TSX:PLU | C$0.65 | US$28m
Drill Results from High-grade Pinocho Area
Plateau Uranium has released drill results from its previously-announced drilling campaign on the Pinocho area of the Macusani Uranium/Lithium Project in south-eastern Peru. Grades were above those of the Kihitian Complex, with two notable intervals grading >2,000ppm U over 2-3m. Management views the Pinocho area as an extension of the Kihitian Complex uranium deposits.
COMMENT: These results confirm the mineralisation identified in channel samples from 2009. The thickness, grades and depth are promising, although the scale remains to be seen. Drill results are from six holes drilled in different directions from two platform locations. The company is targeting a drill programme for Pinocho that will include eight platform locations being completed by April 2017, and we look forward to seeing those results.
Plateau announced PEA results at the start of 2016 based solely on a uranium resource. Estimated AISC of US$18.26/lb were very low for a conventional mining operation, and closer to ISR projects in Kazakhstan. Economics were thus very supportive at a price of US$50/lb. Since then, the company has added a lithium resource and evaluated processing alternatives for lithium. Plateau is targeting the completion of a PFS later this year.
January 2016 PEA for the uranium project indicated AISC of US$18.26/lb at a LT price of US$50/lb U3O8 — Plateau Mining completed an updated PEA on its Macusani Project in January 2016. The study focused on the development of the Kihitian, Colibri and Isivilla complexes, which contain 114Mlb of the project’s total 124Mlb resources. The total mining inventory was 61Mlb U3O8 at an average grade of 289ppm. Heap leaching and tank leaching options were evaluated. The tank leach option has the potential advantage of decreased plant footprint and increased uranium recovery (93% vs. 88%), and also entails a higher level of confidence in upscaling from test-work to operating conditions, although the heap leach option demonstrated more favourable economics. The study showed that the inclusion of high-grade underground material from the Kihitian deposit is accretive to economics. The Base Case open pit and underground mining options combined with heap leach processing generated average LoM production of 6.1Mlb pa U3O8 over a mine life of ten years, with an initial capital cost of US$300m. The resulting post-tax NPV8 was US$603m, the IRR 41% and the payback period 1.8 years. The sub-US$20/lb operating costs are in the first quartile and are in line with Kazakh ISR projects, whilst at US$49/lb pa of annual capacity, and US$4.90/lb U3O8 recovered over the LoM, capital intensity remains competitive with conventional uranium projects.
PFS planned for completion later in 2017 to include trade-offs relating to potential for pre-concentration and lithium production and addition of high-grade uranium at Pinocho — Since the completion of the updated PEA in January 2016 the company has made a number of announcements that could lead to changes in the scope of the project. In March 2016 the company announced that its resource base also contained 176,000t of lithium oxide at a grade of 0.12% Li2O. Recent test-work has indicated that 61-73% of the contained lithium can be leached using sulphuric acid at moderate temperatures of 65-85°C. Further work was planned on the leaching, and also on the subsequent precipitation stages, to develop operating and cost parameters for inclusion in the study. The company is investigating the potential of upgrading by removing the coarse fractions to improve economics. In August 2016 the company announced that historic test-work on the material from a number of the deposits had indicated that it was possible to upgrade the uranium grade by 60% with a recovery of 80% by removing a coarse fraction. Work is planned to be done on a number of deposits and also to test what impact the upgrading had on lithium grades.
Kihitian Complex — The Pinocho area is part of the Kihitian Complex, which includes the Chilcuno Chico, Quebrada Blanca and Tantamaco deposits that form a component of the company’s resource estimate. The PEA released in February 2016 included surface and underground mining of the Kihitian Complex to provide the primary source of ore in the mine plan (54Mt from Kihitian open pit and underground compared with 55Mt from the Colibri and Isivilla complexes).
The first channel samples from Pinocho were announced at the end of 2009 — Historical underground adits were established at Pinocho by IPEN (Institute of Peruvian Nuclear Energy). In 2009 the company took channel samples from these adits, and in December 2009 announced samples with an average grade of 5,540ppm. In November 2016 Plateau announced an 800-1,000m diamond drilling programme for Pinocho. Management views the area as an extension of mineralisation from previously identified deposits within the Kihitian Complex.
Two of the latest drill results show >2,000ppm over 2m and 3m, respectively — Hole PT-PCH1-TNE showed 8m grading 861ppm U from 53m, including 3m grading 2,160ppm U from 53m. Both of these intervals are much higher than the overall resource of 228ppm U in the Indicated category and 240ppm U in Inferred. High grades were also observed in Hole PT-PCH1-TNW, which showed 9m grading 566ppm U from 53m, including 2m grading 2,182ppm U from 53m. Both of these results were from the same platform (PCH1).
Lithium content is consistent with the previously-announced resource — The overall lithium resource shows grades of 595ppm Li in the Indicated category and 576ppm Li in Inferred. Hole PT-PCH3-TNW showed 26m grading 712ppm Li from 39m, which is higher than the grade for the overall resource. The other drill holes showed mineralisation starting ~30-50m from surface grading 535-594ppm Li, with thicknesses in the 12-37m range. Results were consistent across both platforms (PCH1 and PCH3).