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Unconformity May Hold Key for Fission Energy

When assessing resource estimates and assay results for any mineral deposits, one naturally looks to the size of the deposit and the grade of mineralization it holds. As well as the obvious and immediate levels the data can inform you of, a little further investigation can sometimes show you even greater potential for a deposit, and therefore the company that holds it.

A look at the latest Fission Energy Corp (TSX: FIS) results from its flagship Waterbury Lake property is one such example, where the data itself is strong and encouraging to investors, but in addition, a little scientific understanding of the results shows the potential for a much larger deposit discovery.

For some background, Fission Energy Corp is a Canadian based uranium exploration and development company, with properties in Saskatchewan's Athabasca Basin, Quebec, and the Macusani District in Peru. Fission's most valuable exploration asset is the Waterbury Lake Property, located in the Athabasca Basin, Canada; a 40,256 hectare property which virtually surrounds the AREVA/Denison Midwest Uranium Deposit and the Midwest ‘A’ discovery within the central part of Saskatchewan's Athabasca Basin.

In January 2008, a consortium led by Korea Electric Power Corporation (KEPCO) (NYSE:KEP), entered into an agreement for the joint development of the property, with the consortium able to earn up to a 50% interest in the project by incurring exploration expenditures totalling C$14 million over 3 years. Fission retains an exclusive and irrevocable back in option to reacquire a 10% interest in the property for C$6 million, and also holds a 2% net smelter return (NSR) royalty.

A series of assay results coming from the Waterbury Lake property during the past few months have been very encouraging. Not only have significant deposits and grades of uranium been confirmed, but the layer and location, in which the mineralization was discovered, is itself a buoyant sign of what may be to come.

Specifically, mineralization has continued to be intersected in what is known as the ‘unconformity’; a layer of earth found below the Athabasca sandstone. As oxidising fluids from the sandstone and reducing fluids travelling up through reactivated basement faults below unconformity meet, they mix and make a perfect environment for uranium to form. It is the unconformity that provides the optimal location for this solution, effectively acting as a trap to contain the mineralization.

Unconformity uranium deposits are notoriously difficult to find, but once these high grade deposits are discovered however, they can often grow quickly and have a higher chance of being laterally continuous. Unconformity mineralization in the Athabasca currently hosts the largest high grade uranium deposits in the world, including McArthur River and Cigar Lake.

So, what do the latest results from Fission have to show us?

Results from five previously completed vertical oriented step-out drill holes, released in April, were the first to show signs of strong mineralization at the unconformity at the ‘J-Zone’ deposit at Waterbury Lake. Four of the five holes encountered mineralization at the unconformity, and Fission made particular note of hole WAT10-073, which intersected 18 meters grading 1.32% uranium oxide, between 197 and 215 meters, including two intercepts of 2m at grade 3.35% and 3.23% uranium, and one intercept grading 2.49% over 1.50m. Fission also highlighted hole WAT10-077, which intersected 8.5m grading 1.92% uranium oxide, including 4m grading 3.56%.

In May, Fission released assay results of three previously completed vertical oriented step out drill holes at the J-Zone area, where it had extended exploration to the west along strike. All three holes encountered mineralization at the unconformity, and the company noted hole WAT10-083B intersected 7.5m grading 3.83% uranium oxide, including 6m at 4.74% and 0.5m at 10.70. In addition, hole WAT10-079 intersected 7.50m grading 1.89% and hole WAT10-081 intersected 6.5m grading 2.16%. Most significantly however, these results confirmed the continuity of high grade uranium mineralization over exceptional widths, trending laterally to the west of discovery hole WAT10-063A.

This month the most recent updates have been released, with assay results from the remaining six holes at the J-Zone deposit. Fission highlighted vertical drill hole WAT10-091, which extended mineralization approximately 10m to the south of hole WAT10-071. This intersected 3.50m, between 200 and 203.5 meters depth, grading 21.58% uranium oxide at the unconformity. This included 2.50m grading 30.15% uranium oxide, while hole WAT10-087 intersected 6.50m between 193.5 and 200 meters, grading 2.77%, including 1m at 15.61%. These latest assay results were consistent with previously announced results, and further demonstrated that mineralization is trending to the west, while at the same time remaining open to both the north and the south. All holes were terminated within unaltered basement rocks, and given that Fission believes the mineralization thus far encountered in the J-Zone appears to be almost flat-lying, drill intercepts reported from vertical holes can be deemed approximately true thickness.

Following on from this collection of results, Fission has successfully defined the J-Zone over a 90m X 50m area, by intersecting high grade uranium mineralization at the unconformity with 21 closely spaced drill holes, most of which were vertically drilled. With the further discoveries at the J-Zone East and Highland Zones, Fission believes that the potential for multiple mineral occurrences exists along the East-West Corridor, which they suggest continues at least a further two kilometres to the west of the J-Zone.

Going forward, the Joint Venture have finalized terms for a summer exploration program beginning in July, which will build on the success achieved from their initial explorations. This will include a 4,000m drill program comprising 13 holes, to extend the J-Zone west. It will also include additional drill testing in proximity to hole WAT-094A, which Fission believes demonstrates a strong potential for extending high grade mineralization. In addition to this, the summer program will include a marine seismic survey over the east-west corridor, and will involve mapping and prospecting unexplored parts of the Waterbury Lake Property that exhibit high mineral potential.

This leaves us with the potential for ongoing positive results coming from Fission over the second half of 2010.
While it is still early days for Fission Energy, strong results from the J-Zone deposit may indeed just be the tip of the iceberg.