Falchani project gets support from Congress Before the rumours of the merge with $LI started, around November 2020, the market cap of $PLU was just US$20 millions, despite the already bright outlook for both lithium and uranium sectors. After following the Company for years, I concluded that such a huge undervaluation was the result of the following factors:
1)
Concessions dispute with Ingemmet, the State entity that collects the fees required to keep the concessions in good standing. Ingemmet argued that PLU's peruvian subsidiary had not paid the validity fees for 2 consecutive years, which according to the law is a cause of expiration. The truth, however, is that Macusani did pay the fees on time but handed in the invoices 30 minutes after Ingemmet's closing hours; those invoices were initially accepted but later rejected on an excessively formalistic reasoning on the part of Ingemmet. The 32 concessions in dispute [url=https://ceo.ca/@nasdaq/plateau-energy-metals-provides-an-update-on-remaining]comprise[/url] 45% of indicated lithium-in-tuff resources and 46% of uranium resources used in the Macusani PEA.
After a lot of unsuccessful administrative appeals, Macusani had to sue Ingemmet at the Judiciary, which has just decided in Macusani's favour, as has been reported recently by $LI. According to the Judiciary's web page Ingemmet has already filed an appeal against this first instance decision, but it has not yet been admitted by the judge. Once this happens I assume the Company will issue the corresponding NR.
Although nothing is 100% sure when it comes to the Judiciary, the recent decision has been so strong that I'm pretty sure it will be conffirmed in the second instance, even if it takes a couple of years.
2)
Ontario Securities Commission's investigation against PLU for misleading investors. The OSC started this investigation as a consequence of the allegedly "non timely disclosure" of the concessions dispute to the market. This was the Damocles Sword hanging over PLU since the concessions dispute arose, which could have had consequences such as million dollar fines or even the delisting of the stock.
This second risk is now part of the past, because $PLU is now a private company which in turn is a subsidiary of the much stronger company that is $LI.
3)
Permitting uncertainty. This factor was kind of pushed to the background after the concessions dispute was disclosed, so now, after that cloud is starting to dissipate I think it's reasonable to expect the permitting stuff regains the attention it deserves.
When the Falchani discovery
was announced, and after some drill results, it became clear that the deposit had a number of layers, with a first layer (rhyolite) at surface that contained high grade uranium, followed by other layers including the "lithium rich tuff" layer (on which the
Falchani PEA was focused), with high grades of lithium. Because of the presence of high grade uranium and lithium on those first holes, Falchani
was even touted as a "high-grade Lithium and Uranium discovery".
As a result of these first news releases, Minem (Ministry of Energy and Mines) rapidly began an investigation and come to the conclusion that a uranium regulation would be needed for the exploitation of Falchani's lithium, as they were assuming that the uranium layer had irradiated the lithium tuff layer, which could pose a severe risk to the nearby communities. Despite this "note of caution" Minem promised to have a uranium regulation in due curse to make Falchani's exploitation feasible, which in turn would make Macusani Uranium Project feasible too, from a permitting point of view.
Although uranium was not found on subsequent exploration platforms, Minem has since
stubbornly affirmed that a uranium regulation is required for Falchani's exploitation, and
even suggested Macusani Yellowcake to continue exploring to find lithium resources that are far enough to any uranium ocurrences. If lithium is found without any "relation to" uranium, then its permitting could be streamlined and start production very fast, because lithium is regarded as a non-metal in the peruvian regulation.
The thing is that until now (almost 4 years later) Minem has not finalized the promised uranium regulation, and according to
a recent report by El Comercio that could take quite a bit of time. It seems that, instead of making progress on that front, bureacrats inside Minem have been collecting "evidences" to make Falchani's permitting an authentic headache. Good news is that $LI has got an ally inside the recently sworn Congress. Let's look at it in a bit more detail.
Recently (November 17), asked about the state of the "lithium project", the Viceminister of Mines (Jorge Chavez)
declared before the Congress' Energy and Mines Commission:
"Status of lithium projects in the department of Puno. There is currently no application file for authorization to start exploration activities in the General Mining Directorate of the Vice Ministry of Mines of the Ministry of Energy and Mines. But, for context, the owner is Macusani Yellowcake S.A.C., in consortium with Plateau Energy Metals of Canada. The location is in the district of Corani, province of Carabaya, department of Puno. The land is the rural community of Quelcaya, the mineral is lithium, with 40 drilling platforms, that is, they are also in exploration work. The schedule is 12 months and it is in the rural community of Quelcaya. The EIS (Environmental Impact Statement) was presented to the General Directorate of the Environment of the Vice Ministry on July 5, 2021. The ANA issued observations on this EIS and the DGAAM also issued observations to the EIS. In response to the administrator's request, the DGAAM granted 10 additional days to raise the observations (October 18, 2021). In this context, we are being very careful in this aspect of lithium extraction. While it is true this is a material that is necessary to develop the income of resources that can be had and are necessary to be used not only in Peru but also to be exported, we have to be very careful, because we have requested reports from different countries specializing in this issue, and lithium, in the area where it is located, in Corani, comes with an aggregate of uranium, and they have issued us reports that the company that must do this first exploration and then extraction of this material must be a company specialized in the extraction of this delicate material. If we do it with only average knowledge on the subject, we can have a serious radiation problem, because lithium in that area comes with an aggregate that is uranium. So it must have the characteristics and the capacities to be able to separate one material from the other, because doing it without taking these precautions would be very dangerous, we could have contamination, radiation in that community, difficult to control.
That is why we are being very neat and careful about this lithium project, particularly in that area where it is located."
Shortly after, during the Q&A section, the congressman Carlos Zeballos, which apparently has been in communication with Macusani Yellowcake, commented:
"I greet the Vice Minister who has come in representation of the Minister of Energy and Mines. Well, most of all, I want to make a comment about lithium. I am a congressman from the Puno region, I am also an engineer specialized in mining operations. And what the Vice Minister has said regarding lithium, it seems to me that he does not have the real information. For this reason, we would request that it be possible, perhaps with the presence of the Energy and Mines Commission, Mr. President, to have a meeting with both the Minister of Energy and Mines and with the company that is currently exploring lithium. Because we have other information than the one the Vice Minister just gave us. Lithium is separated from uranium. Lithium deposits are one thing and uranium deposits are another. I am telling you this because I have the necessary knowledge, Mr. Vice Minister, and this is how it is happening. Also, our lithium is in rock. The company recently recovered the 32 concessions that it had judicialized with Ingemmet. It just won.
So here we have to be clear. Because on the other hand, Mr. Roque Benavides, representative of Confiep (Confederation of Private Companies), is indicating what the vice minister has been saying, that lithium is next to uranium, which is totally false. I can say it, because as a Congressman of the Republic for the Puno Region I have the necessary information to say what I am saying.
For this reason, I would request that the company that has been doing the exploration, Macusani Yellowcake, is also be invited to come and give us a report on how the exploration is progressing, and also to absolve these doubts that are being generated at this time, because if we are going to be on these terms the project will not come to fruition as we desire it to. Because what is wanted here is to expedite the lithium exploitation, because time goes by and we need this mineral to already be exploited, for which it is being explored. That would be my comment, Mr. President, thank you very much."
Viceminister Jorge Chavez finally replied:
"Greetings to Congressman Zeballos. We understand his position, and what we want through this management is to guarantee all the corresponding measures. I think it is a very good opportunity to make a presentation and exchange information, because we, like the congressman, have received technical reports that indicate the opposite of what he has stated. So it is not a question of whether one is right or not, but to see on the basis of the reports, the adequate technical support. What we want is to guarantee that an extraction of this material is carried out in such a way that it cannot have an effect on the population. If the contrary is proven to the reports that we have, so it be. We are not going to interfere in anything, what we want is to guarantee the safety of the extractive action of this material.
That is what I wanted to point out, and it is an excellent opportunity, and we submit to any invitation to be able to explain all the aspects related to this extractive activity in the Puno region. Thank you very much, Mr. President".
In other words, soon (probably this year) both parties (Macusani Yellowcake and Minem) views will be confronted and that confrontation will de moderated by the Congress' Energy and Mines Commission. This should have happened years ago, but better late than never as they say. When this permitting cloud is finally cleared, the market should not have any doubt about $LI's ability to streamline Falchani. Stay tuned.