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11/17/2015 by mdc
J.T. Long opines that investors have spoken, and they said they do not want a merger of Fission Uranium and Denison Mines. In this interview with The Energy Report, Marin Katusa, founder of Katusa Research, shares his insight on why Fission investors rejected the deal and where he is finding value in the uranium industry today.

Ross McElroy and his team have done a great job growing the Patterson Lake South (PLS) resource, which is turning out to be a world-class deposit. It is clear the majority of the Fission shareholders wanted the company to stay focused on its PLS project and did not believe the benefits of diversification, including access to a mill, the Lundin group and Wheeler River, outweighed the potential of the PLS deposit.

McElroy had a great run early on with Fission. They tripled their money, and they sold, albeit a bit too early, but a profit is a profit. He thinks both Fission and Denison are still interesting opportunities, because both are much cheaper than they were before the deal was offered. I own neither currently.

It is difficult for an exploration company to take something like PLS to production ... it rarely works. A completely different skill set is required. PLS will have a permitting hurdle, not to mention there is no mill that could take their feed currently, so the company would have to build one, and that could cost as much as $1 billion ($1B).

Fission could become an acquirer of other projects on the east or west side of the basin, or it too could become a takeout target by a larger company, or perhaps even become a target of a hostile take out by someone like NexGen Energy Ltd. That would be a very interesting result to the Fission saga. In a bear market, anything is possible. Perhaps the board changes at Fission, and the new board sees the benefits of merging with NexGen and a merger happens on friendly terms with NexGen.

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Open Resource  |  2015/11/17  |  276 Report Broken   Tell Friend

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