BC Business
The Kelowna-based junior miner is poised to play catch-up with larger rivals
The stock: While investors have been taking cover from the fallout of higher-for-longer interest rates, prices for uranium have quietly shot up to their highest level since the Fukushima nuclear disaster more than 12 years ago. That’s produced big gains for producers like Cameco Corp. (TSX:CCO) and exploration companies with advanced projects such as NexGen Energy (TSX:NXE). But if you see a bigger, brighter future for nuclear energy and want to hop on this elevator closer to the ground floor, Kelowna-based Fission Uranium Corp. (TSX:FCU) may be worth a look.
The drivers: Like it or not, nuclear energy is playing a big role in the effort to wean the global economy off fossil fuels. Unlike the other leading low-carbon alternatives, wind and solar, it can generate electricity on demand and provide uninterrupted base load power. The International Energy Agency estimates the nuclear power generation will have to double for the world to meet current climate targets. But the underinvestment in uranium mining capacity since Fukushima has raised doubts that supply will meet demand in the coming years.
Fission Uranium is developing a project called Triple R in the Athabasca Basin of northwestern Saskatchewan, just three kilometres from NexGen’s highly touted Rook I mine. While Triple R is about a year behind Rook I in permitting and engineering, the deposit lies close to the surface, raising hopes it can be brought into production on a similar timeline. Currently, the production start is pegged for 2029.
Fission Uranium projects the mine can be profitable at an average price of just US$50 a pound; uranium’s price today is north of US$70. Changing hands for 93 cents as of the close of trading on Hallowe’en, FCU stock is up 66 percent from its recent low in July and 12 percent year to date.
Word on the street: “We see Fission as undervalued and ripe for a catch-up move to close the gap to its Basin peers,” Haywood Capital Markets analysts Colin Healey and Emma Boggio wrote in a report initiating coverage of the company, with a “buy” rating and $1.55 target price.
Coming and going: The shares of Vancouver-based First Quantum Minerals (TSX:FM) lost a whopping 43 percent of their value over the last two trading sessions in October after Panamanian President Laurentino Cortizo announced that the 20-year tax and royalty agreement governing the company’s Cobre Panama mine, concluded last spring, would be put to a nationwide referendum. Cobre Panama accounts for about half First Quantum’s output of copper.