VANCOUVER — Toronto-based junior Macusani Yellowcake (TSXV: YEL) has moved one step closer to a production decision at its 900-sq.km uranium portfolio, which lies 180 km northwest of the city of Juliaca in southeastern Peru. On Dec. 5 the company released a preliminary economic assessment (PEA) based on a central milling facility that would process 23,400 tonnes of material per day.
Macusani's project area sits in the flat Altiplano of the Eastern Cordillera in the Andes mountain range 4,400 metres above sea level, with Peru's Interoceanic Highway passing 11 km to the east.
The company's uranium deposits occupy six separate mineral concessions — namely Kihitian, Colibri II & III, Corachapi, and Triunfador — with global resources totalling 48 million measured and indicated tonnes grading 0.0253% U3O8, as well as 40 million inferred tonnes averaging 0.0286% U3O8. All resource calculations assume a 0.075% U3O8 cut-off grade.
Macusani's deposits are hosted by acidic tuffs with pyroclasts. The main minerals comprising the tuff are quartz, orthoclase and plagioclase in a groundmass of amorphous glass. Uranium in the form of pitchblende, uranophane, gummite and meta-autunite occurs predominantly in fluvio-lacustrine sediment between two pyroclastic units.
The company's proposed mine would combine open-pit and underground operations, with heap leach processing used to extract uranium into an acidic leach solution prior to recovery via ion exchange and a solvent extraction acid recovery circuit. The operation would crank out around 4.3 million lb. U3O8 annually over a 10-year mine life assuming 88% recoveries.
The company notes that ion exchange was identified as "the simplest and most cost-effective" processing option due to the high purity of uranium mineralization within the Macusani rhyolites, along with the absence of any contaminants such as thorium, molybdenum and vanadium.
Despite relatively low uranium grades across Macusani's deposits, the company does enjoy the dual benefit of open-pit potential and competitive production costs. Open-pit strip ratio sits at 1 to 0.65, while average operating costs are pegged at US$20.57 per lb. U3O8. The company estimates a development price tag of around US$331 million, with sustaining costs tacking on another US$228 million.
President and CEO Laurence Stefan notes in the release that Macusani's economics position it as 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."
Assuming a uranium price of US$65 per lb. U3O8, Macusani would generate a US$417 million after-tax net present value (NPV) at an 8% discount rate, along with a 32.4% internal rate of return (IRR) and a payback period of around 3.5 years. At US$78 per lb. U3O8 the NPV jumps to US$643 million, with an IRR of 43.6% and a 3-year payback period. (The current spot price is only US$36 per lb. U3O8)
Macusani's PEA paves the way for a prefeasibility study, which is expected to begin in early 2014. The company notes that its property package provides the potential for further resource expansion, with a number of its uranium deposits open along strike and at depth.
The company reported working capital of US$2.4 million at the end of the second quarter, and has traded within a 52-week range of 5¢ and 17¢. Macusani closed at 9¢ per share at the time of writing and maintains 159 million shares outstanding for a $14.4 million market capitalization.
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