Macusani Yellowcake CEO Peter Hooper Discusses Uranium in Peru on Today’s Midas Letter Money
Macusani Yellowcake (TSX.V:YEL) CEO Peter Hooper joins host James West on Midas Letter Money from our Toronto Studios to discuss the scale and scope of the company’s giant uranium exploration project in Peru. As Peru’s largest explorer for Uranium, Macusani is planning to become its largest producer of Uranium in the near term.
Peru at this point has no nuclear reactors for electrical power generation, yet the country suffers from acute shortages of electricity, with reliable power an elusive goal for most of the country’s rural communities.
The full transcript of the interview is as follows:
James West: Hi, I’m James West. This is Midas Letter Money. My next guest is developing uranium assets in Peru. Peter Hooper is the CEO of Macusani Yellowcake trades on the TSX venture under the symbol YEL. Peter, thank you for joining us today.
Peter Hooper: It’s a pleasure to be here.
James West: Peter, you’ve been working on this project for quite sometime and since I first started following a few years ago, it’s become much bigger. Why don’t you just elaborate a bit about on where the project is, what you’ve done so far and how it came to be such a large project?
Peter Hooper: We started in 2007, took it public in November and we survived 2008 and 2009, but we never stopped working. We started drilling immediately and we managed by raising money all the way through. To date, we’ve drilled up three deposits and we have a combined nearly 30 million pounds of 43-101 combination of resources inferred and measured. You’re not supposed to have them but we have.
James West: Right, of course. So I’ve been to Lima, Peru and that’s a very chaotic city. I’m trying to picture those guys running a nuclear reactor down there. Does Peru got plans to build nuclear reactors?
Peter Hooper: Peru has no uranium mining and they have one medical reactor. That’s it. The uranium here was found by Margaret Thatcher, you know that of course.
James West: I didn’t know that.
Peter Hooper: She persuaded the British Geological Survey to fly Peru and half of Chile for airborne geophysics including radiometrics in 1980 and ‘81, really is a thank you for the full control. Out of that came hundreds of airborne anomalies and one of the biggest anomalies, it’s right where we are. They created the IPEN, Institute Proven Energy Nuclear at the same time and IPEN, pressing uranium in those days before Chernobyl with sky high and they did some quite a lot of exploration work including some added work. So that’s the basis of where we started uranium price crash that changed the mining law in ‘91 which meant that IPEN had to stop paying the government for all these properties there then they change the rules. Uranium to this day is treated as a base metal improve(ph) no special rules.
James West: So then who would be the ultimate client with that — implied that in the UK would probably be the off take client?
Peter Hooper: Well, more or so the Chinese or the Koreans or the Japanese is my guess.
James West: Okay, so it would be creating uranium mine for export then?
Peter Hooper: Yes, correct.
James West: Okay. So you’ve got 30 million pounds at this point and how far away would you say in the best case scenario we could be from uranium mine.
Peter Hooper: Well, the story goes like the first guy to realized the recent potential was John Challis and he created a company called Solex and he has take two-thirds of the plateau. Frontier Pacific did a lot of work from the joint venture that all fell apart and they run out of money. Solex was bought by Southern Andes and we’ve just moved with Southern Andes. Right now we own 90% of the plateau.
James West: Wow. So that has a potential then to be a huge uranium mine.
Peter Hooper: Well, out of that all our deposits actually go on to the next-door properties, properties we now own. So yes, we have huge potential to dramatically increase our resources quickly.
James West: Okay. What kind of grains are we looking at?
Peter Hooper: Well, one on side its half a pound per ton and on the other side, it’s higher. It’s probably two to three pounds a ton. But we’ve done metallurgical works since 2007 and the recoveries here are huge. They are 96%, 98%, 90% and it’s a heap leach potential, heap leach situation and we’ve done common lead to tests. Kamaka is our next-door neighbor, because they get the same sort of recovery, Solex at the same. The reason these recoveries are so high in my opinion is that when we do our ground radiometrics, we test for 40 elements. There’s no thorium. There’s no manganese. There’s no iron. There’s no copper. There are no contaminants and no titanium.
James West: So those are all undesirable elements in the uranium —
Peter Hooper: For recovery.
James West: Right.
Peter Hooper: Yeah, exactly. So it’s pure autunite, meta-autunite, carnotite, and these are easily soluble in sulfuric acid and which is the agent for the heap leach. When you added the heap leach, you get a pregnant solution and we found if you recall the South Africans (00:04:38) or Russian patents for resins back in the ‘70s. They are experts in that field. We’ve got a guy who found us resins who can extract the Yellowcake out of pregnant solutions and again, high recoveries.
James West: So we’ve got a lot of metallurgical work. We’ve got hundreds of tests. We have a process at work. It’s very cheap. We’ve done a PEA.
The first PEA at million pounds a year for just one target, the price has come at $22 a pound if you use your way which is cheap. When we are expanding that and the objective this year is to get a PEA at five million pounds a year which all of a sudden puts us a big producer. Now to do that, we need in a 10-year life, I need 50 to 60 million pounds so that’s the target from our drilling this year. We’ve got three drills turning now. There’ll be six drills turning before the end of the year.
We’re on the drills and we have a superb manager in Lima who runs it for us. He’s Romanian and he was a prof in Bucharest taught in Johannesburg, doctor. He ended up owning — he work for (00:05:52) and Gold Fields in Peru surveyed the country always. He owns Gold Plants in Peru. He runs a little gold mine and owns the Old Englehard (00:06:03) Refinery there. He has his team together. He’s run those for 14 years and that’s the team. He was doing the work to a solid team, Peruvians, good geologists, good head office, good engineers and a good lawyer in the office who does all our dealing with the locals. We have extremely good relations with the locals.
James West: Okay, so you’re going to drill next year, try to get to 60 million pounds. I’m sorry, this year. So then it would be sort of raise money towards prefeasibility and everything?
Peter Hooper: We have $13 million in acuity, so we don’t have to raise any money. We’ve spent about half a million dollars of this a month to run. So we in fact have two years worth of exploration moneys now. The objective is to get a PEA this year and yes, we need to position the company to have a prefeasibility ready for 2013. In other words, the company can be put into production of that state because if you recall there’s going to be a shortage of supply when the Russian military fuel missile stuff comes off the market and that’s predicted to be in 2013. That gap is supposed to be filled by Cigar Lake, (00:07:15) down to Namibia, all projects slackly behind the time. So it’s on the cards. There’s going to be a struggle to get enough supply particularly with the new reactors coming on the stream. So if we position the company to be ready at that time, we should be in good shape.
James West: So that’s the strategy then.
Peter Hooper: That’s the strategy.
James West: Okay. Well, that’s a really interesting story. We’re gonna leave it there for now. Peter, I’d like to thank you for joining us today.
Peter Hooper: Pleasure, indeed.
James West: If you’d like to learn more about Macusani Yellowcake, you can visit them online at macyel.com and if you’d like to learn more about companies like Macusani at the earliest part of the value creation curve, visit midasletter.com. I’m James West. This is Midas Letter Money.
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