Audio Interview with Devinder Randhawa, Chairman and CEO of Fission Energy

Dev, how is the overall market situation affecting Fission Energy and the company’s business strategy?

These are very unique times. We all knew that a crash was coming when you’ve had the kind of bull markets we’ve had, but no-one suspected there would be this severe down turn of the credit markets. So it’s more than a stock market crash in that it’s a credit crisis affecting everybody. So because of that we’ve just assumed that we don’t know when this craziness will end, and therefore we don’t know when we’re going to raise money, so let’s assume we are going to raise no money and we have to have a business plan that can keep us surviving for the next 12-18 months.


What are your thoughts about the price of uranium and the prospects for uranium?

I like uranium. I’ve liked it for a long time, but I don’t believe it is tied to other commodities. Unlike the base metals which can quickly change overnight, because they’re so tied to the consumers’ spending, uranium is very different. It is tied to a cycle of building a nuclear reactor and you know that takes more than one or two years, it takes 10-20 years by the time the [permits] come in, develop it, raise the money etcetera. So if we were to have four or five years of recession, maybe they’ll re-think some of the of the nuclear plants, but generally the uranium that we produce for the next four, five or eight years is going to go towards existing reactors and not new ones.

So I am optimistic about the price of uranium as I don’t think it’s tied to other commodities, it’s on a long term cycle, and also, it’s not a big part of building a nuclear reactor, it’s a very small percentage of it, so it’s not like tomorrow morning people will say: “gees, you know we need to cut costs on nuclear reactors, let’s go cut back on the fuel.” No-one’s going to do that.

The price of uranium when we talk about it, generally it’s about the spot price. People seem to not talk about the long-term price. The long term price has not had the huge swings that you’ve seen in the short term spot price. But a lot of the big swings were happening because hedge funds were buying it physically. So they drove the price past the $135/pound level and now that they’re in trouble, they drove it down into the $40/pound level, but in the last two weeks alone it has jumped up about 10%, $4/pound. There is a good report out by Dave Wargo - he expects it to go back up to $50-$70/pound range. So I think the prospects are excellent because it’s green energy and it’s very cheap.


What is Fission Energy’s financial situation?

We have roughly $4 million in the till and $2 million of that flow through. So we’re in good shape. Because of the situation we’re in right now in stock markets we will have to prioritize our spending. Thankfully we have got some good joint venture partners, especially the Korea Electric Power Corporation, so they’ll be spending most of the money. It will mean that we have to curtail some projects, for example we were going to do some more work in Peru, but we’ve held that back because it’s hard dollars - we’ll go into more of a maintenance mode there. Some of the other projects we will have to drop, but if we do drop them we’ll keep a percentage. So I think you’ll see us dropping noncore properties but our core property, near the Hathor discovery and Dieter Lake, we’re going to keep those.
So our priority is to focus on our key properties and drop the non-core ones.


What are Fission Energy’s prospects for raising money, and if you can’t raise any money how are you going to manage your business plan going forward?

I think the prospects are very low like any other junior company. Investors are able to buy bank stocks and make speculative moves on them. So until that settles down I don’t see a lot of money flowing into the junior markets. So I don’t think the prospects are very good at all, so therefore we have to realize we’re not going to raise a lot of money and our business plan will have to reflect it. We’re not going to spend money we don’t have; number one is survival, so we’re cutting back overheads, people are going to be doing more jobs and our hope is to move the company forward by using our joint venture partners’ money and cover our overheads, and hopefully as these markets settle down then one day we can raise money. But the prospects are very low so we have recognized that and we’re making adjustments as we speak to make sure we survive until we can raise money.


What are you priorities for 2009 in terms of exploration and development?

Our core project is our Midwest property. It’s within 100-200 meters of the Rough-rider zone where big discoveries are being made, so that’s an obvious no-brainer place to focus. We are going to be spending about $4 million of Korea Electric Power Corporation's money. So they are going to be spending 100 percent of the money on that property, so that will definitely be our focus for January, February and March. Wintertime is the best time to drill as it is cheap - you can drive right across the lake so you don’t have to worry about having to helicopter things in across the water.
So our priority will be, assuming no money is raised, to focus the majority of our efforts on Davy Lake.


What’s your reasoning for the JVs that you’ve been doing?

Well, it didn’t cost a lot of money to stake land, it doesn’t cost a lot of money to do some basic work and so our key reason has always been an old adage that I learnt in a bear market: it’s your brains, your property but somebody else’s money to develop and move the project forward.
That’s why you saw so many joint ventures at Strathmore Minerals, which we spun Fission Energy out of. It was always that: ‘let’s use other people’s money for the risk’ - and that’s why you saw Sumitomo there. I was a founder of Strathmore, we brought Sumitomo in and other joint venture partners. Use other people’s money to move the business plan forward. It’s less dilution for your investors and less risk. That strategy probably wasn’t the best for the bull market, but it’s a great one in a bear market. So we try to stick to using other people’s money, and Korea Electric Power Corporation is actually a group of investors behind other utilities, and they’re really in control of that money, and so as a result we are very fortunate to be able to move our business plan forward in this new market without raising any more money.

What can we expect from Fission Energy over the next 18 months?

I think you’ll see us continue to develop our key properties depending on market conditions. If we don’t raise any money you’ll probably see us focused on Waterbury Lake, maybe some work on Davy Lake and Dieter. Those are our three priorities. We won’t be doing much work in Peru.

So, it’ll be a challenge to do much more than what KEPCO provides for us, and KEPCO is going to spend $9 million over the next two years as the JV moves forward. That’s a lot of money and a lot of spending. Hathor has had such sensational results, amazing results. The grades have been so high that you’ve got to be nuts not to focus all our money on that area. Some people are worried about their depth; there may not enough there, but if we can find one of those veins in our property then our stock can move pretty rapidly here from that 13-15 cent level into the 50-60 cent level just on that discovery alone. So that’s our goal.

Like I said, we grew up in a bear market and in a bear market money is limited. Hopefully we’ll get some results and hopefully some reward for our shareholders because they’ve sure been beat up like so many others.