VANCOUVER — Toronto-based junior Macusani Yellowcake (TSXV: YEL; US-OTC: MCYWF) is 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 mineral concessions — including Kihitian, Colibri II & III, Corachapi and Triunfador — with global resources totalling 48 million measured and indicated tonnes grading 0.0253% uranium oxide (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 mostly 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 before recovery via ion exchange and a solvent-extraction acid recovery circuit. The operation would crank out 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 enjoys the dual benefit of open-pit potential and competitive production costs. The 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 development would cost US$331 million, with sustaining costs tacking on another US$228 million.
“We’ve worked hard to outline these large resources, and we think the PEA demonstrates some really robust economics that position us well to benefit from the expected recovery of the uranium industry, which we hope will start next year,” president and CEO Laurence Stefan said during a conference call. “Our base-case uranium price seems to be supported by research departments at the majority of brokerage firms.”
Stefan notes that Macusani’s projected economics could make it one of the lowest-cost uranium producers in the world, due to a low open-pit stripping ratio, anticipated low acid consumption and high process-plant recoveries expected in a short time.
Assuming 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 3.5-year payback period. At US$78 per lb. U3O8 the NPV jumps to US$643 million, with a 43.6% IRR and a three-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 should begin in early 2014. The company notes that its property package could mean more resource expansion, with a number of its uranium deposits open along strike and at depth.
The company reported US$2.4 million in working capital at the end of the second quarter, and shares have traded within a 52-week range of 5¢ to 17¢. Macusani closed at 9¢ per share at press time and has 159 million shares outstanding, for a $14.4-million market capitalization.
“To be honest, the most important factor in the direction we take over the next year is the uranium market,” Stefan said. “Assuming it becomes increasingly bullish, we’d like to look at both resource expansion and a prefeasibility study. We know where to drill and how to make discoveries, so assuming we can raise that capital, we think we can add tonnage there — but that will really depend on markets.”
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