CGN Mining and Fission Uranium announce agreements

CGN Mining and Fission Uranium Corporation have entered into agreements that will see CGN Mining take a 19.9% share in the Canada-based resource company and purchase up to 35% of annual production from the Patterson Lake South project.

CGN Mining and Fission Uranium Corporation have entered into agreements that will see CGN Mining take a 19.9% share in the Canada-based resource company and purchase up to 35% of annual production from the Patterson Lake South project.

Drilling at Patterson Lake South in winter 2014 (Image: G Lockhart/Fission)

Today's share subscription agreement announcement follows on a binding letter of intent signed by the two companies in December 2015. Under the agreement, CGN Mining will make a CAD 82 million ($58 million) strategic investment in Fission Uranium. The transaction is scheduled to close on or about 29 January.

On completion of the transaction, CGN Mining will become Fission's largest shareholder and will be entitled to nominate up to two directors to Fission's board. The number of directors will increase from seven to nine upon closing of the transaction.

A separate offtake agreement will entitle CGN Mining to purchase of 20% of Fission's annual uranium production with an option for an additional 15%, at a 5% discount from average spot market prices at the time of delivery.

CGN Mining is incorporated in the Cayman Islands and listed on the Hong Kong stock exchange. Its controlling shareholder is China General Nuclear Corporation (CGN) subsidiary China Uranium Development Corporation. The company also holds CGN's 49% equity in the Semizbai uranium joint venture in Kazakhstan.

Fission took full ownership of the Patterson Lake prospects in the western Athabasca Basin following its spin-out from Fission Energy in 2013. The shallow but high grade Triple R deposit at Patterson Lake South, discovered in 2012, contains 30,600 tU of indicated resources at 1.58%, including a high-grade zone with 17,000 tU at 15.4%, and 10,000 tU inferred resources at 1.3% and has been described by Fission as the largest undeveloped uranium deposit in the Athabasca Basin district.

A proposed merger between Fission and Denison Mines that would have consolidated the Patterson Lake South project with Denison's Athabasca Basin interests, including Wheeler River and the McClean Lake uranium mill, failed last year after it was unsuccessful in securing the necessary approval from Fission's shareholders.

Fission intends to use the proceeds from the transaction to develop the Patterson Lake South property. An NI43-101 compliant preliminary economic assessment released by Fission last year envisaged a hybrid open-pit and underground operation producing an average 7.2 million pounds U3O8 (2770 tU) per year over the 14-year life of the mine, with 77.5 million pounds U3O8 (29,810 tU) recovered in the first six years of operation. Average operating costs were estimated at $14.02 per pound U3O8 over the life of mine.

Earlier this month, Fission president Ross McElroy said that CGN Mining's investment would give the company "the financial clout" to advance its project. "Through CGN Mining’s relationship to its mothership, CGN, we are now connected to what is arguably one of the most important utility giants in the world, responsible for delivering power in a region where nuclear power is growing at a rate greater than anywhere else in the world," he said.

Researched and written
by World Nuclear News