PDAC-Fission mulls spin off for Quebec, Peru projects

Tue Mar 8, 2011 7:32am EST

* In talks with bankers on spin-off, to decide in 2011

* Looking for C$40 million IPO for Macusani, Dieter Lake

* Sees official resource estimate for Waterbury this year

* Shares quadrupled in 2010, up 56 pct in 2011

By Julie Gordon

TORONTO, March 8 (Reuters) - Fission Energy FIS.V may spin off its Peruvian and Quebec exploration projects into a new company as it focuses on advancing the Waterbury Lake project in the uranium-rich Athabasca Basin, said the company's top executive.

"Most people don't realize that we have Macusani or Dieter Lake," said Fission Chief Executive Dev Randhawa, referring to projects to be spun off. "If I could put those into a new company, and get C$40 million worth of stock ... I can put that back to my shareholders."

The uranium explorer is talking with bankers on the valuation of the new company and a decision will be made this year, Randhawa told Reuters on the sidelines of the annual PDAC prospectors and developers conference.

Shares of Fission, spun off from Strathmore Minerals STM.V in 2007, more than quadrupled last year. The stock closed at C$1.28 on Monday on the TSX Venture Exchange. <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ TSX Venture top mining explorers: r.reuters.com/nuf48r For more stories on PDAC convention: [ID:nN02153893] ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>

The company holds a 50 percent stake in the Waterbury Lake project, located close to the Midwest project owned by Areva CEPFi.PA and Denison Mines (DML.TO).

Fission, along with joint venture partner Korea Electric Power Corp (KEPCO) (015760.KS), will spend about C$10 million on exploration at Waterbury in 2011.

With the additional drilling already underway at Waterbury, Fission plans to release an official resource estimate later this year.

"We want to keep drilling as long as we can," said Randhawa. "What will help our shareholders is more drilling to find more pearls, high uranium price, and finally a takeover bid."

SPIN OFF

The risk of a larger company swooping in to poach Waterbury Lake is part of reason why Fission is eager to spin off its other exploration assets into a separate company.

"If somebody comes along and offers to buy us out at Waterbury, we'd sell Waterbury - but just Waterbury," Randhawa said.

"Because we have so many properties, we took what we figured was our best one, to develop it," he added. "Now we can start in on the rest of our projects."

At the top of the development list is Dieter Lake, located in northcentral Quebec. The project has an official resource estimate of 24.4 million pounds, but historical data suggests there is up to 100 million pounds, said Randhawa.

Fission will also start development on its Macusani project, located in a growing uranium district in southern Peru.

With spot uranium near $70 a pound and expected to rise on growing demand and shrinking supplies, Fission is also eyeing new growth opportunities.

"We're looking at acquisitions ourselves, because we've got a lot of cash," Randhawa said. "There's some stuff in Australia we like -- exploration mines."

While some juniors are looking to take their projects to production, he sees more value in developing deposits and selling them to established producers.

"We're going to stay in exploration," Randhawa said. "We're treasure hunters. We're not miners."

(Reporting by Julie Gordon; Edited by Frank McGurty)

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