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Macusani Yellowcake is Peru’s Uranium Explorer
By James West
MidasLetter.com
Tursday, Novemeber 19, 2009
Macusani Yellowcake (TSX.V:YEL) is not exactly in the crosshairs of the uranium investing public at present, but that may change soon in view of a strengthening uranium price and continued exploration success on their deposits.
The Macusani Plateau covers about 21,000 km2 and contains ignimbrites (volcanic flows) that are enriched with secondary uranium. Their properties cover almost 12% of this area.
The targets are large, low-grade, near-surface uranium deposits. Initial metallurgical work indicates that about 90% of the uranium is recoverable. The company believes that the capital costs and operating costs for an open pit uranium mine on the Macusani Plateau will be low.
The company’s current exploration program has yielded some promising results that more or less bear out the company’s geological theories.
According to the company’s latest press release of September 29, 2009:
The results continue to return significant high grade uranium mineralization over long intervals including 36.0 metres grading 0.0583% U3O8 (118 feet grading 1.166 pounds of U3O8 per ton). The core is from holes drilled by the previous concession holder, RAM Resources Limited (formerly Contact Uranium Limited), which had drilled 193 holes on the properties but had assayed only 87 holes prior to shutting down its exploration activities in Peru.
Macusani CEO, Peter Hooper, stated that “These results continue to confirm the high grade potential of the recently acquired Corachapi properties. The Company is on schedule to release a National Instrument 43-101 compliant resource on the Corachapi and Kihitian properties later this year.
Peru to Export Uranium by 2011
In the next two years, Peru may export uranium and be one of the four Latin American countries to have a nuclear reactor generating electricity in several remote areas of the country, the president of the Peruvian Institute of Nuclear Energy (IPEN) Conrado Seminario said Thursday.
He noted that IPEN currently promotes a bill encouraging private investment in the electric core field with the purpose of having an alternative electricity generation source to fossil fuel, hydro-electric and wind power.
In the future, given the oil, gas and water shortage caused by global warming, the atomic reactors would be the substitutes to generate electricity and avoid stagnation of industrial and human activities.
Seminario said that in the world there is a resurgence of nuclear power, driven by the high cost and scarcity of traditional fuels. Additional reasons are clean air and environmental requirements.
"In 2008, a provision enabling the IPEN be part of the Energy Guide Plan Commission was issued. This committee will seek to modify the energy matrix which has remained unchanged for years. Its amendment will provide access to other energy sources including nuclear," he said.
World Uranium Demand Strengthening
The world’s nuclear industry is constantly growing. Among the factors that have attributed to a renewed interest in nuclear energy are improved reactor performance, extended fuel cycles, increased generating capacity, and reduced operating costs. In addition, there are concerns regarding the global oil supply and global warming, which have also contributed to a revival in nuclear power. According to the World NuclearAssociation, there are currently 36 new nuclear plants under construction, another 93 planned, and an additional 218 proposed. Furthermore, only 55% of the world’s reactor requirements are supplied through primary uranium production (mining). The remaining demand is met from secondary sources such as ex-military weapons, excess commercial inventories, re-enrichment of mining tailings, and spent fuel reprocessing.
Three countries, namely Australia (contains 24% of uranium resources), Kazakhstan (17%) and Canada (9%), account for more than half of the world’s uranium resources. Total uranium deposits in these three countries are estimated at 4.7 million tonnes. In 2007, annual worldwide uranium production was approximately 41,280 tonnes and was dominated by Canada and Australia, who together produced about 44% of annual mine output. Following these two uranium producing countries are Kazakhstan, Niger, Russia, and Namibia. In 2007, these six countries combined accounted for approximately 83% of all mine production. The industry is dominated by seven companies, each producing more than 2,000 tonnes of uranium annually and accounting
for 85% of total production.
According to the Nuclear Energy Agency, “secondary sources are expected to decline in availability,particularly after 2020, and therefore reactor requirements will have to be increasingly met by primary production.”
The potential growth in demand for uranium, coupled with limited mining capacity expansion and a depletion of secondary sources of uranium such as ex-military weapons, could have a favorable effect on uranium prices. We therefore view the prospects for the uranium industry as positive over the long term.
LOM Securities of Bermuda selected Macusani as a buy in October 2008, and the company’s share price performance since that time has seen it appreciate from the October 2008 price of CA$0.14 to its current level of CA$0.25.
The company has commissioned a 43-101 compliant Preliminary Assessment Study to be published next month that will stipulate a proposed open pit, heap leach, operation. Details will be published at that time and it is expected that mining costs will be low.
Uranium prices have been somewhat volatile in recent months, but it would appear at this time the spot price for uranium has more or less built a floor at above US$40 per pound. As long as uranium prices remain solid above $40 per pound, Macusani could easily become one of South America’s premier exporters of uranium, and do so profitably.
The availability of uranium for nuclear power generation could also mean a renewed interest in the development of a nuclear power facility in Peru.
Follow the company’s progress at www.macusaniyellowcake.com .
Macusani Yellowcake (TSX.V:YEL)
Price: $0.25
Shares: 42 million
Resources: Potential is 40-50 million pounds of uranium from three deposits. The company currently has 12-14 million pounds (43-101 compliant) from first deposit (Colibri 2 and 3), and the second deposit (193 drill holes) is being assayed (Corachapi). The third deposit (Kihitian) needs additional drilling.
Valuation: Peer group sells at $1.50 - $2.00 per pound of uranium, and YEL is at 30 cents per pound, so share price appreciation potential is several times the current price.
SOURCE: http://www.midasletter.com/news/09111901_Macusani-Yellowcake-is-Perus-uranium-explorer.php
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Uranium Epxloration
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