Plateau Energy Metals CEO Alex Holmes explains why the Lithium Triangle is the optimal location for his company’s latest project.
Plateau Energy Metals owns two highly promising projects in Peru: the Macusani uranium project and the Falchani lithium project, both located near the Lithium Triangle in South America. According to Holmes, the lithium-rich area deserves to be called the Lithium Cube thanks to the newly discovered deposits at the Falchani property. After initially establishing a resource of over 2.4 million tons of lithium carbonate equivalent (LCE) on the property, Plateau Energy Metals has updated its resource to 4.7 million tons LCE.
Peru is a mining-friendly jurisdiction with a length history of cooperation. While Plateau Energy Metals was originally drawn to Peru for its promising uranium deposits, the discovery of a separate lithium property could enable the company to serve the growing electric vehicle (EV) market. Holmes expects large sections of the lithium supply chain will need to work together to meet the growing global demand created by EVs, lithium-ion batteries and other rechargeable devices.
Below is a transcript of our interview with Plateau Energy Metals CEO Alex Holmes. It has been edited for clarity and brevity.
Investing News Network: Joining me now is Alex Holmes, CEO of Plateau Energy Metals. Tell me a little bit about the company. Your primary focus didn’t start with lithium. Where did it start?
Plateau Energy Metals CEO Alex Holmes: That’s correct. The company was founded about 10 years ago in Southeastern Peru with a uranium project. Over a period of about eight or nine years, the project grew in terms of the land mass, and through consolidation and exploration, we grew to a very large uranium resource.
INN: Is this your Macusani project?
AH: Absolutely. It’s got a preliminary economic assessment (PEA) on it that was completed in 2016. There’s a lot of underlying value within that asset, but our shift happened in late 2017 with a new discovery in lithium.
INN: Did that come as a surprise for you?
AH: Yes. I would say it’s a bit of skill and a bit of luck that ultimately drove us to this point.
INN: This is a big find. What’s the name of this project?
INN: You are down in South America in an area typically known as the Lithium Triangle, but you’re now saying it’s the Lithium Cube. Tell us about it.
AH: It’s actually the only known lithium project in Peru today. The discovery was made in November of 2017, and it’s a hard rock project. It’s volcanic-coasted and it’s called a tuff, which is hardened volcanic ash. It’s very similar to the brines in South America, where the source of lithium comes through the water leaching through the rock and depositing this water in these basins. In this case, we have something that’s never been water-leached before, and it’s sitting there, in situ, as we continue to expand it.
INN: What’s the size of the ore body as we know it so far?
AH: Discovery was in November 2017, and in nine months we took it to a total resource of about 2.4 million tons of LCE. Lithium carbonate trades for approximately US$12,000 per ton, more or less. This morning we announced a resource update and took it to a total resource of 4.7 million tons. It’s a big project.
INN: Let’s talk about lithium. The price has doubled in the last two or three years, and the demand for lithium is expected to triple over the next nine or 10 years. It’s quite an exciting market.
AH: It is. The lithium price is a supply agreement, a contract-based settlement market. We have a spot price in China that had a big run up leading up to the end of 2017 and then pulled back. Today we’re sitting on the contract market base; it’s roughly that US$12,000 that I mentioned. The demand outlook is very strong. There’s always been demand for lithium. If we look back five or 10 years, demand was for lithium-ion batteries for laptops and smartphones. But this EV revolution is really starting to take hold. We’re still in the early days, but we’ve got macro government policies all around the world starting to place restrictions on internal combustion engine production.
INN: Where are we going to get the materials to build all those EVs?
AH: Car companies have announced they’re investing over $300 billion over the next five to 10 years to capture that EV market. It’s coming to the mainstream. It’s getting there.
INN: When we take a look at Peru, what infrastructure do you have in place there?
AH: We’re about an hour and a half flight from Lima, the capital city of Peru. Then we’re about a three and a half hour drive up to our project site along a two-lane paved highway. Access to the project is fantastic. That two-lane paved highway leads to three ports right on the coast, which is where the high-value product would move through to get to the place where it would go to the processors.
INN: It’s a very interesting strategic location.
AH: Being on the west coast is certainly helpful. I would say 80 to 85 percent of the lithium processing that gets it ready for the cathodes is done in Asia today. Perhaps one day we’ll see Peru bringing some of that technology to bear in terms of downstream processing.
INN: Let’s talk about Peru as a mining jurisdiction.
AH: Peru is a country that is built on a mining culture. It goes back hundreds of years. There are a lot of mines, including some of the biggest copper mines in the world and some of the biggest gold mines. Gold, copper and silver are certainly the biggest metals that are produced in the country. You have a government that understands the impact that foreign investment can have on employment, tax revenue generation and economic development. You certainly have to do things right in a socially responsible way, sustainably mining, to move things forward.
INN: Part of that social responsibility is your community relations. What are you doing in local communities to ensure that you’ve got those good relationships?
AH: We’ve been in the area for 10 years, which means we’ve been able to build up a relationship over time. Working with the community, it starts with local employment. Like the milk program at the local school. We bring milk in once a month for the kids to have fresh milk.
At the end of a three and a half year project, we held the grand opening of an all-weather football field. It was such a heartwarming feeling to be there. It was the start of a big tournament between five villages in the area, so there was a lot of excitement around it. It was three and a half years of helping the community to build this field. It wasn’t just us coming in and building it ourselves. It ultimately culminated in something that will last many generations, and helped support the youth and sport, which brings community together.
INN: Tell us about the company and your team.
AH: On our management team, we have Laurence Stefan, our co-founder. He’s been with the company from the beginning. He brought in the original uranium land package. He discovered Falchani. Under Laurence in Peru, everybody is Peruvian, including our general manager, our technical team, our lawyers and accountants.
From a corporate perspective today we run a fairly lean operation. We’re really focusing on moving the company through what we consider value milestones that ultimately should reflect better value for shareholders.
INN: Where are we at right at the moment and what are the next steps for the company?
AH: Today’s announcement was big. It ranks us about the sixth-largest lithium project in the world today, as far as hard rock projects. But it’s not just about being big, it’s about being scalable and flexible. When you have a mining operation, you want to be flexible because you have various ways you can achieve your operational goals. As the lithium demand side starts to really take hold, we’re going to get to a point where the assets that can scale up and keep pace with that demand growth are going to be the projects that are the most successful. That’s why we really wanted to expand it. The next few months are about optimizing processing routes and the PEA. The PEA is targeting the first half of this year, so that will put some economics on our project.
INN: Will you scale up on your own, or are you bringing in partners as well?
AH: The supply chain needs to work together. Original equipment manufacturers are investing over $300 billion. Upstream of that, you’ve got factories building cells and putting together the battery packs, investing over $100 billion. The lithium side only needs about $24 billion to meet all of what they need. They need security of supply, they need longevity of supply and they need volume. When I think about the project, I look at security, predictability, scalability and a jurisdiction that people appreciate.
INN: So you’re pretty excited about the future.
AH: I am. It’s unbelievable to see a market forecasted for over 20 percent year-over-year growth in demand. You don’t see that all the time.
INN: You’re sitting on two very interesting resources. Thank you very much for coming in.
AH: Thanks so much, Stu.
This video interview is sponsored by Plateau Energy Metals (TSXV:PLU,OTCQB:PLUUF). This video interview provides information that was sourced by the Investing News Network (INN) and approved by Plateau Energy Metals in order to help investors learn more about the company. Plateau Energy Metals is a client of INN. The company’s campaign fees pay for INN to create and update this video interview.
INN does not provide investment advice and the information on this profile should not be considered a recommendation to buy or sell any security. INN does not endorse or recommend the business, products, services or securities of any company profiled.
The information contained here is for information purposes only and is not to be construed as an offer or solicitation for the sale or purchase of securities. Readers should conduct their own research for all information publicly available concerning the company. Prior to making any investment decision, it is recommended that readers consult directly with Plateau Energy Metals and seek advice from a qualified investment advisor.
This interview may contain forward-looking statements including but not limited to comments regarding the timing and content of upcoming work programs, receipt of property titles, etc. Forward-looking statements address future events and conditions and therefore involve inherent risks and uncertainties. Actual results may differ materially from those currently anticipated in such statements. The issuer relies upon litigation protection for forward-looking statements. Investing in companies comes with uncertainties as market values can fluctuate.