Fission Uranium Corp. (FCU/TSX, $1.01) - Buy: Target $1.65 Maiden Resource Outperforms Expectations; New Rating & Target Price Rob Chang (416) 849-5008 ; Michael Wichterle (416) 849-5005
EVENT
Fission Uranium Corp. has announced the maiden resource at its wholly-owned Patterson Lake South “PLS” uranium property located in the Athabasca Basin.
BOTTOM LINE
Very Positive – Fission Uranium Corp. has announced a maiden resource of 106M lbs. at its PLS deposit. The initial resource estimate of 80M lbs. M&I and 26M lbs. Inferred (global total of 106M lbs.) is substantially higher than our combined estimate of 76M lbs.
We are upgrading our recommendation to Buy (from Buy Speculative) while establishing a target price of $1.65 per share.
FOCUS POINTS
Upside Surprise: Market expectations for the initial resource at PLS ranged from 40-80M lbs U3O8 with Cantor Fitzgerald Canada’s estimate coming in at 76M lbs. The 105M lbs global estimate from a third party firm known for its conservatism is a definite surprise. Market Value vs. Takeout value: Based on the initial resource estimate, we estimate a fair market value of $1.65/share based on FCU’s closest peer. However, from a takeout perspective FCU would be valued at approximately $2.50/share based on precedent transactions in the Basin. Potential for More: While already third largest deposit in the basin behind McArthur River and Cigar Lake, PLS still has plenty of room to grow as the resource only incorporates two of four known lenses of mineralization. Moreover, FCU has only explored three conductors out of dozens detected on the property. Click here for the research update
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