The following are questions asked by Fission shareholders with answers provided by Fission Management
Question: The dual paths to production approach is brilliant. A concern is how that impacts Fission's cash position at this stage. As an existing shareholder I'm worried that this approach will burn up cash too quickly and result in a premature financing that will further dilute my holdings. If, however, CGN was willing to offer loans to prevent that dilution from happening then that would put a different complexion on the situation. As an interested shareholder, I don't want an equity financing at the bottom of this cycle right now.
Fission: To advance the “underground only” scenario to PFS, is a limited cost with a budget of $0.5M. There is no additional field work required to do this, and we expect to complete the study in Q3 2019. Once we have both scenarios at PFS level, we can decide the appropriate path forward to use in the Feasibility Study. Thus, minimal impact on the company’s treasury.
Question: The recent news on NexGen moving forward on EA and licensing approval as a 100% standalone mine and mill project certainly raises more questions vis-a-vis where does that leave Fission in the overall creation of a new Patterson Lake mining district? Where are the synergies and how will Fission leverage them given NexGen's go it alone approach?
Fission: Both projects will have a positive impact in creating a new mining district in the Patterson Lake area and identifying and working on areas that increase the overall strength of this vision is important to stakeholders and shareholders of both Fission and NexGen. At this stage NexGen have done their respective PFS study as a stand-alone project, similar to what Fission has done for PLS. We ultimately believe there are very good synergies to both companies that would positively impact economic, environment and community and first nations issues. We will continue to work with our neighbors to identify areas that would benefit both parties. As an example, a shared mill, shared infrastructure (airstrip, accommodations, power etc.) are some of the key elements that if shared, will positively benefit both groups.
Question: The proposed operation includes a uranium mill to process the ore into yellow cake. Since this facility is one of the higher pre-production capital outlays at $241M what consideration was given to defraying that cost by entering into a joint venture agreement with other potential or existing mill operators? Given the proximity of NexGen’s Arrow deposit would not a JV similar in nature to Cameco/Orano operation of Key Lake Mill be a more efficient use of Company capital? Or with the nearby UEX-Areva Shea Creek development?
Fission: This is an area that we’ve identified as a potential major cost-saving by sharing for both Fission and NexGen. We are pursuing a shared mill concept and continue to work towards this vision.
Question: Regarding the underground mining option, the PFS envisages water control issues and proposes a system of dykes and slurry cut off walls as the means of keeping water out of the mine. How does this affect the underground portion of the mine? With water saturated, sandy overburden, would it not be a better option to freeze the water bearing overburden to prevent water ingress as has been done at Cameco’s Cigar Lake mine? Underground mine flooding has caused extensive additional capital costs to Cameco - would it not be wise to follow their example?
Fission: We have done extensive geotechnical studies during the PFS phase to address water control into the mine. We are very comfortable with the conclusion that our Engineering group determined. Our mine development more than adequately addresses water control. Cigar Lake and McArthur River are much different mines with their own unique issues for water control. Importantly, both of those deposits are relatively deep, where ground pressure is much higher than would be the case at PLS and both of those deposits occur at or near the unconformity contact between the Athabasca Basin sandstone formation and the underlying crystalline basement rocks. The sandstone above the unconformity is notoriously problematic with respect to rock strength and integrity. At Triple R, as we are outside of the Athabasca Basin, we have no overlying Athabasca sandstone. Also being much shallower (less pressure) we do not have the same concerns as deeper deposits. We do not need to employ large-scale freezing to successfully operate a mining operation.
Question: Has the Company applied for a license to operate Triple R Mine to the Canadian Nuclear Safety Commission and the Saskatchewan authorities. How long is such an approval expected to take?
Fission: We expect to make our initial application, via “Project Description” during Q3 2019.
Question: The proposed method of dealing with tailings is by means of conventional tailings ponds and these can be contentious issues with regulators. Has there been any consideration given to the storage of tailings back underground? NexGen appears to have adopted this approach both to reduce the environmental footprint of the mine and reduce long term maintenance of tailings ponds which requires ongoing care, maintenance and monitoring. Would the Triple R mine not benefit from a similar approach? At a cost of $110 million, this capital cost could be eliminated in favour of ongoing backfilling of the mine.
Fission: An underground tailings for a uranium mine has never been done before in the Athabasca Basin, so it is untried. It is by no means without potential risk. Just because it is out of site, does not mean it is out of the realm of concern. There is sub-surface waterflow as well as water that you see at surface. How do you control it, if there is a problem? Fission believes it is most advantageous to deal with traditional surface tailings, where the technology is well understood and tried and tested in many mining operations. Surface tailings are easier to monitor and control.
Question: It is stated that the underground mining capital costs are reduced by going for an all underground mining at the outset, but this is at the expense of losing some mineral resource in the crown pillar. How much mineral resource (lbs of U3O8) is lost in this scenario. It appears to be 90.5 – 81.4 = 9.1 Mlbs @ $50/lb = $455M is that correct?
Fission: The amount of loss in the crown-pillar for an underground only scenario will be addressed in the upcoming Underground only PFS. This is an area of detailed engineering that is being addressed. At the PEA level, yes correct that it is a loss of around 9M lbs.
Question: Once the underground operation is mined out could the crown pillar be mined afterwards using open pit methods? This would eliminate the loss of resource.
Fission: The underground only PFS scenario is specifically looking at crown-pillar issues and will address this.
Question: It is conceivable that a uranium bull market is looming and those uranium miners that are in production or near to production will benefit the most. Since there is a full year difference between the underground only option and the PFS study base scenario, would it place Fission in a better position to have an operating mine one year earlier and potentially access to a higher price than the base cost of $50/lb. Getting into production earlier could give better returns.
Fission: Our PFS assumes a stronger uranium market than presently exists. All things being equal, it always makes sense to develop a mine in a shorter period of time, rather than longer and more expensive timelines.