FCU-V: Dundee Capital Markets: Buy rating and $2.10 target for FCU
According to Dundee Capital Markets:
Fission Hits 23.41% U3O8 over 7.0m (line 765E); Another Six High-Grade Holes at PLS
Fission Uranium (FCU-T)
Buy, Spec. Risk, C$2.10 Target
Impact: Neutral. Investors looking past assay results.
Fission announced assay results from nine more holes at its PLS project. Overall results appear mostly in line with expectations, adding ~4 MM lbs to our mineral inventory estimate, taking it to 68.8 MM lbs grading 1.62% (from 1.68%). But, in our view the market has stopped caring about Winter assays, and are now focused on its Summer drill program which just began. The company has plans for 63 holes, including 20 holes at new exploration targets.
Based on feedback from the company, investors are looking to see if it can make another discovery on a parallel conductor. This is grassroots exploration so nothing is guaranteed, but given its success already we view FCU as having a higher probability than almost anyone else in the region in making another significant hit. Summer drilling will culminate in an initial resource estimate by YE which could help expedite any potential takeover transaction.
Drilling Highlights:
• All 9 holes drilled within R780E
- Two were low grade, and six higher grade
- All holes were thick, with concentrated intervals of higher grade ore
• PLS14-186 (Line 765E) – hit 13.5m (157.0 to 170.5m) @ 12.35% U3O8, including:
- 7.0m (157.0m to 164.0m) @ 23.41% U3O8; and 7.0m (188.0m to 195.0m) @ 0.90% U3O8
• PLS14-180 (Line 990E) – hit 21.0m (136.5m to 157.5m) @ 0.44% U3O8, including:
- 2.0m (155.0m to 157.0m) @ 3.45% U3O8; and 25.0m (165.0m to 190.0m) @ 4.68% U3O8
• PLS14-170 (Line 915E) – hit 58.0m (135.5m to 193.5m) @ 0.35% U3O8, including:
- 5.5m (169.0m to 174.5m) @ 1.20% U3O8; and 20.0m (217.5m to 237.5m) @ 2.90% U3O8
Mineral Inventory Estimate: DCM estimates 68.8 MM lbs, grading 1.62% U3O8, from 64.93 MM lbs grading 1.68%.
Cash: ~$30 MM currently. It will need to raise money by YE for 2015 Winter drilling, current cash should hold it through summer drilling and an initial resource.
Valuation: FCU trades at an implied EV/lb of $5.19, vs. $4 precedent average, and $9.36 in the Athabasca Basin. |
