Fission Uranium (TSX: FCU) President Ross McElroy on Potential Benefits of an Underground-Only Mining Approach at the PLS Project in the Athabasca Basin

July 23, 2019

Gerardo Del Real: This is Gerardo Del Real with Resource Stock Digest. Joining me today is the President, COO and Chief Geologist for Fission Uranium (TSX: FCU)(OTC: FCUUF), Mr. Ross McElroy. Ross, how the heck are you?

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Ross McElroy: Doing well, Gerardo. It's been awhile, but we were doing pretty well. Thank you.

Gerardo Del Real: It's been a few months. You had news this morning. Fission's commencing the prefeasibility study for the underground-only option at the world-class PLS project. Now obviously you have a multi pronged approach. Can we talk about the details a bit, and why you feel it's important to look at this option exclusive of the other scenario?

Ross McElroy: You bet. I think what's pretty unique about the PLS project, and the Triple R Deposit specifically, is the fact that we do have flexibility. As we showed in our prefeasibility report that we put out in April, we can look at mining this as an open pit. We can evolve to an underground, and we also had another look at this to see if we can develop this as an underground deposit, and it looks like we can. That's why we are going down the path to do an underground only scenario.

Our preliminary look at it shows that it has some improved economics, say opposed to the open pit scenario. There's advantages to both, but I think you're pretty hard pressed to find any project anywhere that has the ability to choose multiple types of conventional mining. So that really gives us a lot more flexibility for our path going forward.

Gerardo Del Real: Ross, let's be very frank. Right? The stock has had a rough summer of it, despite the fact that you have about $10 million cash in the bank, you have a world-class deposit, you have an off-take agreement with a world-class partner. Can we talk a bit about the potential numbers around this underground-only option at PLS?

Ross McElroy: Sure. And you're right, it has been a rough go lately in the market. I think that's uranium in general, and we can talk about that in a bit, but specifically on this project, when we look at an underground scenario, one of the main things that it does is we'll have significantly reduced capitalized expenditures. What we saw in our first look at it, we're shaving off around $300 million if we choose to go with an underground scenario, and that's because of the berm wall needed to build the open pit itself. I'd say that the key is shaving a lot of CapEx off the top there, and also reducing the time of construction to be able to go into production, so going from four years to three years.

Otherwise, you're dealing with almost the same resource. You're dealing with very, very, very low operating costs. The open pit showed just under $7 US a pound, and the underground scenario is just over $7. I mean there were about $0.50 a pound difference, but both extremely low operating costs. We just think it's worthwhile to advance this underground case, and see if that's maybe the way to developed the project going forward.

Gerardo Del Real: You mentioned it shaves a year off the time it would take for you to get into production, and we know from past uranium bull cycles that a year can be infinity in terms of profitability and margins. Right? When you get that violent upside that we've seen in the past, you definitely want to be in a position to capitalize on that. You touched a bit, or I touched a bit on your world-class off-take partner. How is that relationship and how receptive are they to this underground only option?

Ross McElroy: Well, very good. We have an excellent relationship with CGN, one of the large state-owned utilities in China, one of the two major ones. We've had that relationship since the beginning of 2016. It's very strong. They're very supportive. Everybody knows how important China is to the future of the uranium sector, the nuclear field. That's where all the growth is.

They're a very supportive partner. I think they're supportive of whatever way looks best, if this thing shows itself to be best to be developed as an open pit, they're supportive of it. If it looks like underground, then equally supportive. We all know that this is a world-class asset, and we feel very strong that it will be developed. We're just going through the motions of trying to fine tune and pick the best way to go forward.

Gerardo Del Real: Excellent. With the recent Section 232 decision that pretty much put things off until October. Right? Have you seen more either institutional and or retail interest in the uranium space, and specifically in regards to Fission? I know you've been on the road a bit.

Ross McElroy: Yeah. Well, I think the first reaction when it was hot off the press was viewed negatively, obviously for the US producers because there wasn't a quota put on there. And then alternatively, the other uranium stocks moved upwards, but then I think people looked at it and saw that there's an additional 90 days out there. I think that that's another review, and I guess that that's put a little bit more uncertainty yet again into it. I think we're still going to be at the same place that we were prior to the announcement in July. I think 90 days out from now, that would be mid-October, I still think Canada and these Athabascan projects will still be in a pretty favorable position. But of course they're still uncertainty in the market and. I don't know who's buying right now, weems to be a little gun shy for some of the best institutional investors, and maybe retail.

But I'll tell you what, I am starting to get a lot more phone calls by interested parties. People, they see the inevitability of the improvement in uranium. They think it's going to improve in the short term, and I'd say in the last two or three months anyways, we've seen a great uptick of interest in the sector despite what you might be seeing share price-wise. I do think that we're starting to attract people to come back into the nuclear sector.

Gerardo Del Real: Fantastic. Ross, I know it'll be a busy second half of the year for you. Thank you today for the update, and as always, I'm looking forward to having you back on when you announce details of the next step.

Ross McElroy: Yeah, you bet. A real pleasure to update on what's happening with our project. Just to note, it was in the news release, but we're looking for having this underground-only PFS results by late August, early September. There really isn't any field work to be done. It's just re-engineering to look at the underground crown pillar, that kind of stuff, how you access it. It's just a little bit more detailed engineering in that aspect, so it won't take very long, and it's not really a major undertaking by us, as two months from now we should have our results.

Gerardo Del Real: Good stuff. Looking forward to it, Ross. Thanks again.

Ross McElroy: Very good, Gerardo. Thanks very much.

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