Read the article on Hydra Capital’s website, or below:
It’s been a while since I’ve said much about Plateau Energy Metals (previously Plateau Uranium, PLU.V, last at $1.35), but the name change says a lot about what’s transpired here. While a lot of junior companies constantly re-invent themselves to chase the next “hot” commodity in a new area, Plateau had the good fortune of having a new “energy metal” (lithium) fall into its lap right in its own backyard. The Falchani deposit consists of a lithium-rich tuff (extrusive volcanic rock) that accumulated over a large area in which the lithium was trapped over millennia of hydrologic activity. In a practical sense, it appears to be laterally continuous, good grade (0.6-0.7% lithium oxide), and seems to be amenable to open pit mining methods and standard recovery processes.
And it looks like Falchani is big. With widely spaced drilling to date covering only about20% of the prospective area, Falchani’s inferred resource is already well over 100 million tonnes at a grade of 0.6-0.7% Li2O. That translates into about 2-2.5 million tonnes of lithium carbonate which is already enough to keep a good-sized open-pit operation of 50,000 t of Li2CO3 going for 40-50 years. I was looking around for a decent market comparable in terms of the potential economic value of the asset and I came across Lithium America’s Thacker Pass project in Nevada. While the Thacker Pass is claystone hosted, Falchani is in a tuff (extrusive volcanic), and as a result I suspect that the Falchani rock will make for a more simple overall operation, even if the terrain is more complex in the greater Falchani area. The deposits are both flat lying though, close to surface, and of comparable scale and grade. There certainly are deposits with higher grades (e.g., Nemaska Lithium, NMX.TO, Critical Elements (CRE.V), but Falchani’s tonnage potential makes it stand out as one of the biggest hard-rock lithium deposits out there. That big tonnage potential might make all the difference in a major mining company’s interest level in the project, so I’ll we watching closely to see what the next move is from a corporate standpoint. If things are handled properly, there may be a multi-bagger on the table here.
For Peru, the asset would put the country on the lithium stage globally and deposits like this are hard to come by in regions that also have highways, labour, water, and power all easily accessible. On that basis, I see a lithium project as an easy sell from a permitting and financing perspective and Peru is a great place to export from. Despite some recent reports regarding the potential for archeological sites in the region that briefly took the shares down about 20%, I would point out that Plateau has been operating in the area for more than a decade and is quite familiar with areas of potential cultural significance. I have to think that any archeological review could be conducted and concluded relatively quickly, but this will be a topic that management will address as part of the permitting process. It comes with the territory, so to speak.
There are some very sharp tacks behind this story now and I suspect some CA’s will be signed here soon, if not already, by majors wanting to have a closer look at what Plateau has found at Falchani. Of course there’s an extra “side project” of around 100 million pounds of low-cost uranium on the table as well, but that’s for another day. Plateau has certainly earned its “Energy Metals” moniker with the Falchani resource estimate that was released yesterday. Now it’s just a matter of seeing who’s paying attention and how management carries the ball. Next stop: China? Korea? India? Time will tell.