Pat McKeough recent replied to a Member of Inner Circle who was interested in a junior mining stock that is dividing its focus between two metals.
Plateau Energy Metals changed its name from Plateau Uranium after it identified a high-grade lithium deposit on its property in Peru, where it also has a large uranium deposit. Before it can develop either, it must ensure that they do not infringe on the nearby Area of Cultural and Archeological Significance. Although the company recently raised money for development with a share issue, it is a long way from drilling, says Pat. He also notes that global oversupply makes the near-term outlook uncertain for both lithium and uranium prices.
Q: Hi. I was curious what your thoughts are on Plateau Energy Metals Inc. Thanks. Take care.
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A: PLATEAU ENERGY METALS (symbol PLU on the Toronto Venture Exchange; www.plateauenergymetals.com) is a Canadian lithium and uranium exploration and development company focused on its properties on the Macusani Plateau in southeastern Peru. The company was formerly known as Plateau Uranium, but changed its name to Plateau Energy Metals in March 2018.
Today, its focus is on both lithium and uranium. Each of those is found in the Puno District of southeastern Peru. That area is near the border with Bolivia and Lake Titicaca. On its Falchani property, Plateau has so far outlined a deposit of 2.5 million tonnes of high-grade lithium. On its nearby Macusani property, it has defined a large uranium resource of 124 million pounds.
A key factor in being able to, at some point, mine the uranium and lithium deposits is their location in Puno’s Area of Cultural and Archeological Significance.
Plateau believes that the new Falchani lithium discovery area lies outside of the Area of Cultural and Archeological Significance. It cites archeological studies completed as part of its exploration program and the recent Environmental Impact Assessment study work. Both show that to date there are no sites of cultural or archeological significance affecting Falchani.
The company also believes that the local landscape, landforms, higher elevation and rock weathering style at Falchani are not conducive for hosting, or preserving, sites of archeological significance.
Still, Plateau’s existing uranium deposits are located within the Area of Cultural and Archeological Significance, although they appear not to be directly affected by any such sites. At the same time, the company reports that it is working with environmental and archeological consultants, local communities and Peruvian authorities to develop a plan to protect any culturally significant sites located close to the proposed infrastructure sites for its project.
Penny stocks: Company raises $4.5 million in share issue to fund exploration
The company now aims to advance the high-grade Falchani lithium project toward a Preliminary Economic Assessment that would determine the viability of building a mine. It also wants to continue exploration drilling. Plateau has already completed a positive Preliminary Economic Assessment on the Macusani uranium project. The company now needs to further define the deposit as well as work toward an environment assessment.
Plateau recently raised $4.5 million in a share issue at $0.95 a share to fund its ongoing exploration and development programs.
It’s a long way from early-stage drilling success to defining a mineral resource large enough to support a mine. The politically sensitive archeological areas where the deposits are located is also an added risk factor.
What’s more, the near-term outlook for both lithium and uranium prices is uncertain. That could make it difficult to raise funding for a mine.
Longer term, demand for lithium should continue to rise. That chemical is needed by the makers of electric car batteries, electric grid and power storage entities, and the makers of smartphones, portable electronic devices and lubricants. However, worldwide lithium production is currently at overcapacity. That’s mostly because miners have ramped up production in response to 2017’s big price jump. This includes bringing into production lithium deposits that were previously deemed uneconomical to mine.
Uranium prices have moved up a bit lately. But while the long-term outlook is positive, global supply still remains higher than demand.
Inner Circlerecommendation: These risky shares have some speculative appeal, but they are a hold only for highly aggressive investors.
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