In the context of the current political crisis in Peru, wihch has caused riots, violence and police repression maily in the southern regions of the country (including Puno), Macusani Yellowcake's manager Ulises Solis conceded an interview to local bussiness magazine Gestion. Besides talking about the short term plans for the lithium and uranium projects, Ulises gave details about the recent decision to suspend the hydrogeological drilling program until the protests ease, which in fact has been followed
by a similar decision from Minsur, a big tin miner that operates not that far away inside Puno.
The part that caught my attention is when Ulises talks about how they had to stop working despite having good relations with the communities in their direct area of influence:
(...) For security reasons, we stopped these operations (hydrogeological studies) on December 10 because the leaders of the local peasant rounds told us that they did not want to conflict with the provincial rounds. We are going to have these operations stopped throughout January, because they can come (rounds from other areas) and force the activities to stop in the districts and provinces of Macusani. It's social pressure. We cannot continue working, because if we do, the community members will be penalized. (...)
Ulises Solis has always said Macusani Yellowcake has social license from their local peasant rounds, but apparently there are other more influential rounds (the provincial rounds) whose decisions tend to prevail. The current tensions with Lima politics are only strenghtening their organization, which will also have a word in future situations, for example when social approval is needed for a construction decision. In any case, this "hidden stakeholders" are certainly something $LI management should keep an eye on.
Below is the complete transcript
of the interview:
In recent days you announced the spin-off of the uranium assets. Is this a new commitment to this mineral?
The decision to separate the uranium and lithium projects is due to corporate interests. The company that will take over uranium concessions will be called Macusani Uranium in Peru. Macusani Yellowcake will continue with all the lithium concessions and we think it should be extended. Macusani Uranium's board of directors, management and shareholders are the same as Macusani Yellowcake's.
What motivated you to separate assets?
There are anti-miners and organizations that began to say that the Falchani project contained uranium, but that's not true. Our uranium projects, which are seven so far, contain lithium in a smaller amount, but we are not going to develop them at this time. What we want is to develop the Falchani project that only contains lithium and not uranium.
They also said that Falchani was within a natural reserve area, which is also false. Three of the seven uranium projects are within the natural reserve area, but that does not mean that they will never be exploited, since archaeological studies must be carried out to do so. But Falchani is not within this natural area and there are no archaeological remains. We have the corresponding certificate.
In addition, they say that Falchani is going to mutilate the Quelccaya snow peak, which is also false, since we are kilometers away from that snow peak. We have uranium concessions that are relatively close, but they are not going to be mined at the moment or maybe not even explored. For all these reasons, it was decided to differentiate the uranium and lithium projects, but the management and board of directors in Peru remain the same.
Has the separation already materialized?
We have officially done it the last week of December, when we carried out a capital increase in Macusani Yellowcake to consolidate all foreign contributions. The procedures are on track.
How many concessions go to each company?
53% of the concessions go to Macusani Uranium, a little more than 86 of the total.
What opportunity does this separation open up for you? Do investors now see the lithium project as more attractive?
Not only lithium, but uranium, because there are investors who are interested in renewable and clean energy, such as uranium nuclear power. Others want to invest only in lithium, to make batteries. This will help us to raise more capital in both companies, to differentiate the shareholders from each other, and thus we will be able to develop these projects separately.
Is there an intention to resume the uranium project?
In March or April we must present legal instruments for environmental permits to explore for uranium and continue with the studies as we have already done and which were halted in 2017. With the new capital that comes for uranium, we will continue with our work.
Who are the investors interested in uranium?
We are now listing on the Nasdaq Stock Exchange and that means that we not only have the Canadian or European market —where we are on the Frankfurt Stock Exchange—, but we can also attract the American market, which is the main interest in investing in uranium.
So, do you plan to explore for uranium this year?
This year we should start some uranium exploration work to increase our resources. We now have 124 million pounds of uranium identified as resources and we want to increase that. The problem comes from the paperwork. There is a delay in the Ministry of Energy and Mines (Minem) to obtain these permits.
Does the dispute you have with the Geological, Mining and Metallurgical Institute (Ingemmet) for some concessions restrict your ability to separate the uranium assets?
Practically 21 of the 32 concessions (in dispute) go to Macusani Uranium, but in the state they are. The new company assumes that if Ingemmet wins the trial in the future, these concessions will be lost, that is stipulated; and the same for Macusani Yellowcake, but that is in the hypothetical and denied case that it happens.
We are on the right track in the Judiciary. We have the Medida Cautelar that protects the 32 concessions and we already have a positive decision in the first instance. Now the process is in the second instance and could end in April or May of this year.
What is the impact of the demonstrations in southern Peru on Macusani's operations?
There is a lot of mistrust from investors in general, but in our case they are calm because we have the social permit. We have always walked very well with the communities, until now, but we are going to see what happens after the conflicts in Puno.
Haven't you had to paralyze your activities?
We have a permit from the National Water Authority (ANA) to carry out hydrogeological studies. For security reasons, we have stopped these operations on December 10 because the leaders of the local peasant rounds told us that they did not want to come into conflict with the provincial rounds. We are going to have these operations stopped throughout January, because they can come (rounds from other areas) and force the activities to stop in the districts and province of Macusani. It's social pressure. We cannot continue working, because if we do, the community members will be penalized. In any case, there is nothing against us or neighboring mines.
What is the status of the Falchani lithium project?
We want to upgrade the resources to reserves this year. We have been authorized for the participatory workshop for the semi-detailed EIA to be carried out by the Regional Government of Puno. We hope that the social problems will be solved this week or next and we will resume our meetings to carry out this activity. Then we will present the semi-detailed environmental impact study (EIA), which we expect to be evaluated in four to six months, in July or August, and then we begin drilling to convert the resources to reserves. According to the contract we have and the number of platforms, drilling is done in five months.
What steps would be missing towards a start of production?
In February next year we hope to have proven reserves and at the same time in July (2023) we will start the EIA for exploitation. If it is presented in May of next year and the evaluation takes 18 months, I think that in January 2026 we should have the EIA approved and the authorization to begin construction of the plant. I think that during 2026 we can build the plant and start (production) in 2027. We are losing a year due to legal permits, but that's right, it's delayed.
Are you receiving capital or are you going to go looking for it?
We have capital, we have money in our pockets, we have a little more than US$ 34 million in cash and little by little we are strengthening that cash with the exchange of shares. When the EIA is approved, we will go out to look for capital to start operations.
In 2022, Macusani was linked to Alejandro Sanchez, a friend of former President Pedro Castillo and investigated in the "Shadow Cabinet" case, how is that situation?
In nothing. It is true that Mr. Sanchez made the connection for us to meet with the former President of the Republic, that was absolutely all. Mr. Sanchez came to my office, we explained the benefits of the project and he arranged a meeting with the former president. That was in September 2021, 45 days after he became president. We met and he told us that he was not going to nationalize or expropriate projects.
He informed us that he was going to travel to Washington and New York. We met at the home of the Peruvian ambassador in New York, and he also told my (global) CEO that he was not going to nationalize, that investment was welcome, that we should just respect our communities and provide jobs. It was a six minute meeting. That was totally public. What mr. Sanchez has said among his group about lithium are conjectures. Then we have met in the Presidency of the Council of Ministers (PCM) with Anibal Torres to talk about some permits, but they never did anything. So far they have done nothing.
Has that limited Falchani's progress?
That does not prevent anything. Everything was public. It was even published on our website and is in the Government Palace admission books. Now we are oblivious to what happens to Mr. Sanchez and Mr. Castillo. I have gone to the Prosecutor's Office, I have declared the same thing. They have summoned me as a witness, not as a defendant, and that was it. Thank God we never went to Sarratea's house (of Alejandro Sanchez), our interview with the president was at the Government Palace and at the house of the Peruvian ambassador in New York.
Do you have any hearing pending in the Prosecutor's Office for that case?
To date we do not have any pending summons, if something to clarify comes later, so it be. I have nothing to hide, we are a public company, we are on the stock market and we have to be clear.