Interview with Ross McElroy, Uranium COO and Chief Geologist of Fission 3.0 (TSX-V: FUU). Another small Uranium explorer speaks to us and tells us how they think they can make it. Fission 3.0 are in the Athabasca basin and believe they have picked up some quality assets.
We interrogate them about how long it has taken to get to where they are today and why they think that investors should think about investing on this Uranium exploration play.
- Overview of the Company & Birth of Fission 3.0
- Relevant team experience with Uranium exploration.
- What’s been done in the 5 years the Company’s been running?
- M&A and their financing options.
- Their strategy for growth and their model to make it attractive to shareholder.
- Targeting projects: uranium winners vs picking up scraps in the Athabasca basin.
Click here to watch the video.
Matthew Gordon: So, tell us about Fission 3.0.
Ross McElroy: You know, really it was all about still wanting to be able to be an explorer. Fission Uranium, the big company, is really all about developing the PLS project, RRR deposit. That’s a project that the legs and the ability to go through to, ultimately, a production story, quite different than the exploration arm. Really that’s why Fission 3.0 was set up several years ago, and was spun out of Fission Uranium Corp. Just to be simple about it, what we did is we’ve acquired a lot of grassroots projects, primarily in the Athabasca Basin. Our goal in Fission 3.0 is really to go out and make a new discovery, similar to what we’ve already done several times.
Matthew Gordon: So, let’s say this is a new story to everyone here. Tell us a bit about you. What’s your background? What’s your skill set relative to this exploration play?
Ross McElroy: I’m a geologist. I started working in the industry back in the mid-1980s. Interesting enough and relevant for this story. My first job was with what’s now Cameco. So, I worked with a uranium major. That was my first real job out of school. I’ve spent the good part of my early career in the Athabasca Basin hunting for uranium, looking for those high-grade deposits with Cameco. I ended up working with the French conglomerate as well, currently called Orano, and they were really in the same space and looking for deposits in the Athabasca Basin. So, that’s really where I got started. I spent about 14 years with BHP, mostly in gold exploration – gold and diamonds. So, I’ve been a mining geologist with them. So, I guess you could say my career has really spanned everything from grassroots exploration, through to mining and multiple commodities. But really, uranium is my main focus.
Matthew Gordon: Tell us a little bit about Paul Charlish, what does he do?
Ross McElroy: Paul Charlish is our CFO. He’s been the CFO with Fission Uranium Corp and has the same role with Fission 3.0.
Matthew Gordon: Dev’s the market guy. You’re the technical guy and you’re driving the business, but you’ve been doing this for five years. So what’s happened in five years?
Ross McElroy: What we’ve done and probably I guess the whole history of the company, really, since I got involved working with Dev back in 2007. We’ve been acquiring our own ground. So, we’re kind of set up to do our own staking. Do our own investigating of where we want to be. Staking ground organically. So, we haven’t done any acquisition deals. We like to pick up the ground early because that’s the least expensive, but you have to have the expertise to do it. We’ve got a team that been acquiring good ground that way and we’ve been successful. And ultimately, if we are successful, we’ve been able, at least in the past, we’ve sold projects. We’ve been a project generator. We’ve been able to get other people to invest in our products. And really, that’s been the model that we that we do.
Matthew Gordon: I’m looking through the presentation. There’s a lot going on in there, there’s a lot of ground. What’s the strategy? You’re looking at a lot of optioning or building out a lot of options here. At some point, you’ve got to make decisions because you need to finance this.
Ross McElroy: It is, very much so. You know, first of all, we start with the Athabasca Basin. That’s the premium uranium district in the world. Certainly, the home of the highest-grade deposits. It’s where I spend a good deal of my career looking for deposits. I’ve been very successful at it. What we’ve been able to do is build a team of experts, geochemists, geophysicists, structural geologists looking for these deposits because although the rewards are tremendous, when you find a high-grade uranium deposit probably more valuable than any other commodity. They’re hard to find as well. So, you have to apply the sciences of geochemistry, geophysics. So that’s really what our team is built around. And that’s how we go about starting to explore and make these discoveries.
Matthew Gordon: Not all uranium plays are born equal. Even in the Athabasca Basin. So, what is the process that you’re going through to identify the targets which you’re going to focus on? We’ve spoken to a lot of juniors in the Athabasca Basin and they’re saying because we’re here, it’s a home run, no problem.
Ross McElroy: And that’s not true. I mean, it’s a home run if you make that discovery. But the failure rate has been pretty high among juniors. Even with the majors. If you make a significant discovery in the Athabasca Basin, about 1 in every 5-10 years. That’s sort of when you look at it as a whole. I’ve been fortunate enough when I first started, I was working with Cameco. We made the discovery of McArthur River, which is the world’s largest high-grade uranium deposit. So, that was a pretty good experience. You learn the things that you’re looking for. Because these are deposits that occur below the surface, with no surface exposure. So, you’re really trying to use the science of vectoring in with geochemistry and geophysics. And so, it does take a pretty multidiscipline team in order to be successful at it. And I think that, having spent time with the majors, learning how they do it, I think that’s boded very well for us and that’s why we’ve been successful at what we do. So, there’s nothing easy about it. There’s nothing fast about it. But if you learn how to select the right ground, you’d know the techniques to go through discovery. You sort of know when you’re in the right area. That’s what’s important.
Matthew Gordon: So how many projects have you got at the moment?
Ross McElroy: Fission 3.0 has 16 projects.
Matthew Gordon: That’s a lot of projects. So, you’ve got to know what you’re looking for or else you’re going to spend a lot of money. So, how quickly do you get to the point we can decide and 16 goes down to 10, goes down to 8 etc. How do you play that? How does it actually work?
Ross McElroy: That’s always it’s a bit of an iterative process. You have a land tenure, sort of always in a state of flux. We picked up new ground. We shed other ones. That’s part of the overall strategy. Because you’re right, otherwise you’ll be spending money where you don’t need to. And I think what we try to do is, first of all, we have a pretty good idea where the key areas are. And one of the strategies that we’ve used successfully with other companies in the past, Fission Uranium being a good example, Fission Energy, the predecessor of that, is we pick ground that’s very shallow, where we expect to make a discovery within about 3 or 4 hundred metres of the surface. In the high-grade uranium business, that’s shallow. It decreases your cost., it makes exploration actually somewhat easier and less expensive. And it’s just that the whole process is really about evaluating. Ultimately, you want to get to a drill target, so you do your geophysics, you do some chemistry studies, understand soils etc. If you get to the point where you do a drill target, then you’re really looking for the subtle clues. You’re trying to read the tea leaves that allow you to vector, vector, vector, vector, vector. What we’re always looking for at the beginning is “smoke”. All these high-grade uranium deposits have an aura around them of what we call “smoke”. And we’re really looking for the fire, which is the prize, right in the middle of that is the high-grade uranium. The dimensions of it are probably not big, they never are. Even the biggest, best mines have relatively small deposits, a lot of uranium packed into that. So, you’re really trying to get yourself focused, focused, focused and make that hit.
Matthew Gordon: Obviously, market cap at $14M. It’s not huge. You’ve been going at this for 5 years. How long have you been going at it properly in terms of this, Fission 3.0, proper?
Ross McElroy: Well, we spun Fission 3.0 out of Fission Uranium back in 2014. But at that time really the market in uranium had been very slow. So, one of the things that we did during that period from 2014-2017 is we’ve been quietly getting ground, staking ground, picking areas where nobody’s looking. And a lot of companies have not been all that active, because the uranium market’s been slow. So, it’s given us an opportunity to pick the best the best places. So, we’re picking the best fruit off the tree in the slow times. And then towards the end of 2018 we were starting to raise money into the company that allowed us to get those dollars into exploration, money into the ground. And so very quiet, lean time for the first few years. Now we’re starting to get to work.
Matthew Gordon: People will say “they’ve been going 5 years and they’ve not done anything” but the reality is, it’s only been just over a year. When you raised money, the share price was around $0.30, people got excited. It’s around $0.09-$0.10 cents today. I’m sure you’ll say “undervalued”. But I’m more interested in the stage that you’re at and it really is about these projects and understanding what’s there and vectoring in on which ones are more important to you than others before you the move the company forward to the next stage.
Ross McElroy: Yeah, that’s right. My kind of group are projects, although we’re in the Athabasca Basin, where all of the products are fairly shallow and kind of go around the edge of the Basin, where you would expect the shallowest deposits to be as you move toward the middle of the basin, deposits could be there, but they tend to be pretty deep. So, our ground is around there, but we are focused in areas where you would have historic mining district in the Key Lakes side in the southeast part of the basin, there’s been a lot of discoveries and activities for the last 40 years there. We have property in and around there, using new models to look for uranium that people haven’t really used before. But in a historic area of known uranium. We also have a really good land package up in the Beaver Lodge, Uranium City district in the North West corner of the Basin. And that’s where uranium mining first gets started in the province of Saskatchewan. Everybody forgot about it. That was in the 1950s-60s. And we went chasing stuff around Key Lake and forgot about those areas. So, they’re really under explored by modern exploration techniques. The third area that we focus on is around in the South West part, around our PLS project. This is where the newest, best discoveries in the Basin have been in the last 10 years. In Fission uranium we’ve made the RRR discovery. NexGen made the Arrow discovery. These are big high-grade deposits in a brand-new area. And so, our land package sort of focuses mostly in those key areas.
Matthew Gordon: I’m trying to work out was the timing from where you are today to that point where you’re just creating DFS, BFS? What’s that timeframe? So, do I come in now, get in early? Do I wait? Do something else and come back to you later? What do I do?
Ross McElroy: Well, let me give you some perspective. With Fission Uranium in the PLS project, for example, that was a grassroots play, very similar to the sort of projects we have in Fission 3.0. In 2010, we did our first airborne survey of radium metrics and we found radioactive anomalies. In 2011 we made the discovery to figure out what those were, that was a high-grade boulder. In 2012 we were drilling along the trend and made the discovery. So, it was really a 2-3 year period of starting to look at that project to making that discovery that was an absolute game changer. I think that’s the kind of model that we’re looking at. When we start looking at these projects, to me it’s probably about at least a 2-4 year window for when you start getting something really interesting that you might tag into. It generally never happens in your first pass on a project. I’ve never seen anyone stake ground and make a discovery the first year just started. It doesn’t happen that way.
Matthew Gordon: And you’ve also got something in Peru?
Ross McElroy: We do. It dates back to the predecessor of all of them, Strathmore minerals. That was the first project in the Strathmore in the 1990s. Now, Strathmore was various versions of Fission out of that. That was a first project put into the company back then, the government released ground. Prior to that, you couldn’t stake for uranium as a public company. So, it was government’s held strategic mineral titles. So, they opened it up and we acquired some ground down in that area. There has been an interesting history down in Peru. We’ve focused more on the Athabasca, in our life. But others have made some great advancements down in Peru and the Machu Stanley Plateau Energy
Matthew Gordon: Are you parking that for now?
Ross McElroy: No and the reason we don’t park is it because we’re also a project generator. We’ve been able to attract an investment group that’s interested in advancing properties down there. So, we’re looking for uranium and lithium in a partnership with a private company right there. So that really follows our preferred model of a business that we do in Fission 3.0, which is we acquire the ground, bringing in others to spend money and jointly together we explore and make discoveries.
Matthew Gordon: There will be other starters there. It happened that last cycle. It’s going to happen again. There’ll be more people coming to the party. Do you think that you’ve hit this at the right time? Do you think that people coming in are going to be left with scraps? If you’ve spent five years looking at stuff, surely you and others will have picked up the good stuff. What does it mean for all of these new entrants coming in?
Ross McElroy: Well, you’re absolutely right. We saw that in the last bull run, that started in 2003 & 2004. I remember seeing the entire Athabasca Basin stake dust. Prior to that, the whole eastern side of the Basin was state that had been sold for 30 years and that was mostly Cameco’s holding. You’re right, there wasn’t a whole lot of ground available, but even the big guys dropped ground. The ground that we picked up in the old Fission Energy was a throw away from Cameco called Waterbury Lake. And it’s just part of the process. They hadn’t made a discovery there, they shaved off some ground. You could look at it as scrap. We picked up a significant package in there, made a discovery, right beside where a company called Hathor Uranium had made their discovery. That was part of the same thing. So that deposit crossed the boundary. So, you can still look at these same areas, 40 and 50 year out, exploration and still make a significant discovery. So that does happen. I think the key to everything is not thinking whether you got the scraps or not, but it’s whether you have a technical team capable to look at something in a new way and make a new discovery and have the guts and the capital to be able to go out and explore. I’ve seen that too often. Now, PLS is another example where we just used a brand-new idea, thinking outside the box, doing something that majors hadn’t even done, nobody had really done, which was look for uranium in a new area outside of the Basin and we were successful. So, you know, you can win both ways.
Matthew Gordon: Sounds like you’ve got a great team there. You’re in the right part of the world so it’ll be interesting to see how these projects develop. You’ve got to stay in touch with us and let us know.
Ross McElroy: We’d love to. Where we think that this is just the start of a new uranium market. And now that we do have an established land package, we’re not new to the game. I think that really gives us a leg up on what everybody else is doing. We’ve got the team, we’ve got the land. We know what to do. We know you start bringing people back into the uranium market and it will become a bull market again, once the price of the commodity continues to work its way upwards. I’m not going to get into the supply demand story, but once the price of the commodity moves up and there is every reason to believe it. Well, that does create excitement for exploration companies in the uranium sector. We’re so well positioned to take advantage of that.
Matthew Gordon: We look forward to hearing all about it over the next few months. Appreciate your time, Ross. We’ll speak to you again real soon. Thanks again.
Ross McElroy: Thank you very much. A pleasure.
Company page: https://www.fission3corp.com/
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