Mineral exploration company Fission Uranium is studying the merits of an underground-only approach at its flagship Patterson Lake South (PLS) project, in Saskatchewan, the Kelowna, British Columbia-based firm announced on Tuesday.

Potential benefits of an underground-only approach include low operating costs, further improved economics, lower capital expenditure (capex) and a reduced construction time.

The new prefeasibility study (PFS), which should be completed by September, comes only months after Fission unveiled the results of a PFS based on an openpit/underground hybrid operation mining the Triple R deposit on the PLS property. That scenario determined that initial capex of $1.49-billion will be required for a mine producing about 15-million pounds a year of U₃O₈ over the first five years from mineral reserves of 90.5-million pounds.

The construction period is four years and the mine will have an operational life of 8.2 years.

The hybrid option has an internal rate of return (IRR) of 29%, a net present value (NPV), at an 8% discount, of C$1.32-billion, and a two-year pay-back period.

"With the only large-scale, near-surface, high-grade deposit in the Athabasca basin, PLS has the rare advantage of flexibility when it comes to conventional mining methods. There is the obvious potential to mine it via a combination of openpit and underground, and the considerable benefits of that approach have been clearly outlined in our recent PFS. However, as outlined in the PFS report, it may also be possible to develop a low operating cost, underground-only mine - an approach which has its own strong advantages. By completing an underground PFS, we can evaluate the two approaches on equal terms and select the optimal path of advancement towards feasibility stage,” said Fission Uranium president, COO and chief geologist Ross McElroy.

Fission previously said that the underground-only scenario could reduce the construction timeframe to three years, reduce the capex to C$1.19-billion and improve the IRR to 36%. The preliminary economic assessment-level, underground-only scenario also showed that the NPV will be C$1.31-billion and that the mine will have a 1.9-year payback.

The PEA for the underground-only assessment determined operating expenditure of $7.17/lb, compared with $6.77/lb for the hybrid option.