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Fission Uranium Corporate Presentation

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Fission Uranium's latest corporate presentation, featuring information on the company's award-winning team and PLS project, as well as the uranium sector and nuclear industry.

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Fission Uranium Corporate Presentation

  1. 1. TSX:FCU OTCQX:FCUUF FissionUranium.com PLS: Athabasca’s Shallow Depth, Highly Awarded Uranium Project Exploration Project of the Year May 2019
  2. 2. TSX: FCU OTCQX: FCUUF Disclaimer & Technical Information Disclaimer The following information may contain forward-looking statements. Forward-looking statements address future events and conditions and therefore involve inherent risks and uncertainties. Actual results may differ materially from those currently anticipated in such statements. The technical information in this corporate presentation has been prepared in accordance with the Canadian regulatory requirements set out in National Instrument 43- 101 and reviewed on behalf of the company by Ross McElroy, P.Geol. President and COO for Fission Uranium Corp., a qualified person. The updated Mineral Resources as reported April 15, 2019 are as reported from data up to and including 2018 drill programs and are reported within an open pit design at a cut-off grade of 0.15% U3O8 and 0.25% U3O8 for resources outside the pit that are potentially mined by underground methods. The R1620E, R840W and R1515W zones are evaluated as underground at this time. Technical Information Certain of the technical information contained herein is derived from the April 15, 2019 news release entitled “Fission's PFS shows Low OPEX of US$6.77/lbs U3O8, High IRR and Clear Growth,” describing results of a PFS completed on the project – a copy of which is filed on the Company’s profile on SEDAR at www.sedar.com. The PFS considers the PLS project as a stand-alone mine and mill operation, which includes development and extraction of the R00E and R780E zones (Triple R deposit), based on a number of inputs, estimates, and results including the following (all values in C$ unless otherwise noted): Mineral Resources and Mineral Reserves are reported within the open pit design at a pit discard cut-off grade of 0.15% U3O8 and outside the design at an underground cut-off grade of 0.25% U3O8 based on a long-term price of US$50 per lb U3O8 and PFS cost estimates. Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability. 2 Physicals: • Four years of pre-production and 8 years of mine life, processing nominally 1,000 tonnes per day (350,000 tonnes per year) • Total Tonnes Processed: 2.89 million tonnes at 1.42% U3O8 average grade; open pit mining of 2.30 million tonnes at 1.62% U3O8 • Underground mining of 0.59 million tonnes at 0.63% U3O8 • Process recovery of 96.7%, supported by metallurgical testwork • Production of 90.5 million lbs U3O8; an average of almost 15 million lbs U3O8 per year for 5 years, followed by a lower-production tail Revenue: • Long term uranium price of US$50 / lb U3O8 • Exchange rate of 0.75 US$ / C$1.00 • Gross revenue of C$5.84 billion, less Saskatchewan gross revenue royalties of $423 million • Net revenue of C$5.41 billion Operating Costs: • Average OPEX of C$9.03/lb (US$6.77/lb) U3O8 over the life of mine • Unit Operating Costs of C$274 per tonne processed. • Combined Mining C$89 per tonne processed • Processing: C$115 per tonne processed • Surface and G&A: C$71 per tonne processed • Operating cash flow of C$4.62 billion Capital Costs: • Pre-Production capital costs of $1.498 billion • Dyke and Slurry Wall - C$371 million • Open pit mining - C$44 million • Process plant - C$241 million • Tailings Facility - C$101 million • Infrastructure - C$114 million • Indirects & Owner’s Costs - C$376 million • Contingency - C$250 million • Sustaining capital costs of C$137 million (includes all underground mine capital costs, and tailings dam lifts) • Reclamation and closure cost of C$77 million • Cash flow from operations of C$2.91 billion
  3. 3. TSX: FCU OTCQX: FCUUF 3 Large, shallow (~50 m from surface), high- grade Triple R deposit Maiden reserve estimate of 90.5M lbs U3O8 at 1.42% U3O8 3.2 km mineralized trend – largest in the Athabasca Basin Potential to become amongst the top 3 largest and lowest cost uranium mines Production: 15M lbs/yr U3O8 over first 5 years Cash costs: US$6.77/lb U3O8 over LOM Flexible mining approach with strong project economics OP/UG case: after-tax NPV8% of C$693M and IRR of 21% UG case: after-tax NPV8% of C$696M and IRR of 26% Near-term catalysts • Future drill program to upgrade/expand resource • PFS on UG scenario Summer 2019 • Feasibility study within ~2 yrs Award winning project and management team 31,039 ha property in a world class uranium district (Athabasca Basin) Excellent potential to expand resource and extend mine life Reasons to Invest
  4. 4. TSX: FCU OTCQX: FCUUF 4 Tickers TSX: FCU OTCQX: FCUUF Frankfurt: 2FU Share Price (as of May 1, 2019) C$0.54 52 Week Low / High C$0.47 / C$0.78 Basic Shares Outstanding 486.0M Options (weighted avg. strike price of C$0.89) 25.5M Fully Diluted Shares Outstanding 511.5M Market Capitalization (Basic) C$262.4M Cash & ST Investments (as of March 31, 2019) C$15.0M Investment in Fission 3.0 Corp. C$1.1M Enterprise Value (Basic) C$247.4M Capital Structure Share Price Performance (Last 12 Months) Share Ownership Research Coverage Management& Board 1.6% Retail & Other 66.3% China General Nuclear Power 19.9% Institutions 12.1% Institution Analyst City BMO Capital Markets Alex Pierce London Cormark Securities Tyron Breytenbach Toronto Eight Capital David Talbot Toronto Haywood Securities Colin Healey Vancouver H.C. Wainwright & Co. Heiko Ihle New York Red Cloud Klondike Strike Derek Macpherson Toronto 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 $0.00 $0.10 $0.20 $0.30 $0.40 $0.50 $0.60 $0.70 $0.80 May-18 Jun-18 Jul-18 Aug-18 Sep-18 Oct-18 Nov-18 Dec-18 Jan-19 Feb-19 Mar-19 Apr-19 May-19 Volume(M) SharePrice(C$) Corporate Information
  5. 5. TSX: FCU OTCQX: FCUUF 5 Management Devinder Randhawa, Chairman & CEO • Fission Energy founding CEO and chairman from 2007 to 2013 leading company to Tier One status • Finance Monthly ‘Dealmaker of the Year 2013’, Northern Miner ‘Person of the Year 2013’ • Founder of Pacific Asia China Energy, sold for $34M Ross McElroy, President & COO, Director • Formerly with Cameco, Areva, BHP Billiton • PDAC 2014 ‘Bill Dennis Award for Exploration Success’, Northern Miner ‘Person of the Year 2013’ • Significant role in 4 major uranium discoveries in Athabasca Basin, incl. Fission’s Waterbury Lake & PLS • Professional geologist of 30+ years experience Management cont’ Ray Ashley, VP Exploration Paul Charlish, CFO & Corporate Secretary Directors William Marsh, Lead Director Frank Estergaard, Director Robby Chang, Director Darian Yip, Director Deshao Chen, Director Shiming Ma, Director Award Winning Project and Team
  6. 6. TSX: FCU OTCQX: FCUUF 6 Building Shareholder Value Since 1996 Strathmore Minerals Corp. • U3O8 spot price at US$7/lb • C$2M market cap to peak valuation of C$457M in 2007 • JV Sumitomo (Japan) (C$50M) Fission Energy Corp. • JV KEPCO (Korea) (C$15M) • J-Zone discovery & sale to Denison Mines Fission Uranium Corp. • Takeover of Alpha Minerals • Triple R Deposit: discovered (2012) • Completed maiden reserve estimate and PFS in April 2019 • Chinese Utility (CGN Mining) buys 19.9% for C$82M Energy Fuels Takeout (2013) 1996 2007 2013 Fission 3.0 Corp. (2013) • Project Generator with several high-potential projects: drilling- boulders-geochem-geophysics- showings in Athabasca • Rhyolite to spend C$22M to earn-in 80% of Macusani Assets, Peru
  7. 7. TSX: FCU OTCQX: FCUUF 7 Ownership • 100% owned by Fission Uranium Location • 31,039 ha property located in the southwest margin of the Athabasca Basin in northern Saskatchewan • Accessible by all-weather Highway 955 • Strong government support at all levels • Straight-forward permitting process Triple R Deposit • Structurally controlled, east-west trending, sub- vertical high-grade uranium deposit • 5 mineralized zones over a 3.2 km strike • High grade mineralization starting at ~50 m depth • Zones are open in several directions April 2019 PFS (OP/UG) • 6-year open pit mine followed by 2 years of underground mining (both at 1,000 tpd) • Based exclusively on R780E and R00E zones • 97.7% recovery rate • LOM avg. production of 11M lbs/year U3O8 ‒ 14.4M lbs/year U3O8 over first 5 years • Cash costs of US$6.77/lb U3O8 • 4-year construction period with initial capex of C$1.5B • NPV8% (pre-tax) of C$1.32B and IRR (pre-tax) of 29% at US$50/lb U3O8 and US$1:C$0.75 Category Ore Grade Contained Metal 000 tonnes % U3O8 g/t Au 000 lbs U3O8 000 oz Au Probable Reserves Open pit 2,296 1.62 82,262 Underground 592 0.63 8,236 Total Probable 2,888 1.42 90,500 Indicated Resources Open pit 1,609 2.33 0.58 82,753 30.1 Underground 931 1.02 0.48 21,015 14.3 Total Indicated 2,540 1.85 0.49 103,768 44.4 Inferred Resources Open pit 40 0.62 0.24 551 0.3 Underground 1,198 1.23 0.50 32,334 19.3 Total Inferred 1,238 1.20 0.49 32,886 19.6 Reserve and Resource Estimate (April 2019) PLS Project Patterson Lake South (PLS) Project Overview
  8. 8. TSX: FCU OTCQX: FCUUF Canada’s Athabasca Basin District 8 +2.5 billion pounds of U3O8 discovered
  9. 9. TSX: FCU OTCQX: FCUUF Athabasca: The Premier High-Grade Uranium District ENVIRONMENT • Political stability • Pro-mining • Permitting INFRASTRUCTURE • Mills nearby • Power grid • Highways & airplane access EXPERIENCE • 60+ years of mining • Supplies 22% of the world’s uranium • Saskatchewan was ranked as #3 jurisdiction in the world for mining investment in 2018 by the Fraser Institute Average Grade (% U3O8) 9
  10. 10. TSX: FCU OTCQX: FCUUF 10 • Structurally controlled, east-west trending, sub-vertical, high-grade uranium deposit • ~50 m starting depth of high-grade deposits ‒ Overlain by 50 m to 60 m of sandy overburden, with high grade mineralization located near the bedrock-overburden contact • Five separate mineralized zones (R1515W, R840W, R00E, R780E and R1620E) over a 3.2 km strike (drill defined) mineralized system ‒ Western Zones: R1515W, R840W and R00E are on land with 55 m to 100 m of overburden ‒ Eastern Zones: R780E and R1620E zones are beneath Patterson Lake at generally <6 m water depth with ~50 m of overburden • Total strike length is now well beyond that of Cigar Lake (1.95 km) or McArthur River (1.70 km) 3.18 km east-west strike length Triple R Deposit
  11. 11. TSX: FCU OTCQX: FCUUF 100 200 300 400 500 600 700 800 900 Cluff Lake Triple R 11 Key Lake McClean Lake Midwest Roughrider Phoenix Cigar Lake McArthur River Millennium Arrow Shea Creek Depleted Producing Advanced Exploration “Sweet-Spot” * Based on company information Low Hanging Fruit Picked First Orano Cameco Fission Orano Orano Rio Tinto Denison Cameco Cameco Cameco NexGen Orano Unconformity Deposits Basement Deposits
  12. 12. TSX: FCU OTCQX: FCUUF 12 PLS Project April 2019 PFS (OP/UG) and April 2019 PEA (UG Only) Units OP/UG (PFS Case) UG Only (PEA Case) Mine Type 6 years OP 2 years UG 7.3 years UG Mine Life Years 8.2 7.3 Construction Period Years 4 years 3 years Ore Mined M tonnes 2.89 2.55 LOM Avg. Head Grade % U3O8 1.42 1.64 LOM Production M lbs U3O8 90.5 81.4 Avg. LOM Annual Production M lbs U3O8 11.0 11.2 Operating Costs C$/tonne $274 $335 C$/lb U3O8 $9.03 $9.57 Initial Capital Cost C$M $1,498 $1,194 LOM Sustaining Capital Cost C$M $137 $258 Project Economics at US$50/lb U3O8 and C$1.00:US$0.75 Pre-Tax Cash Flow C$M $2,910 $2,587 After-Tax Cash Flow C$M $1,759 $1,533 After-Tax NPV8% C$M $693 $696 After-Tax IRR 21% 26% • April 2019 PFS (OP/UG) cash costs of C$9.03/lb is 45% lower than the 2015 PEA (C$16.50/lb) • Indicated resources grew 18% from previous estimate (February 2018) • Initial reserve estimate of 90.5M lbs U3O8 at 1.42% from R00E and R780E Zones • April 2019 PFS demonstrates the flexibility of future development of the Triple R deposit ‒ Potential to develop mine as combination open pit/ underground or underground only ‒ OP includes construction of a sand dyke and plasticized cement slurry cut-off wall into Patterson Lake ‒ UG involves sinking shafts on land and developing underground workings below Patterson Lake • April 2019 PFS based exclusively on indicated resources from R00E and R780E zones
  13. 13. TSX: FCU OTCQX: FCUUF April 2019 PFS – Hybrid (OP/UG) April 2019 PEA - UG Only Capital Cost • Does not require construction of a sand dyke and plasticized cement slurry cut-off wall • ~C$400M (20%) lower initial capex • Eliminates pre-stripping • Shorter construction period LOM Production • Access additional 9.1M lbs of reserves • 11% increase in LOM U3O8 production • Extends mine life by ~1 year Operating Costs • Modestly lower cash costs over LOM (~6%) Permitting • Reduces permitting time and costs • Potentially lower environmental impact and reclamation costs Project Economics • 15% higher LOM free cash flow (after-tax) • Higher IRR (26% vs. 21%) 13 • Both scenarios results in bottom quartile cash costs. Base Case scenario 15M lbs U3O8 of annual production over first 5 years, and a high IRR at a US$50/lb uranium price PLS Project Trade-Off Between Hybrid (OP/UG) and UG Development Options
  14. 14. TSX: FCU OTCQX: FCUUF 14 Excellent opportunity to upgrade resource base and extend mine life • Addition of Zones to Mine Plan: three other mineralized zones (R1515W, R840W and R1620E) along strike requiring drilling to upgrade inferred to indicated • Zone Expansion: R780E Zone is open at depth and along plunge to east with opportunity to extend UG mine life • Mineralization Upgrade: excludes [ ] of existing inferred resources from R780E and R00E zones Next Steps • UG only scenario to PFS level (by Summer 2019) • Advance towards Feasibility Study (toward end of 2020) ‒ Conversion to indicated from R780E, R00E (20 holes) and zones outside of PFS resource (40 holes in-fill) ‒ Feasibility level mine design, scheduling and cost estimation ‒ Permitting R780E R00E PLS Project Project Enhancement Opportunities and Next Steps
  15. 15. TSX: FCU OTCQX: FCUUF 15 Rank Mine/Project Location Mining Method 2016 Production (M lbs U3O8) Percent of Total 1 McArthur River Canada UG 18.0 11% 2 Cigar Lake Canada UG 17.3 11% 3 Katco Kazakhstan ISR 10.4 7% 4 Olympic Dam Australia UG 9.6 6% 5 Central Mining District Uzbekistan ISR 6.2 4% 6 Inkai Kazakhstan ISR 5.7 4% 7 Somair Niger OP 5.6 4% 8 Karatau Kazakhstan ISR 5.4 3% 9 Ranger Australia OP 5.2 3% 10 South Inkai Kazakhstan ISR 5.1 3% - Remaining - - 69.2 44% Total 157.7 100% Source: S&P Global Market Intelligence PLS Project Largest Uranium Mines by 2016 Production • Under the PFS Base Case, the PLS Project is forecast to produce 15 million lbs of annual U3O8 production over the first five years • PLS Project is positioned to be one of largest uranium mines as well as the largest open pit mine in the world • Under the PFS Base Case, LOM avg. cash costs of US$6.77/lb, which would be near the bottom of the global industry cash cost curve and amongst the lowest of all major uranium mines 2016 Uranium Industry Cash Cost Curve $0 $10 $20 $30 $40 $50 0 20 40 60 80 100 120 TotalCashCost(US$/lb) U308 Production (M lbs) 2016 Uranium Industry Cash Cost Curve First Quartile Second Quartile Third Quartile Source: S&P Global Market Intelligence Fourth Quartile PLS Project Well Positioned Amongst the Largest Uranium Mines in the World PLS Project • 15M lbs/yr U308 (first 5 years) • US$6.77/lb LOM cash costs
  16. 16. TSX: FCU OTCQX: FCUUF 16 • 31,039 ha property in the Athabasca Basin district, with only a small portion explored to date • Triple R deposit is open in multiple directions, particularly westwards, towards the high-grade boulder field • Triple R deposit (3.2 km strike) is part of a huge mineralized trend, with over 100 EM conductors and multiple exploration hotspots • Most awarded uranium exploration company with industry-leading, multi-discipline technical team Exploration Potential
  17. 17. TSX: FCU OTCQX: FCUUF 17 • Fission Uranium trades at a P/NAV of 0.26x¹, which is ~19% below the average P/NAV multiple uranium exploration and development companies • Fission Uranium should warrant a premium valuation given the size, high-grade and expansion potential of the PLS Project and land position in the prolific Athabasca Basin • Substantial re-rating opportunity as the company continues to advance, de-risk and grow the PLS Project Note: as at May 1, 2019 1. NAVPS for all other companies are consensus research 2. Consensus NAVPS for Fission Uranium is based on estimates from Eight Capital and H.C. Wainwright Source: Capital IQ and Thomson P/NAV Multiples of Uranium Producers and Development Companies1 Uranium Producers 0.90x 0.73x 0.66x 0.59x 0.49x 0.43x 0.49x 0.47x 0.42x 0.30x 0.30x 0.26x 0.21x 0.21x 0.14x Average: 0.63x Average: 0.32x Cameco Energy Resources Energy Fuels Paladin Peninsula Energy Uranium Energy Laramide Denison NexGen UEX Azarga Fission Uranium Vimy Berkeley Plateau Comparable Company Analysis Uranium Exploration and Development Companies 2
  18. 18. TSX: FCU OTCQX: FCUUF 18 Why Fission? Award winning project and management team World class uranium district Large, shallow, high grade Triple R Deposit Untapped exploration potential Near-term resource growth One of the world’s largest and lowest cost uranium projects Triple R on a 3.2 km mineralized trend - largest lateral footprint in the Athabasca Basin Maiden reserve estimate of 90.5M lbs U3O8 at 1.42% U3O8 Majority of 31,039 ha property remains unexplored 100s of potential drill targets Future 2019 drill program Triple R deposit is open in multiple directions April 2019 PFS outlines OP/UG mine producing 15M lbs/yr U3O8 and LOM avg. cash costs of US$6.77/lb Discovered two world-class uranium deposits since 2010
  19. 19. Fission Uranium Corp. Phone: +1 250 868 8140 Toll Free: +1 877 868 8140 (North America) Website: www.fissionuranium.com Investor Relations: Email: ir@fissionuranium.com
  20. 20. Appendix: Uranium Market Reactor Builds at 25 year high
  21. 21. Reactor Builds at 25 year high More reactors operating in 2018 than in any other time in history More Japanese reactors coming online due to strong regulator support Middle East (home of Big Oil) aggressively securing nuclear energy supply USA: +28 EUROPE: +35 INDIA: +28 RUSSIA: +22 CHINA: +136 E. ASIA: +10 SAUDI ARABIA: +16 UAE: +10 452Current Reactors Operation 55Under Construction 151Planned 355Proposed TSX: FCU OTCQX: FCUUF Electricity Demand +150% by 2035 21
  22. 22. TSX: FCU OTCQX: FCUUF Growing Electrical Demands and Nuclear Solutions • Electricity demand growing at rapid pace and increasingly integrated into daily life • As demand for electricity increases, demand for clean energy is paramount • EV’s entering the marketplace by major automobile manufactures • Bitcoin POW mechanism annual electric consumption same as Switzerland • Small Modular Reactors (SMR’s) – implementation is a game changer Small Modular Reactors (SMR’s) - Game Changing Technology • Assembly line construction will standardize build and reduce construction risk and decrease cost (analogous to Ford’s Model T) • Shorter construction time (3 years vs. 10 years) • Transport modular components reduces major transport requirements • Small footprint allows smaller safety zones around reactors • Incremental power thus suitable for more countries, more locations 22 Source: World Nuclear News 22 Moving Forward
  23. 23. TSX: FCU OTCQX: FCUUF 23 Source: https://pris.iaea.org/pris/ 452 Nuclear power reactors in operation 55 Nuclear power reactors under construction 151 Nuclear power reactors planned 335 Nuclear power reactors proposed Reactors: Uranium Requirements & Future Nuclear Power Source: WNA October 2018 Plans for New Reactors Worldwide
  24. 24. TSX: FCU OTCQX: FCUUF CGN, Fission’s Strategic Partner • 19 operating reactors* • Important domestic and global builder of reactors (23 new reactors under construction world wide)* • Owns 19.9% of Fission • Offtake agreement - 20% of annual uranium production from PLS; option to purchase additional 15% 24 240 China’s Reactor Construction Boom 2030 Estimate • 150 reactors in operation* • 50 under construction*33 Beijing, China: Air Quality Red Alert * CGN Personal communication China’s Strong Nuclear Buildout
  25. 25. TSX: FCU OTCQX: FCUUF 25 “Our resource-poor country cannot do without nuclear power to secure the stability of energy supply while considering what makes economic sense and the issue of climate change.” Shinzo Abe, re-elected Prime Minister of Japan Oct. 2107 Source: World Nuclear Association (February 2019) 2010 2016 2030 Nuclear 25% 2% 20-22% • 9 reactors have currently restarted • 17 reactors currently in the process of restart approval • 2 reactors under construction • 8 new reactors planned and proposed Japanese Recovery Continuing
  26. 26. TSX: FCU OTCQX: FCUUF 26 Kazakhstan (to reduce planned uranium production by 20%) Other Countries Australia Canada (indefinite suspensions at McArthur River) Africa • Nearly 60% of primary supply comes from politically unstable countries • Saskatchewan, Canada: ‒ Ranked #3 mining investment jurisdiction in 2018 by Fraser Institute ‒ Increased share of global production from 17% to 22% in 2016 14.1% 39% 22% 10.2% 7.9% Politically unstable Permitting issues Stable & supportive 13.8% Russia & E. Europe All figures from Uranium Investing News (based on World Nuclear Association country reports) Supply Side Vulnerable to Geopolitical Instabilities
  27. 27. TSX: FCU OTCQX: FCUUF 27 Low U3O8 price impacts low cost producers: • Kazakhstan production cut by 20% over three years starting in 2018 • Production indefinitely suspended at McArthur River • Canadian operations shut down at Rabbit Lake and Eagle Point • Production cuts at Cigar Lake Utilities are increasingly uncovered Source: UxC U3O8 Mlbs 1B lbs U3O8 Uncovered in Next 8 Years and Supply Still Being Cut 0 50 100 150 200 250 2019 2020 2021 2022 2023 2024 2025 Uncovered US Utilities Uncovered Non-Us Utilities Covered
  28. 28. • Utilities buy high and sell low • Lack of long-term contracting leaves utilities exposed • For contracting to return, prices will have to rise • The longer the wait, the stronger the upwards pressure on pricing TSX: FCU OTCQX: FCUUF Pressure is Growing for Return to Contracting 28