Fission Uranium (TSX: FCU) President Ross McElroy on Uranium: “Certainly the Sector to Have Your Eyes On Right Now”

March 15, 2019

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

Ross McElroy: Doing well, Gerardo. Thank you very much. Great talking to you today.

Gerardo Del Real: I appreciate you taking the time. Fission had some news a couple of days ago. You hit some good mineralization outside of the high-grade domain model, and obviously you're advancing the mine plan there. Can we talk about the highlights and then get an update on the progress?

Ross McElroy: You bet, yeah. We're in the middle of our winter program up at PLS right now. Part of that program, there were three holes that we're drilling for geotechnical rock mechanic purposes. We also wanted to extend all three of those holes into the 780 zone. When we did extend the holes to be able to intersect the 780 in an area where we suspected there should be high-grade mineralization, but it wasn't part of our high-grade domain that's been modeled in the resource so far. Any hit that we had there would be a benefit to the overall resource, and we were successful.

All three of those holes drilled pretty much in the middle part of the R780 zone, which is the big key main zone in the deposit. All three of them hit at nice mineralization that does extend beyond what we'd modeled as that high-grade domain. And we expect that the assays should return with high-grade mineralization. We saw scintillometer results with the downhole probe up to 70,000 and 80,000. With the hand-held machine we can see readings up to 61,000. So this is basically in the high-grade territory. So very happy with those holes, what the results of them were.

And of course, meaningfully, they were collecting data too, geotechnical data, which is important for the mine planning, in both open pit and unground parts of the deposits. So I think it was a success all the way around, and things just keep moving along in a positive manner up at PLS.

Gerardo Del Real: The last time we spoke you were moving towards feasibility. You had a new 28-hole winter program. How are things coming along with the pre-feasibility, which again, we're hoping late Q1, early Q2 is my understanding. Correct?

Ross McElroy: Yes, that's correct. That's what we're targeting. We're already at the latter part of Q1, so it will be possibly at the end of Q1, early Q2. I think we're moving along very well in that category. All the work that was done prior, including the field work up to 2018, that's all the input for the PFS. So it's really putting together the long-term geotechnical modeling and those sort of things. That's the final component of the PFS study.

The work that we're doing right now up at the project area is actually feasibility-level work, so it's really designed for the next tier of economic work. So it assumes that the PFS is already done, and so it's moving forward with this information that we're gathering towards the feasibility. So there's really no delays in any of the timelines that we're looking at, even though the PFS is taking a little longer than we initially had guidance that it would take. It really doesn't slow anything down because we're already working towards the next level anyways.

Gerardo Del Real: Excellent. You know the uranium space. It's one step forward, it seems like two steps back. 2019 I think is going to be an exception. I actually think we're going to get two steps forward and one step back here in the second half of this year. You're positioned well for it. What does the cash position look like here moving forward?

Ross McElroy: Well, we've got a little over $19 million in the treasury. So that certainly takes us through the winter program, the summer program. I basically think we can get through 2019 with the cash that we have and still be able to have a nice aggressive winter and summer program there. We have to start looking at opportunities in the not-too-distant future. But for right now we're in good shape, and I really take your point. I think you're right.

The uranium market’s really starting to change. I think 2018 was a big year, you know? We saw the price of uranium significantly off its bottom. We were up trading around $28, $29/lb. on the spot. We're close to that right now. It's dipped a little bit, but it's still looking like a much improved sector, and I think once we get some clarity in the Section 232 issue in the US, those are the sort of things once they're cleared up I think it'll be a much better pathway forward. So I think you're right. Uranium is certainly the sector to have your eyes on right now.

Gerardo Del Real: The utilities coming back to the market is obviously the big, big catalyst. That's really going to send prices higher. It has to go higher, obviously. What are you hearing and seeing behind the scenes, Ross? Are you hearing whispers of that Section 232 decision providing some clarity and a way forward?

Ross McElroy: Well, I think it will. I mean it's certainly a US story. But as we're all aware, no matter what the outcome is, I think it'll have positive benefits for Canada because the US no matter what cannot supply the nuclear fuel that is required to run its reactors. If everybody was up at full capacity of production, you'd still be far short of what's required to run the reactors. So there's always going to be a need for other uranium sources nearby and friendly sources. I think that's probably where Canada fits in.

My understanding is that we're going to see some clarity on that Section 232 by April, so next month they're supposed to come back with what the recommendations are, and then the President would have another 90 days I believe is after that in order to pass whatever the recommendations are. So that's probably where some of the uncertainty in the market is right now. Utilities are a little bit like deer in the headlights. They're not sure how to contract at the moment, who and what those rules are going to be. So I think once we do get clarity, I think it'll be a much more clear path forward, we'll say, and that should only improve the sector.

Gerardo Del Real: Excellent. Ross, thank you for taking time today. I'd love to have you back on, obviously, when we get the PFS results. I assume it's going to be a busy couple of quarters of news for Fission.

Ross McElroy: Yes, certainly. I would be happy to come back on and be able to share the details that we have at that time. So thank you very much.

Gerardo Del Real: Thanks again, Ross.

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