Enabling the New Energy Paradigm
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Plateau Energy Metals Inc. (TSXV:PLU, OTCQB:PLUUF) (“Plateau”), a Canadian-Peruvian clean energy metals development and exploration company, is a leader in the new energy paradigm with its Falchani lithium chemical project and its Macusani uranium project. The company, with mineral concessions in southeastern Peru, covering approximately 930 square kilometers, discovered and delineated the world’s sixth-largest hard rock lithium resource, putting Peru on the lithium development world map. The company controls all reported uranium resources known in Peru, all of which are situated near infrastructure. To date, the company has only explored a fraction of its land package.
While Plateau started out exploring for uranium in 2006, in November 2017 the company uncovered the Falchani lithium chemical project, which has presented a large hard rock deposit with high-grade values of lithium. On March 4, 2019, the company released an updated resource for Falchani, which estimated (1) the high-grade lithium-rich tuff zone had an indicated resource of 0.79 million tonnes of lithium carbonate equivalent with an average grade of 3,500 ppm lithium and an inferred resource of 2.13 million tonnes of lithium carbonate equivalent with an average grade of 3,243 ppm lithium, and (2) the lithium-rich tuff plus the zones sitting immediately above and below the tuff (upper and lower breccia) for an indicated resource of 0.96 million tonnes lithium carbonate equivalent with an average grade of 2,954 ppm lithium and an inferred resource of 3.75 million tonnes of lithium carbonate equivalent with an average grade of 2,706 ppm lithium.
Extensive metallurgical test work completed to date demonstrates that the lithium-rich volcanic material at Falchani can be processed using conventional processing methods (tank leach) and can produce a low impurity battery quality lithium chemical. On February 4, 2020, the company released its preliminary economic assessment (PEA) led by DRA Global which demonstrates Falchani is capable of growing to become one of the largest single asset lithium chemical projects that exist today, together with a low operating cost, flexible lithium chemical processing route, high economic returns (US$1.55 billion NPV of 8 percent and 19.7 percent IRR after-tax) and potential for future by-products. With the newly uncovered lithium project, Plateau plans to take advantage of a rapidly growing lithium market.
Plateau Energy’s plans for its Macusani uranium project are to continue working with the Peruvian government’s implementation of the new regulations for safe transport and export which are anticipated for the second half of 2020, according to government sources. The Macusani uranium project is located approximately 25 kilometers from its lithium project and is a PEA-stage, low-cost, high-return uranium project with over a US$600 million NPV (8 percent) and +40 percent IRR after-tax.
Plateau Energy’s Highlights
- 100-percent control of a 930-square-kilometer land package in stable jurisdiction of Peru’s Macusani plateau
- Excellent infrastructure (highway, water, power and labor)
- In a very supportive mining jurisdiction
- Active exploration of both lithium and uranium in the land package
- Falchani lithium project
- Large high-grade resource – sixth-largest hard-rock in the world today
- Battery-grade, low-impurity lithium chemical product
- Scalable production with 33-year mine life
- Low 2nd quartile operating cost as determined by leading industry experts
- Phase production approach to reach 85,000 tonnes per year of battery-grade Lithium Carbonate
- Process route utilized offers flexibility for future modifications to lithium chemical product – strategic benefits for evolving lithium chemical market
- Further exploration upside with only 30 percent of the immediate Falchani area drilled to date, with additional regional targets generated within the broader land package
- Macusani uranium project
- A large well-defined uranium resource in an emerging uranium district
- Robust PEA economics
- Ability to fast track development to feasibility with a scalable, flexible growth plan
Plateau’s Falchani lithium and Macusani uranium projects are situated approximately 25 kilometers apart, within contiguous mineral claims that cover approximately 95 percent of the Macusani Plateau. Hosting all of the known lithium and all of the known uranium deposits in Peru, the projects are situated approximately 650 kilometers southeast of Lima and have access to labor, water, inexpensive hydro-electric power and major transportation routes and ports. Just to the east of the property is the Interoceanic Highway which links the projects to Pacific and Atlantic ports. The San Gaban hydro generation station is approximately 40 kilometers, as the crow flies (88 kilometers via the highway) to the north and high voltage power lines run adjacent to the project area.
Falchani Lithium Project
This new high-grade lithium deposit rapidly advanced from discovery in November 2017 to maiden resource mid-2018. Plateau released an updated resource for the project in March 2019 and after months of detailed test work and engineering analysis completed a PEA in February 2020.
Preliminary Economic Assessment for Falchani
Base Case Key Highlights
- After tax, average annual at steady state throughput of 6mtpa, based on a selling price of $12,000/t Li2CO3.
- See news release for OPEX breakdown
- See news release for CAPEX breakdown.
- Steady State – battery grade Li2CO3.
Key Project Attributes
- Scaled approach to development allows the Project to grow with market demand
- Battery grade, low impurity lithium chemical allows complete onsite production, maximizing the Company’s share of the value chain
- Lithium-rich sulfate process step supports the flexibility to adapt lithium chemical production for industry demand
- The on-site acid plant provides green power generation and enables low-cost reagent access
- Inputs sourced largely in Peru support local development while reducing costs and value-added taxes
- Availability of contract mining reduces CAPEX and provides flexibility during expansion phases
- Major contributor to economic development in Peru of approximately $2.1 billion LOM capital investment and tax and royalty contributions estimated in excess of $5 billion1
- Excellent infrastructure near the site to support future Project development and operations
1. Royalties: approximately $760 million, Workers Participation Tax & Pension Fund: approximately $1.25 billion, Income Tax: approximately $3.75 billion
Mineral Resource estimates for Falchani
In March 2019, Plateau released an updated resource estimate that increased the resource by more than 90 percent. Highlights from the resource, based on a 1,000-ppm lithium cut-off grade, include resources for both the lithium-rich tuft sequence and the wider lithium-rich package including upper and lower breccia units.
The high-grade lithium-rich tuff showed an indicated resource of 0.79 million tonnes of lithium carbonate equivalent with an average grade of 3,500 ppm lithium and an inferred resource of 2.13 million tonnes of lithium carbonate equivalent with an average grade of 3,243 ppm lithium. The wider lithium-rich package, including upper and lower breccia units, displayed an indicated resource of 0.96 million tonnes lithium carbonate equivalent with an average grade of 2,954 ppm lithium and an inferred resource of 3.75 million tonnes of lithium carbonate equivalent with an average grade of 2,706 ppm lithium.
Ongoing lithium exploration
Since releasing its maiden resource estimate, Plateau continued to explore its Falchani project with a drill program to the west of the initial resource that led to the uncovering of the extensions of the eastern portion of the Falchani deposit at Falchani West and the March 2019 resource update. A number of additional target areas have been identified to the west and the deposit appears open to the west, north and northwest of Falchani West. Exploration results include announcements on September 20, 2018, October 9, 2018, November 19, 2018, January 30, 2019, and June 3, 2019.
“In a short two years, from grassroots discovery to the PEA, we’ve achieved a great deal and brought forward an exciting, and we think disruptive, new lithium chemical project that we believe will be well-positioned to help meet the world’s increasing shift to electric mobility and battery storage,” said Plateau CEO Alex Holmes. “In 2020 we will be focusing efforts on strategic project catalysts that yield long-term benefits for our stakeholders. Short-term decisions that garner an immediate market reaction always fizzle out as quickly as it began.”
Falchani Lithium Project 3D Overview
On July 18, 2019, the company announced the successful results of a metallurgical study that indicated the potential to produce a high purity (> 99.74 percent to 99.82 percent) lithium carbonate product. The extensive test work on multiple up-front process steps, two preferred routes – tank leaching and sulfation baking – have been selected to focus on the extraction of lithium from the Falchani mineralized material. Specific flowsheets have been developed and tested for both process routes and have shown that a high purity lithium carbonate chemical product (“LC” or “Li2CO3”) can be produced from each.
- All tested processes produced strong overall recoveries (mineralized material to LC) with reasonable reagent addition figures:
- Tank Leach (95 °C): 77 percent – 81 percent overall recovery via a 24-hour up-front acid leach with total sulfuric acid addition of 370 kg per tonne of mineralized material, followed by conventional purification and precipitation of a high purity (99.74 percent) Li2CO3.
- Sulfation Baking (200 °C): 72 percent – 82 percent overall recovery via a six (6) hour baking and acid recovery step with net sulfuric acid addition (after acid recycling) of 330 kg per tonne of mineralized material, followed by conventional purification and precipitation of a high purity (99.82 percent) Li2CO3.
- Up-front roasting with sulfate and chloride reagents at 900 oC was examined, and although the resultant leach solutions contained very low levels of impurities, the extraction of lithium was limited to about 80 percent. Further test work following the PEA would be required to improve the extraction of lithium and provide an alternative to the two preferred process options examined as part of the trade-off study.
- Lithium carbonate produced using both up-front tank leaching and sulfation baking process steps are of high purity battery grade (>99.5 percent) (refer to table below).
- Conventional downstream process steps to yield a Li2CO3 product are employed for both tank leaching and sulfation baking routes.
- Both processing routes are being optimized by DRA Global with input from ANSTO and M.Plan. Further optimization of these processing routes to be pursued following the PEA.
- Trade-off study work, ahead of the PEA, has now been completed, which has focused on both the tank leach and sulfation baking processing routes.
- Processing options identified for potential additional revenue streams from other products such as sulfate of potash (“SOP”) fertilizer (K2SO4) (refer to flow sheet below).
Table: Lithium Carbonates – Tank Leaching vs Sulfation Baking/Volatilisation vs Livent Material
Bolded figures are less than values; ppm = mg/kg. Source: ANSTO
Tank Leach Process flowsheet
“We took the time to conduct a thorough and robust analysis of Falchani mineralization as a build up to our PEA,” Alex Holmes, CEO of Plateau, commented. “We have been working closely with ANSTO, DRA and M.Plan to identify areas for potential optimization, some of which will be incorporated into the upcoming PEA. Further, the test work demonstrated the ability to reduce impurities to extremely low levels and produce a high-value end-product at site, in Peru. Capturing most of the value chain will be one key differentiator for Falchani.”
Also on July 18, 2019, the company announced the completion of the trade-off study which utilized iterative results of the metallurgical test work. Following receipt of the final results, the trade-off study focused on both the tank leach and sulfation bake up-front process steps.
Future Project Opportunities
The PEA identifies several opportunities which may greatly enhance the economics and include:
- Revenue opportunities: further evaluation of additional revenue streams, not included in the PEA, such as SOP fertilizer (K2SO4), caesium sulfate (Cs2SO4) and rubidium sulfate (Rb2SO4). Preliminary metallurgical test work is currently underway.
- Capital optimization: alternative acid plant and processing plant/equipment sourcing, including evaluating options for “over the fence” acid and power purchase from a third-party operator.
- Operating cost optimization: long-term contracts for major consumables, reduction in processing consumables and/or costs through process model optimization.
Macusani Uranium Project
In 2015, Plateau released an updated resource estimate for the Macusani uranium project.
At a 75 ppm cut-off the resource estimate is:
At a 200 ppm cut off the resource estimate is:
The Macusani uranium project, which the company was founded upon, released a resource estimate in 2015 which has measured and indicated resources of 52.9 million pounds of U3O8 at 248 ppm and an inferred resource of 72.1 million pounds of U3O8 at 251 ppm. In 2016, the company released an updated PEA which indicated robust after-tax economic returns of NPV (8 percent) US $603 million, IRR of over 40 percent and a rapid payback in 1.8 years – based on a selling price of US$50 per pound of uranium.
Plateau continues to work in the region, moving forward on environmental assessment work, conducting optimization work programs, and pending those results, updating the current PEA. Plateau is well-positioned to take advantage of the world’s growing need for cleaner, safer and efficient sources of energy which uranium provides.
2016 Preliminary Economic Assessment
In January 2016, Plateau completed an updated PEA using the 2015 Resource Update. The strong PEA results further validate the merits of the company’s consolidation and organic growth strategy to control all defined uranium resources in Peru.
Proposed Mine Plan and Process Design
More than 60 million pounds of production planned for over 10 years.
The 2016 PEA proposes the construction of a conventional open pit mining operation with a centralized processing facility operating over a 10-year life with a throughput of approximately 30,000 tonnes per day. Heap leach processing will be used to extract uranium into a weakly acidic aqueous leach solution with uranium recovery through exchange and a solvent extraction acid recovery circuit.
The proposed mine plans include predominantly open pit mining with underground mining proposed for some of the deeper high-grade portions of the Kihitian complex to be accessed from the pit bottom.
An optimized PEA will be considered pending positive results of optimization of work programs and ratification of transport and export framework.
Plateau’s plan is to move the Macusani uranium project further along the path to production. The Government of Peru is currently targeting H2 2020 for the implementation of the legal framework for transport and export of uranium (in progress). Steps for advancement of the project include:
- Optimization work programs, and pending positive results, update the PEA
- Continuing the environmental impact assessment process
- Generating future exploration targets within and along the known uranium trend and within the larger property package
- Outlining a fast track to feasibility study upon implementation of the aforementioned legal framework
Following constructive meetings with government officials including leaders from the Ministry of Mines and Energy and the Peruvian Institute of Nuclear Energy, Plateau received approval for its environmental baseline study.
Plateau’s Value Proposition
Plateau’s value proposition is summarized as follows:
Plateau Energy’s Leadership Team
Alex Holmes – CEO and Director
Alex Holmes has spent over 15 years working in the mining industry. Most recently, he was a partner and co-founder of Oxygen Capital Corp., leading business development activities for all affiliated companies, including True Gold Mining Inc. where he served as VP Business Development and co-founder. He played an instrumental role as part of the senior leadership team from initial asset acquisition in 2013, reserves and resources growth, advancing the project from PEA to feasibility study, through project finance and ultimately gold production in early 2016. Over that period, Holmes and the team raised in excess of US$215 million to construct and operate True Gold’s Karma mine. Previously, he led the mining teams at two independent Canadian investment banks and raised capital for and advised on transactions for numerous companies.
Dr. Laurence Stefan, M.Sc., Ph.D. — President, COO and Director
Dr. Laurence Stefan is a founder of Plateau Energy Metals and has served as its Managing Director in Peru since October 2007 when the Company went public. He is also the founder of the Colibri Group of Companies, a mineral service company based in Lima, Peru. Dr. Stefan previously worked at Gold Fields of South Africa and JCI (Pty) Ltd. with recent years spent mainly on South American projects. He has been involved in basic and specialized research in uranium metallurgical, recovery and enrichment programs at various gold-uranium mines along the Witwatersrand Basin in South Africa and Namibia.
Philip Gibbs, B.Compt., MBA, CPA, CMA – CFO
Philip Gibbs has extensive knowledge of the financial aspects of exchange-listed mining and mineral exploration companies operating in Africa and South America. Mr. Gibbs has worked as a CFO for publicly listed mining companies for over 25 years.
Alan Ferry — Chairman
Alan Ferry is an independent businessman with over 28 years of experience in the investment industry following a career as a geologist, mainly in uranium exploration. With significant experience in mining analysis, mineral economics and corporate finance, Mr. Ferry has served on the boards and audit committees of several publicly traded mining and exploration companies, and is currently a member of the board of directors of Avalon Advanced Materials Inc. He holds a B.Sc. (Honours) in Geological Sciences from Queen’s University (1977) and holds a Chartered Financial Analyst designation (retired).
Ted O’Connor, P.Geo., M.Sc., B.Sc.— Director
Ted O’Connor is a Professional Geoscientist with more than 22 years of experience, predominantly in the uranium exploration industry. Prior to joining Plateau Energy Metals in 2014, Mr. O’Connor was with Cameco, one of the world’s largest uranium producers, where he was Director of Corporate Development. In that role he was responsible for evaluating, directing and exploring for uranium deposits throughout North America, Australia, South America and Africa. Mr. O’Connor successfully led new project generation from early exploration through to discovery on multiple unconformity uranium projects. Prior to joining Cameco, Mr. O’Connor was an exploration field and underground mine geologist for major mining companies and junior explorers searching for gold, diamonds and base metals.
Wayne Drier – Director
Wayne Drier is a seasoned finance executive with over 20 years of corporate finance and capital markets experience within the global mining sector, spanning a wide range of commodities and jurisdictions. He is currently Chief Financial Officer of Ero Copper Corp., a TSX-listed copper company with operations in Brazil. Previous roles have included senior executive positions at Asanko Gold, Mantra Resources, Norilsk Nickel International and BHP Billiton. He holds a Bachelor of Business Science Honours degree from the University of Cape Town, South Africa.
Maryse Belanger — Director
Maryse Belanger, currently President, Americas for St Barbara Mining, brings over 30 years of experience in the mining industry with strengths in operational excellence and efficiency. She has been President, COO and Director of Atlantic Gold Corporation -acquired in 2019 by St Barbara Mining, CEO and Managing Director of Mirabela Nickel where she was responsible for the turnaround of the company and the reestablishment of the Santa Rita Nickel-Copper sulphide open pit mine in Brazil. Prior roles have included Senior Vice President, Technical Services at Goldcorp where she oversaw the global geology, mine planning and design, metallurgy, hydrology, tailings dam and geotechnical engineering functions, and Director, Technical Services for Kinross Gold Corporation for Brazil and Chile. She holds a Bachelor of Science degree in Geology and a graduate certificate in Geostatistics and is fluent in English, French, Spanish and Portuguese. She has been an active board member at Mirabela, True Gold Mining Inc., CEEC International Ltd. and is a member of Westcoast Women in Engineering, Science and Technology (WWEST).
Christian Milau — Director
Christian Milau, currently CEO and Director of Equinox Gold Corp., is a chartered professional accountant with executive experience in acquisitions, financing, mine development, construction and operations. Mr. Milau was CEO of Luna Gold, which through a series of mergers and acquisitions, became Equinox Gold in December 2017.He was also CEO of True Gold Mining, successfully negotiating and closing True Gold’s sale and acquisition by Endeavour Mining Corp. for $240 million in April 2016. At True Gold, he was instrumental in the development of the Karma Gold Project where, under his leadership, True Gold was able to successfully negotiate agreements with the government and community in Burkina Faso, recommence construction, complete development, and reach production, all in under 12 months. In addition to his extensive background in finance and capital markets, Milau brings important operational, government and stakeholder relations experience, including successfully negotiating various community, security, fiscal and tax agreements. Prior to True Gold, Milau held senior positions at Endeavour Mining Corp., New Gold Inc., and in investment banking at BNP Paribas in London.
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