Please Note: Blog posts are not selected, edited or screened by Seeking Alpha editors.

Fission Energy lands buy rating from Fundamental Research Corp

Fission Energy (CVE:FIS) has received a buy rating and a bullish price target from Fundamental Research Corp, as the uranium explorer's projects in Saskatchewan continue to make headway.

The Kelowna, British Columbia-based company completed the winter drill program at its Waterbury Lake joint venture in April, with results prompting it to acquire an additional 10% interest in the partnership for a 60% total stake.

The best results from Waterbury include 7.84% uranium over 14.5 metres; 4.41% uranium over 12.0 metres and 4.45% uranium over 6 metres.

The results suggest, noted Fundamental, that there is a potentially large uranium system at Waterbury that warrants further drilling, with a 21 hole summer exploration program now in the works. 

Indeed, five discoveries have already been identified within the Discovery Bay Corridor, including the new hole discovery to the west of the J Zone. Winter drilling focused on the J Zone, and led to a 370 metre expansion in strike length in the east-west direction, Fission said.

The Waterbury Lake joint venture is held by Fission, with the remaining 40% held by Korea Waterbury Uranium Limited Partnership, a consortium of Korean companies.

"We believe that the company’s [Fission's] expanding interest in the Waterbury project represents the company’s increasing confidence on the project’s potential demonstrated by recent encouraging drilling results," said Fundamental in its report.

As such, Fission paid an additional $6 million in cash for the extra 10% stake.

In Fundamental's previous report, the equity research firm had not assigned a valuation on the company as it did not have sufficient information to quantify the upside potential of the Waterbury project.

However, with the new results, including those from 2010 and 2011, the firm has estimated initial resources for the J Zone at 12.9 million pounds of uranium, based on an estimated average grade of 2.32%. The grade was calculated using the weighted average of the 2010 and 2011 drill results, using a 0.01% cut-off.

This resource estimate, as well as the inferred resource of 24.4 million lbs on the Deiter Lake property in Quebec, led to Fundamental's 72 cent per share fair value estimate, up from Fission's current 55 cent trading price.

Fundamental noted that it is still bullish on the outlook of uranium prices as fundamentals remain strong, despite the earthquake events in Japan in March.

"Uranium continues to be one of the cheapest and cleanest sources of energy, and we expect it to be one of the major sources of energy going forward, especially due to rising fossil fuel prices.

"We expect a slow and gradual recovery in uranium prices and, therefore, we believe uranium is very attractive for investors with a longer time horizon," it added.

In addition to Waterbury Lake, Fission also announced stellar boulder prospecting results on its Patterson Lake South property in July, which is located in the southwest margin of Saskatchewan's Athabasca Basin.

A total of 74 boulder and mineralized soil samples were assayed, of which 25 reported grades of over 10%, with the highest grade returning 39.6% uranium. 

The uranium boulder field has currently been traced for a length of about five kilometres, and a width of up to 0.9 kilometres.

Further evidence to Fission's growth, the company, with roughly $17.5 million of working capital, was named to the TSX Venture 50, which is comprised of the top 10 companies listed on the exchange in each of five major industry sectors.