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Indicated vs Inferred: A look at 43-101-compliant resource categories

June 19, 2015

Fission has a very large indicated resource and a smaller, but still significant, inferred resource. One question I often get asked at conferences by investors is what’s the difference between the two categories? Well, it’s a question of confidence in your numbers based on the drilling you’ve done and ultimately this reflects on the quality of the resource delineated.

The simplest description I can give is that it is all about the spacing of drill holes. An indicated resource is based on the results of drill hole intersections that are closer to each other as compared to an inferred resource. Indicated category is a much higher degree of confidence in the resource estimate, while inferred is lower confidence and much more speculative. Indicated material can move into mineable reserves, while inferred cannot.

Now, depending on the type of deposit and the style of mineralization, the difference between the two categories can be quite different. For example, in some deposit types, such as banded Iron Ore deposits, the grade can be quite homogenous throughout and “inferred” grades may not vary much from “indicated” grades.

However, when it comes high-grade structurally controlled deposits, such as we have in to the Athabasca Basin, the difference in grade and thickness of a mineralized interval over very short distances can be substantial. This is known to geologists as “The Nugget Effect” and is the reason that indicated resources are far more valuable than inferred. The obvious danger with a high-grade Athabasca Basin uranium resource that is mostly in the inferred category, therefore, is that the actual contained metal can end up being a lot different in grade and size than was anticipated. In these cases, best practices for economic studies, such as the PEA that Fission is embarking on for PLS should be done only when a substantial portion of the resource has been upgraded to indicated category.

That’s why we spent the time, money and effort to drill in a way that would give us a very large resource in the indicated category â€" amounting to over 75% of our resource estimate. The end goal in delineating a resource is to provide a high-confidence / high-quality asset that lowers the risk for both investors and those companies seeking an acquisition, and that is what a high-degree of indicated resource does.

Particularly with today’s markets, you can bet that the companies with the money and desire to acquire a uranium asset are going to be looking very, very hard at your numbers and the proof that you have what you say you have.

I worked for the majors for many years, both in resource development programs and mining operations.  I have learned that the quality of the asset and the confidence you have in the resource is critical. Essentially, economic studies and mining operations require reducing the risk as much as possible.  As we move forward, we remain committed to enhancing the quality of the resource at Triple R, reducing the speculative risk and adding value to our shareholders.

Ross McElroy, President, COO and Chief Geologist for Fission Uranium

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