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Investors have spoken, and they said they don’t want a merger of Fission Uranium and Denison Mines. In this interview with The Energy Report, Marin Katusa, founder of Katusa Research, shares his insight on why Fission investors rejected the deal and where he is finding value in the uranium and oil sector today.

The Energy Report: What happened to the Fission Uranium Corp. (FCU:TSX) (FCUUF) – Denison Mines Corp. (DML:TSX; DNN:NYSE.MKT) deal? Why did investors reject it and what does it mean for the junior uranium mining landscape?

Marin Katusa: Ross McElroy and his team have done a great job growing the Patterson Lake South (PLS) resource, which is turning out to be a world-class deposit. It is clear the majority of the Fission shareholders wanted the company to stay focused on its PLS project and didn’t believe the benefits of diversification, including access to a mill, the Lundin group and Wheeler River, outweighed the potential of the PLS deposit.

I had a great run early on with Fission. We tripled our money, and we sold, albeit a bit too early, but a profit is a profit. I think both Fission and Denison are still interesting opportunities, because both are much cheaper than they were before the deal was offered. I own neither currently.

TER: What’s next for Fission? It isn’t going to try to take Patterson Lake to production, is it? Are there other suitors in the wings?

MK: It is difficult for an exploration company to take something like PLS to production; it rarely works. A completely different skill set is required. PLS will have a permitting hurdle, not to mention there’s no mill that could take their feed currently, so the company would have to build one, and that could cost as much as $1 billion ($1B).

Fission could become an acquirer of other projects on the east or west side of the basin, or it too could become a takeout target by larger company, or perhaps even become a target of a hostile take out by someone like NexGen Energy Ltd. (NXE:TSX.V; NXGEF:OTCQX). That would be a very interesting result to the Fission saga. In a bear market, anything is possible. Perhaps the board changes at Fission, and the new board sees the benefits of merging with NexGen and a merger happens on friendly terms with NexGen. Anything is possible. In early 2014, we participated in the NexGen private placement, and the team at NexGen has done an incredible job. Tim Young, who is on my Top Ten Under 40 list, had incredible vision when he staked the properties NexGen holds today. It’s great to see young resource entrepreneurs doing so well.

I actually think the two should merge, but I don’t think the current Fission board would like that to happen. The two management teams might not be a good fit. But if it did happen, it would make for a very interesting story. If that happened, the region could get very hot, and the other juniors could do quite well, such as Skyharbour Resources Ltd. (SYH:TSX.V) (SYHBF). I currently do not own Fission or NexGen, so I don’t have any skin in this potential fight. I own a lot of Skyharbour.