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Fission's Patterson Lake maiden resource wildly outperforms expectations

Last updated: 10:49 12 Jan 2015 EST, First published: 11:49 12 Jan 2015 EST

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Shares of Fission Uranium Corp (TSE:FCU) jumped after analysts upgraded their ratings on the company following the highly anticipated announcement of its maiden resource estimate at the Patterson Lake South (PLS) uranium property in the famous Athabasca Basin.

At the newly named Triple R deposit at the PLS asset, the uranium explorer unveiled an initial resource of 106 million pounds in the indicated and inferred categories, which handily beat market expectations. 

Analysts at Cantor Fitzgerald had been predicting a combined estimate of 76 million pounds, and as a result lifted its recommendation to buy from buy speculative, and assigned a target price of $1.65 per share.

Market expectations for the initial resource at the property ranged from 40 to 80 million pounds, analyst Rob Chang said. 

"The 105M lbs global estimate from a third party firm known for its conservatism is a definite surprise," he wrote in a research report released after market close Friday.

Cantor Fitzgerald's target price for Fission is based on the company's closest peer, but Chang said that from a takeout perspective, Fission would actually be valued at about $2.50 per share based on precedent transactions in Saskatchewan's Athabasca Basin.

"While already the third largest deposit in the basin behind McArthur River and Cigar Lake, Patterson Lake South still has plenty of room to grow as the resource only incorporates two of four known lenses of mineralization.

"Moreover, Fission Uranium has only explored three conductors out of dozens detected on the property," Chang added.

Dundee Capital Markets also said the initial resource further qualifies its recommendation of Fission as its top pick in the category. It has a buy rating on the company, and on the back of the latest news, increased its target price to C$2.40 from C$2.10 previously.

"Triple R is now easily ranked within the top four Athabasca uranium deposits along with the high grade unconformity giants McArthur River, Cigar Lake, Phoenix in our opinion," said Dundee analyst David A. Talbot in a research note released this morning.

"While basement-hosted deposits have gained a reputation of being preferred to unconformity, they are typically smaller and lower grade. As that myth is being dispelled, Triple R can now be considered the prolific Athabasca's 3rd largest deposit and largest undeveloped resource."

Talbot pointed out that the deposit's 58 million pounds of high grade core at 19.7% uranium oxide alone can carry it as one of the highest grade metal deposits of any kind in the world.

Shares of Fission were up almost 14 percent at C$1.15 as of 11:30am ET in Toronto. The stock has risen more than 41 percent in the past 12 months.

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