Global nuclear renaissance buoys developer Fission Uranium Corp towards mine ambitions
By James Brewer
Proponents of nuclear power are full of optimism that their time is now. There is a desperate need to replace fossil fuels with low-carbon options to meet world climate action targets, but only a handful of elite uranium projects are moving through development and can expect to be producers in the late 2020s.
One such project is a “mine in the making” in Canada’s Athabasca Basin, under the wings of Toronto-listed Fission Uranium Corp. Fission Uranium has applied to the Canadian Nuclear Safety Commission for a licence to build a uranium mine and mill at its Triple R uranium deposit, which is part of the Patterson Lake South (PLS) property. PLS has a feasibility study which concluded a construction timeline of three years with a projected mine life of 10 years and life-of-mine production of 90.9m lbs of U308 (triuranium octoxide, a compound of uranium). The study determined an average unit operating cost of below US$10/lb U308 (approx. C$13.02/lb U308.
Fission chief executive and president Ross McElroy on a recent visit to London told investors that global economic ‘drivers’ were strongly favourable to processing more uranium as a power source.
“This is the most exciting era we have seen in the sector for decades,” said Mr McElroy. “Nuclear is now a much more accepted form of energy. The whole macro-situation continues to go on improving, and our story is getting better and stronger.” He is enthused by spot uranium prices, which have been running at -year highs.
The Athabasca Basin in in northern Saskatchewan is home to the world’s richest uranium mines, and PLS hosts the longest mineralised trend in the district. Within the entire region, the Triple R is the only existing major, high-grade, deposit at shallow depth.
Mr McElroy and his colleagues speak of a nuclear renaissance. They point out that to meet net-zero emissions by 2050, the International Energy Agency estimates that nuclear capacity needs to double. ‘The electrification of everything’ necessitates scalable, non-intermittent, zero-carbon power generation.
More than 30 countries are planning or starting nuclear power programmes, and a further 20 have expressed interest in either traditional plants or next-generation small modular reactors, which can be factory-assembled and transported to a site to serve industrial applications or to areas with limited grid capacity. By making construction faster, cheaper, and simpler, small reactors could transform the economics of building power stations.
Leading economies including Japan and California are reassessing their earlier nuclear phaseout plans, and under specific conditions investments in nuclear projects labelled ‘green’ can be approved under the European Union 2022 Taxonomy, part of the community’s sustainable finance framework. Industry experts such as Mr McElroy are keen to stress the advantage that nuclear power plants do not produce air pollution or CO2 emissions while operating.
Admittedly, there continues to be some opposition to the principle of using nuclear energy: organisations such as California-based One Earth cite operational risks and safety concerns, huge cost-overruns of the mega-plants, uranium mining risks, financial and regulatory risks, waste management issues, nuclear weapons proliferation concerns, and some adverse public opinion. They say that the spread of small reactors may encourage some countries to enrich imported uranium secretly to create weapons-grade material. Despite this, global public support for nuclear energy as a clean energy source and replacement for coal and oil is at the highest it has been for many years.
Much of global uranium supply comes from Kazakhstan which is within Russia’s sphere of influence and others such as Niger that are considered politically unstable. Orano recently stopped processing uranium at its Niger plant. Western utilities have been shunning Russian nuclear fuel although such trade is not subject to sanctions.
According to the World Nuclear Association, Kazakhstan in 2022 produced the largest share, 43%, of world supply of uranium from mines. Canada (Saskatchewan) is the world’s second largest producer of uranium, accounting for roughly 13% of total global output, but the country’s Cameco, the world’s second-largest uranium miner, has lowered its production guidance for 2023. Kazatomprom, the Kazakh uranium producer, has announced plans to increase production in 2025, adding 6,000 tonnes of elemental uranium to bring its contribution to between 30,500 and 31,500 tonnes. The producer said that its decision to increase output was motivated by improved uranium market conditions and successful medium and long-term contracting with new and existing customers.
At present, the main growth in uranium demand is from China and Russia. Much of Russia and Kazakhstan’s combined production is likely to be sent to China and not the West. China is expected to build another 32 nuclear reactors by the end of the decade. Japan is seeing plans to restart some plants and build new facilities.
The World Nuclear Association says nuclear energy provides about 10% of the world’s electricity from about 440 power reactors, and there is a clear need for new generating capacity around the world, both to replace old fossil fuel units, especially coal-fired ones, which emit carbon dioxide, and to meet increased demand for electricity in many countries.
All but one of the UK’s nuclear plants are scheduled to close by 2030, and in an attempt to remedy the lack of low-carbon power generation, ministers have set up a body named Great British Nuclear to oversee the construction of up to 24 gigawatts of new capacity by 2050. This envisages a variety of small, containerised nuclear reactors alongside three giant nuclear plants, although the major plants are likely to struggle to lure investors. Six companies have been put on a preliminary shortlist to apply for contracts to build small modular reactors with part-public funding.
A UK government statement described the launch of the nuclear body in July 2023 as “a massive revival of nuclear power … placing the UK at the forefront of a global race to develop cutting-edge technologies to rapidly deliver cleaner, cheaper, more secure energy.” It aimed to help the government achieve its ambition to provide up to a quarter of the UK’s electricity from homegrown nuclear energy by 2050.
Uranium soared to $70 per lb in September 2023 (Fission has used US$65 per lb for recent feasibility study modelling), the highest since before the Fukushima disaster of 2011 which prompted several countries to turn their backs on nuclear, and producers to put mines into care-and-maintenance. Volatile fossil fuel prices and efforts to end reliance on Russian energy have prompted the change of mind.
There was a cumulative 100m lbs uranium deficit between 2021- 2022 and estimates for 2023 are 190m lbs of demand versus 140m lbs of supply. Aggressive purchasing by financial buyers is also likely to remove a chunk of supply from the market. The US consumes about 40m lbs a year for its nuclear power stations while producing a mere 2m lbs. This signals Canada as its main export country of interest – relatively cheap and competitive. Fission’s mid-stage development project is in the low political risk jurisdiction of Canada, where the province of Saskatchewan has a 60-year history of uranium mining and for which there is said to be strong support at local, regional, and provincial level.
In its feasibility study, Fission Uranium, headquartered in British Columbia, outlined the potential for the Triple R to become one of the lowest cost uranium mines in the world. Highlights of the study included an initial capital expenditure of C$1.15bn (US$858.8m), a mine life of ten years, and production of 90.9m lbs of uranium oxide over the life of mine. Average unit operating cost was put at C$13.02 per lb. “We are making money at over the low $20s that is a pretty healthy margin,” said Mr McElroy.
Fission (FCU-TSX) had good news to announce on October 4, 2023. It closed a “bought deal” public offering of 7,731,092 flow-through shares at C$1.19 per share (a big premium on the opening 90c on September 26, the day of the announcement) for gross proceeds of C$9.2m, including an over-allotment option held by a syndicate of underwriters including Eight Capital and Red Cloud Securities. The gross proceeds will be used for “Canadian exploration expenses.”
The near-surface Triple R uranium deposit is 80km south of the past-producing Cluff Lake mine, 150km north of the town of La Loche. The project is 2km from the all-weather Highway 955 which continues north through the area of the Shea Creek deposits being jointly developed by UEC. Fission Uranium has 100% ownership of its PLS Property, which comprises 17 mineral claims totalling 31,039 ha.
With an experienced team run by Mr McElroy, the project is said to be undervalued by share price among its peers. “The company is ideally positioned to continue developing PLS through the environmental assessment and licensing phase,” said Mr McElroy, a geologist with more than 35 years of experience in the mining industry. “We are about to start our hunt for further mineralisation.”
He is keen on community relations, having signed engagement and capacity agreements with all key indigenous groups within the property’s catchment area, and Fission is working to identify potential areas of interest or concern related to Indigenous rights and culture, traditional land and resource use, and community interests.
He summed up: “We are now towards working filing permitting to construct a mine. We are looking at having a producing asset in 2029.”
Fission Uranium representatives will be back in London on November 20 and 21 for the 121 Mining Investment Conference.
