Macusani Yellowcake Announces Positive Preliminary Economic
Assessment for Uranium Deposits in Peru
Pre-tax IRR of 47.5% and NPV of $708 M (8% discount rate) at
$65/lb U3O8
TORONTO, ONTARIO--(Marketwired - Dec 5, 2013) - Macusani
Yellowcake Inc. (the "Company") (TSX-VENTURE:YEL)(FRANKFURT:QG1) is
pleased to announce the results of a Preliminary Economic
Assessment ("PEA") for its uranium properties located on the
Macusani Plateau in the Puno District of southeastern Peru. The
results from the PEA demonstrate that the Project has the potential
to become a large, low-cost uranium mining operation. In addition,
there remains excellent exploration potential to further expand the
size of the existing Mineral Resource. The PEA was prepared by GBM
Minerals Engineering Consultants Limited in conjunction with The
Mineral Corporation and Wardell Armstrong International. All
figures quoted are in US dollars.
Highlights of the PEA
- Net Present Value ("NPV") at an 8% discount rate of $708 M
pre-tax / $417 M post-tax and an Internal Rate of Return ("IRR") of
47.5% pre-tax / 32.4% post-tax using a uranium price of $65/lb
U3O8, considered as the long-term price by many industry analysts.
Capital payback has been estimated at 2.9 years pre-tax / 3.5 years
post-tax.
- Cash operating costs during years 1-5 to average $19.45/lb U3O8
placing it in the lowest quartile in the world using 2012
production figures. Cash operating costs over entire mine life to
average $20.57/lb U3O8.
- Annual uranium production during operating years 1-5 to average
5.17 M lbs of U3O8, which would have ranked the mine as the sixth
largest uranium mine in 2013. Life of mine ("LOM") annual U3O8
production are estimated to average 4.30 M lbs over a 10 year mine
life.
- Initial capital expenditures ("CAPEX") to construct the mine
and a 8.5 M tonne per annum ("tpa") process plant have been
estimated at $331 M. Total sustaining capital costs for LOM are
estimated at $228 M.
- Measured and Indicated Mineral Resource of 47.9 M tonnes
grading 253 ppm U and containing 14.3 tonnes U3O8 (52.8 M short
tons grading 0.598 lbs/ton U3O8 and containing 31.5 M lbs U3O8).
Inferred Mineral Resource of 40.5 M tonnes grading 286 ppm U and
containing 13.6 tonnes U3O8 (44.6 M short tons grading 0.674
lbs/ton U3O8 and containing 30.1 M lbs U3O8).
"The completion of the PEA is a significant milestone for the
Company on a number of levels." said Dr. Laurence Stefan, CEO of
Macusani Yellowcake Inc. "Firstly, the estimated production cost of
$20.57/lb demonstrates that we have a Project that has the
potential to be one of the lowest cost uranium producers in the
world due to a low stripping ratio in the open pit operations,
anticipated low acid consumption, and high process plant recoveries
expected to be achieved in a short period of time. Secondly, the
PEA demonstrates that the Macusani plateau has significant
potential to become a major uranium producing district considering
that only small areas have been explored to date. And finally, the
PEA paves the way for further development of our Project and the
completion of a Pre-Feasibility Study, which we expect to initiate
in 2014."
Potentially economic material for the Project will initially
come from multiple target deposits including Colibri 2 &
3/Tupuramani, Chilcuno Chico, Quebrada Blanca, Corachapi and
Triunfador 1. Conventional open pit and underground mining methods
are proposed. The PEA contemplates the construction of a mine and
centralized processing facility operating over a 10 year mine life
at a throughput of approximately 23 400 tonnes per day. A heap
leach would be used to extract uranium into an acidic aqueous leach
solution and recovery would be achieved via ion exchange ("IX")
with a solvent extraction acid recovery circuit. IX technology is
preferred as the simplest and most cost effective option
considering the almost pure uranium mineralisation available within
the Macusani rhyolites and the absence of any contaminants such as
thorium, molybdenum and vanadium.
Table 1. Key production and financial parameters of the PEA
Production Parameters |
Mine life |
10 years |
Average annual potentially mineable tonnes |
8.5 million tonnes |
Processing recovery rate |
88% |
Open pit strip ratio |
1 : 0.65 |
Average grade |
259 ppm U3O8 |
Average annual production (LOM) |
4.30 million lbs U3O8 |
Average annual production (Operating Years 1-5) |
5.17 million lbs U3O8 |
Financial Parameters |
Uranium price |
$65 / lb U3O8 |
Average cost of production |
$20.57 / lb U3O8 |
Start-up CAPEX |
$331 million |
Sustaining CAPEX |
$228 million |
|
Pre-tax |
Post-tax |
NPV (8% discount rate) |
$708 M |
$417 M |
IRR |
47.5% |
32.4% |
Payback period |
2.9 years |
3.5 years |
Contingencies
The base case financial projection includes a LOM contingency of
$86.2 M. This includes $61.7 M for the initial capital expenditure
("CAPEX") or approximately 32% of the total initial direct
CAPEX.
Sensitivity Analysis
A sensitivity analysis was performed to test the robustness of
the Project against variability in factors such as the price of
uranium yellowcake, operating costs, capital costs, grade of the
deposit and recovery rates. A chart illustrating key sensitivities
and their relationship to the Project NPV and IRR can be found on
the Company's website:
http://www.macyel.com/PEA2013/sensitivity-analysis/
Mineral Resources
In August 2013 the Company released updated NI 43-101 Mineral
Resource estimates showing a 167% increase in the contained U3O8 in
Measured and Indicated Mineral Resource categories and a 9%
increase in the Inferred Mineral Resources from totals previously
reported. The updated Mineral Resource estimate is based on 600
bore holes totalling over 55 000m.
Table 2. Summary of Mineral Resource estimate (75ppm U
cut-off)
|
Kihitian |
|
Colibri 2 & 3 / Tupuramani |
|
Corachapi |
|
Triunfador 1 |
Measured & Indicated |
11.8 M lbs U3O8 @ 1.27 lbs U3O8/ton (8.4 M t @ 635 ppm U3O8) |
|
14.7 M lbs U3O8 @ 0.48 lbs U3O8/ton (27.9 M t @ 240 ppm) |
|
5.0 M lbs U3O8 @ 0.39 lbs U3O8/ton (11.6 M t @ 195 ppm U3O8) |
|
n/a |
Inferred |
17.4 M lbs U3O8 @ 1.23 lbs U3O8/ton (12.8 M t @ 615 ppm U3O8) |
|
7.7 M lbs U3O8 @ 0.34 lbs U3O8/ton (20.4 M t @ 170 ppm U3O8) |
|
1.9 M lbs U3O8 @ 0.46 lbs U3O8/ton (3.8 M t @ 230 ppm U3O8) |
|
3.1 M lbs U3O8 @ 0.82 lbs U3O8/ton (3.5 M t @ 409 ppm U3O8) |
* Conversion of U to U3O8 is 1 : 1.179.
Cautionary Note
Readers are cautioned that a PEA should not be considered to be
a Pre-Feasibility or Feasibility Study. The PEA is preliminary in
nature and uses Inferred Mineral Resources which are considered too
speculative geologically to have economic considerations applied to
them that would enable them to be categorized as Mineral Reserves.
At this stage, the Mineral Resources cannot be converted to Mineral
Reserves as the Project has not been demonstrated to be technically
and economically viable to a sufficient level. There is no
certainty that the results predicted by this PEA will be realized.
The Mineral Resource estimates, upon which the PEA is based, could
be materially affected by environmental, geotechnical, permitting,
legal, title, taxation, socio-political, marketing or other
relevant factors.
Conference Call and Additional Details
A conference call to discuss the results of the PEA news release
with President & CEO Dr. Laurence Stefan as well as members of
the board and management team is scheduled for December 5th at 10
a.m. Eastern Standard Time, 3 p.m. Greenwhich Mean Time.
All interested parties can join the conference call by dialing
+1-888-231-8191 or +1-647-427-7450. Please dial in 15 minutes prior
to the call to secure a line. An archived copy of the conference
call will be available from www.macyel.com.
A presentation with highlights of the PEA is available from the
Company website at: http://www.macyel.com/PEA2013/presentation/
The Canadian National Instrument 43-101 ("NI 43-101") technical
report summarizing the results of the updated PEA will be filed on
SEDAR and the Company's website within 45 days of this press
release.
Qualified Persons
The scientific and technical information contained in this news
release relating to preliminary economic assessment was prepared by
or under the supervision of, or reviewed and approved by, Mr.
Michael Short, B.E., CEng., FIMMM and Dr Thomas Apelt, PhD, CEng.,
MAusIMM, of GBM Minerals Engineering Consultants Limited, and/or
Mr. Mark Mounde, BEng., CEng., MIMMM of Wardell Armstrong
International, who are independent technical consultants to the
Company and "Qualified Persons" under NI 43-101 Standards of
Disclosure for Mineral Projects.
The scientific and technical information contained in this news
release relating to the Mineral Resources was prepared under the
supervision of, or reviewed and approved by Mr. David Young, B.Sc.
(Hons), FGSSA, FSAIMM, FAusIMM, Pr Sci Nat (No 400989/83) of The
Mineral Corporation that is an independent technical consultant to
the Company and a "Qualified Person" under NI 43-101 Standards of
Disclosure for Mineral Projects.
About Macusani Yellowcake Inc.
Macusani Yellowcake Inc. is a Canadian uranium exploration and
development company focussed on the exploration of its properties
on the Macusani Plateau in southeastern Peru. The Company owns a
99.5% interest in concessions that cover over 90 000 hectares (900
km2) which are situated near significant infrastructure. Macusani
Yellowcake Inc. is listed on the TSX Venture Exchange under the
symbol 'YEL' and the Frankfurt Exchange under the symbol 'QG1'. The
Company has 159 473 613 shares outstanding. For more information
please visit www.macyel.com.
Disclaimer: Mineral Resources which are not Mineral Reserves
do not have demonstrated economic viability. Mineral Resources may
not necessarily be converted into Mineral Reserves. In
additon, "Inferred Mineral Resources" have a great amount of
uncertainty as to their existence, and as to their economic and
legal feasibility. It cannot be assumed that all or any part of an
Inferred Mineral Resource will ever be upgraded to a higher Mineral
Resource category.
This news release includes certain forward-looking
statements concerning the future performance of Macusani Yellowcake
Inc.'s ("Macusani") business, operations and financial performance
and condition, as well as management's objectives, strategies,
beliefs and intentions. Forward-looking statements are frequently
identified by such words as "may", "will", "plan", "expect",
"anticipate", "estimate", "intend" and similar words referring to
future events and results. Forward-looking statements are based on
the current opinions and expectations of management.
Forward-looking statements and forward-looking information include,
but are not limited to, statements with respect to estimated
production and mine life; the future price of uranium; the
estimation and/or realization of Mineral Resources and Mineral
Reserves; the timing and amount of estimated future production;
costs of production; success of exploration activities; and
currency exchange rate fluctuations. Except for statements of
historical fact relating to Macusani, certain information contained
herein constitutes forward-looking statements. All forward-looking
information is inherently uncertain and subject to a variety of
assumptions, risks and uncertainties, including the speculative
nature of mineral exploration and development, fluctuating
commodity prices, competitive risks, the availability of financing,
variations in grades or recovery rates, risks relating to
international operations, fluctuating currency exchange rates,
changes in project parameters, the possibility of project cost
overruns or unanticipated costs and expenses, labour disputes and
other risks of the mining industry, failure of plant, equipment or
processes to operate as anticipated, as described in more detail in
the Company's recent securities filings available at www.sedar.com.
Actual events or results may differ materially from those projected
in the forward-looking statements and Macusani cautions against
placing undue reliance thereon. Neither Macusani nor its management
assume any obligation to revise or update these forward-looking
statements.
Neither TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release.
Macusani Yellowcake Inc.Laurence StefanPresident and
CEO+1-416-628-9600laurence@macyel.comwww.macyel.comFacebook:
www.macyel.com/facebook/Twitter: www.twitter.com/macusani/
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