It’s a tumultuous time to be in the uranium space, but at this year’s Prospectors & Developers Association of Canada (PDAC) conference in Toronto, one couldn’t help but feel a sense optimism in the sector.
Speaking to the Investing News Network (INN) at the show, Dev Randhawa, CEO of Fission Uranium (TSX:FCU), said there has been a positive change in the sector already, and commented on what his company has been up to lately.
Other highlights of the conversation include:
- Randhawa’s thoughts on how a Trump presidency will impact the uranium sector
- his expectations for the uranium market moving forward
- more of Fission Uranium’s plans
Below is a transcript of the interview. It has been edited for clarity and brevity. To listen to the interview, please scroll to the top of the article.
INN: In February, Fission Uranium expanded its winter drill program by 29 new drill holes to a total of 63 holes. How has the drill program been impacted since the announcement?
DR: We really felt a move the needle. There’s only two things that I believe can for us — this is based on feedback from our shareholders and our board — to find new areas away from where we’ve already found uranium. Secondly, the spot price. I don’t control the spot price, but I think to take more shots on exploration ideas, we’re trying to treat the property — at least parts of it — like an exploration project. Where can we look for a new blob of uranium if we didn’t have this particular wonderful big section of land. The footprint is pretty big now. It’s bigger than anything in the basin, but we haven’t connected yet. Our hope is to find more areas and really grow this because it’s a big, big property. We’ve only touched a small part of it.
INN: Following that release, the company announced results from 10 holes at the Paterson Lake South property. They will potentially be included in a resource estimate this year. Are there any more details that can be shared regarding the estimate?
DR: Not really, because anything that’s material has to be told to everybody, not to an interview. Number one, compliance, number two, really the way you find uranium, it’s vectoring in on something, and the first thing you look for is a conductor, then you look for alteration, then your drill hole starts and you’re looking for chemistry. With the right chemistry you know you’re in the right area. We ticked off all those boxes and now we’ve got something pretty decent grade, but now we need to find the blob of uranium that’s a source of it.
INN: US President Donald Trump has made some questionable comments about uranium, saying, “lots of things are done with uranium, including some bad things, but nobody talks about that.” How do you think a Trump presidency will impact the sector?
DR: You have to have a logistical software to keep track of everything Trump says about everything, and he changes his mind the next day. Like the travel ban gets changed dramatically from the one he started. Overall I think it’s really, really good for uranium because he seems far more interested in making sure America has lots of cheap energy, which is how you get a competitive edge. That’s one of the reasons I don’t think Japan does as well. They’ve shut down the nuclear reactors and they’re using gas plants. Their CO2 emissions have gone through the roof, and their cost of business goes up. Manufacturers need to keep their costs low.
I think what Trump is … for business. I don’t personally like the way he does a lot of things, but he at least understands how to create jobs. He knows that to do that you’ve got to create lower taxes. Generally I’m in view of what he’s doing, and I don’t count on anyone to do anything positive at all, because to me the real story in uranium is China and India … those places. For every one that might shut down, they’re going to finish five this year in China, they’ve got eight more being built, eight more starting. So you’re talking about 21, and people will catch all the news about one in Japan. So I think too often the media is at fault at this for focusing on one or two of the negative stuff that is said. But good news doesn’t sell, so I don’t blame them.
INN: That said, many are hopeful about a turnaround in the uranium market. What are your expectations for the sector moving forward?
DR: I think we have seen a turnaround. We’re down to $17, now we’ve jumped up. Again, there are two things in terms of supply and demand. Well, one: demand keeps going up. More and more reactors. In fact, in the next 10 years, there’s 800 million pounds that need contracts and there’s no contracts for them. So overall, no doubt. The question is, what happens in the next three years? When will utilities start to contract? Unfortunately, they act like lemmings so we don’t know. Uranium went from $7 to $140, and if you can believe this, utilities waited until it was $100. Everyone with common sense said, “oh, maybe we should buy it at $20, $30, $40, $50, $60” — nope. They waited until it went to $100. They act like lemmings, which is sad. It causes huge fluctuations. But I think demand is there, it’s supply. Having this week, and the last two weeks, we’ve seen Cameco (TSX:CCO,NYSE:CCJ) say, “we’re going to revisit our numbers, maybe we could drop production even more.” Secondly, the big one is the Kazakhs. Cameco’s cutbacks impact the long-term price more than the short term. Because the Kazakhs dump all the uranium at the spot price, their announcement means more.
And really, at $17, $25 they have no money left to say, “okay, we take the money up, but they’ve got to reinvest it.” In solution mining — ISL — you have to continue like oil wells. You’ve got to continue to add wells, otherwise you have a decline in production. So they’re not doing any new drilling at all. We really need them to cut back. If they were to cut back 20 percent, it would get rid of all the overhang on the spot price. All of it would be gone … the average cost of a mine is $60, and you cannot have your long-term price at $30. I’ll plagiarize Cameco: they say today’s prices are unsustainable and irrational. And that’s where they are today. Investors want to make money, you buy stuff, quality companies that are cashed up with good management track records, and own them and hold them. When it turns, you’ve seen what happens. You saw Denison Mines (TSX:DML,NYSEMKT:DNN) go from $0.49 to $1.10. It was double in a month. The easy money is gone. Now people are having to grind for nickels again, so I’m hopeful for it.
INN: On that note, are there any other plans Fission has this year that investors should know about?
DR: Well for us, definitely. We’re always looking to look at doing deals. It would make sense for shareholders, but at the same time we know our main asset. We own 100 percent of it. We have a great, great partner in CGN. They’re the mothership in the uranium industry. People look to them for leadership and developing nuclear plants and uranium projects. They’re the ones that are really more entrepreneurs out of China. I think we might do more things with them, who knows.
But right now, we’re pretty happy to have a project that is very high grade in Saskatchewan, but starts at 50 meters. That’s the thing that people forget: you can’t compare apples to oranges. To compare a project that’s mineable at 50 meters versus 500, it’s night and day. So … other projects that are deeper and even higher grade, but nothing is shallow. If you go back to the history of the basin, anything that was shallow like Key Lake, Cluff Lake, boom, they’re gone. It’s not a fluke; it’s because they’re easy to mine, and also when you do open pit less risk in mining — and more importantly, you get every pound. When you’re going underground, you don’t know what you’re always going to get. So you get every pound when you’re open-pit mining, you don’t get that when you’re underground.
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Securities Disclosure: I, Jocelyn Aspa, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in contributed article. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.