However, all uranium miners have been posting similar share price performances over the past few weeks and I think there are two main reasons for this: And in the last month alone, they have nearly doubled. However, they have staged a remarkable recovery, in line with the broader market.
Uranium prices are still low and PLS is as worthless as in 2019, so why has the share price of Fission been performing so well?Īfter my last article, share prices fell from $0.26 to a low of $0.08 by March 2020. (Source: Kazatomprom) Reasons for the strong share price performance The latter has the best mines in the world and is keeping output at low levels on purpose. It could take a year and it could take a decade but another problem is that the recovery will benefit mostly Kazatomprom. However, it's a small and opaque market that is oversupplied and timing the recovery is nearly impossible. As I wrote in my November article on Uranium Participation ( OTCPK:URPTF), I think uranium prices need to recover to around $50 per pound to stop the shutdown of current mines and encourage the opening of new ones. Of course, investors have been hoping for a recovery in uranium prices for almost a decade now. The reason is that the net present value (NPV) of the project is based on uranium prices of $50 per pound while the current spot price is just below $30 per pound.Īt current spot prices, the NPV of PLS is negative. I continue to think there isn't any value in PLS. (Source: Fission Uranium) Why Fission is worthless However, these expenses will be spread throughout several years and I think raising so much money at once is not justified. This will cost C$27 million ($21.2 million) and permitting and environmental, social and corporate governance activities are estimated at another C$17 million ($13.3 million). Sure, Fission needs fresh funds as it's planning to commence a feasibility study on Triple R. I really don't like companies that dilute shareholders twice in such a short interval of time. While the company has around three years' worth of reserves at the current cash burn rate, it saw fit to raise C$17.07 million ($13.04 million) through a share offering last month and is currently in the middle of another bought deal offering worth C$6 million ($4.71 million). (Source: Fission Uranium) Progress over the past yearįission hasn't advanced PLS much since my last article and has invested little in exploration and development. Of course, this comes at the expense of higher unit costs as well as a lower life of mine. This is why I think the underground-only option is better as it removes a lot of initial capex and is less technically complex. My main concern with this project is that two of the five mineralized zones at Triple R are located beneath Patterson Lake, which means that an open-pit would require the construction of a berm wall around the deposit. Under the underground-only option, these stand at 81.4 million pounds of uranium. I think it's weird the company is using resources in its presentations, considering PLS has reserves. The project is located in Canada's Athabasca Basin, and the Triple R is hailed as one of the largest high-grade undeveloped deposits in the world with indicated resources of 102.4 million pounds of U3O8. So, what gives? Overview of Patterson Lake South
Still, the share price is up by 19% since my article was published. More than a year later, the development of PLS has advanced very little and Fission continues to burn cash. I covered Fission Uranium ( OTCQX:FCUUF) in October 2019, shortly after the company posted an updated prefeasibility study for an underground-only option for its Patterson Lake South (PLS) uranium project.
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