Dundee Securities on Fission Uranium (FCU-V) News
Another Suite of Holes Return Off-Scale CPS While Closing That Gap
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Another Suite of Holes Return Off-Scale CPS While Closing That Gap
Fission announced scintillometer results from an additional seven holes at PLS. Highlight hole PLS14-201 (L855E) hit 82.5m of mineralization including 16.8m off-scale. Three other holes were drilled very close to hole -187 (146m of mineralization including 53.47m off-scale), potentially the best hole drilled at PLS and announced two weeks ago.
These three holes hit significant mineralization between 60m to 115m composite thickness and with off-scale ranging from 9.4m to 16.2m (>9,999cps), starting at shallow depths (58.5m-86.5m). They are rather strong, but might be considered average for PLS based on some of the recent high grade that has been reported. The holes do display nice correlation to -187 and to each other (mainly the three holes from L660E), with robust and relatively continuous mineralized horizons as noted from the downhole gamma log surveys (we prefer these to scintillometer results).
These holes help confirm continuity of mineralization along this trend and fill the gap between the former R585E and R945E zones, which have both been incorporated into the R780E zone. We had expected closure of the gaps along the main trend, despite breaks showing from radon surveys.
The market should be at least satisfied with these holes if not happy - but it's getting to the point where investors might just expect more and more - and expectations are a risk here. We do expect the market to react well when hole -187 is reported, likely next week. Meanwhile Fission is doing what we expected them to do - expanding known mineralization, filling in gaps while connecting zones along strike and expanding laterally N-S. Known zones include R600W (30m strike x 30m width), R00E (165m x 45m), the main zone R780E (855m x 95m), R1155E (only three holes here), and R1620E (only one hole, new conductor). Most remain open along strike and width, suggesting that further definition drilling by Fission is warranted.
That area of R780E, which closed the gap between R390E and R780E, was relatively under drilled. Three of today's holes helped fill in that gap further:
• Hole -200, 115.5m mineralization (at 70.0m depth), including 16.2m off-scale;
• Hole -197, 60.5m mineralization (at 86.5m depth), including 13.6m off-scale;
• Hole -198, 63.0m mineralization (at 58.5m depth), including 9.4m off-scale.
A total of 70 holes are completed, with ~10-15 holes to go, but they may not finish 85 holes based on weather conditions.
The market is starting to think more about the mining scenarios facing PLS. The lake has drawn some investor attention, although we are less concerned - both Denison and Cameco have moved back lakes to access respective deposits (not to mention Ekati keeps out the Arctic Ocean). As for operating and capital costs, there are many moving parts and we believe it's still too early (especially without a compliant NI 43-101 resource). This appears to be a relatively flat lying and shallow deposit and we believe conventional open pit mining will be the method of choice, at least early in potential mine life. But capital will depend on who purchases this deposit. Does Cameco or Denison buy it and haul it across the province to their own mills? Or do UEX and AREVA buy it as a starter project for its own world class 96 MM lb Shea Creek deposit just 70 km away? These questions will come. But we don’t believe there are any fatal flaws and that grades should be able to support a variety of options. We believe determining the ultimate size of the zone is more important at this point.
Another best hole ever? As we were restricted on the stock we didn't get a chance to discuss hole PLS14-187 (announced on 12-Mar-14) that intersected 146m of mineralization (58.5m depth) including 53.47m off-scale. This hole closed the gap between R390E and R780E. This hole set a new record at PLS in terms of total off-scale, surpassing the previous three best holes: #1 – -129 (L600E) hit 36.72m off-scale within 111.5m mineralization, and assayed for 9.93% U3O8 over 100m; #2 – -164 (L810E) hit 30.08m off-scale within 136m mineralization, no assays yet; #3 – -75 (L330E) hit 21.65m off-scale within 82m mineralization, and assayed for 9.08% over 54.5m. It’s important to note that all four of these are holes are from separate spots along the entire 855m long R780E trend.
New zone discovery at PLS last week. Fission also announced discovery of a new zone along a new conductor last week (31-March-14) while we were in research blackout. Hole -196 on line 1620E, intersected 30.5m of mineralization (300-6,100 cps), and was a ~465m step-out to the east of R1155E (another discovery along the main trend). This increased the on-trend strike length from 1.78km to 2.24km. The new conductor, PL-3C, lies along strike of the PL-3B conductor they have been drilling. Fission from earlier ground EM work named its conductors, in this case PLS is on conductor PL-3B and the latest hole is on PL-3C. There is a gap of about 450m between these two on the maps based on ground surveys. At depth the conductor may move or disappear. What's more important is that hole -190 around line 1060E is on trend of hole -196 on line 1620E. The trend is your friend. The structure provided access of fluids into these rocks. |
