(Disclosure: The following represents my opinions only. I am not receiving any compensation for writing this article, nor does Hydra Capital have any business relationship with companies mentioned in this post. I am long YEL.V )
Name Change and Share Consolidation Tomorrow
As much as I enjoy a good tongue twister, I'm glad to see that Macusani Yellowcake (YEL.V on the TSX Venture) will be renamed Plateau Uranium (PLU.V on the TSX Venture) effective May 1, 2015. In conjunction with the name change the shares will be consolidated on an 1 for 8 basis, which will complete the transformation that YEL has gone through over the last number of years.
Since I started following the company, YEL/PLU has completed an amalgamation of the vast majority of the land position on the Macusani Plateau at a time when the uranium market was depressed and lethargic. While most of the industry has been in stasis post-Fukushima, YEL/PLU has: a) completed analytical work highlighting the simple metallurgy of the project, b) completed a preliminary economic assessment that places the project at the low-end of the global cost curve, and c) carried out drill programs to increase the resource base. Over the same period, I saw the resource grow to nearly 50 million pounds before the most recent acquisition of Azincourt Uranium's Peruvian subsidiary, Minergia, which should have roughly doubled the pounds in the ground (an updated consolidated resource is expected soon-ish). It's a textbook story of countercyclical consolidation of an asset and, in my view, it has left YEL/PLU with one of the most attractive large-scale uranium resources on the planet at a time when sentiment in the sector is just starting to shift back towards normalcy. Timing is everything.
People often ask me what I think the upside is on the project. It's hard to answer that question in absolute terms, but I think that the best recent market comparison is that of Mantra Resources. Mantra was bought by Russia's ARMZ for around $1 billion in 2011 (post-Fukushima) while it was still in the pre-feasibility stage. On every relevant economic metric (resource size, targeted annual production, projected cash cost, projected capex), YEL/PLU's project stands toe-to-toe with what Mantra had. To put some numbers to that, Mantra had a resource of roughly 83 mmlbs U3O8 and was targeting 4-5 mmlbs per year of production at a cost of around $25-26/pound on $300 million of initial capex (also note that part of the project was within a Tanzanian game reserve and there was no prior uranium mining in the country). In comparison, YEL/PLU's project has a resource of roughly 90-100 mmlbs U3O8, is targeting 4-5 mmlbs per year of production at a cost of around $21/pound on initial capex of $331 million. At the current market cap of $20 million, YEL/PLU is valued at roughly 1/50th of what ARMZ paid for Mantra. As a result, I believe the upside is "significant" and I'll leave it at that.
I know that the asset is generally poorly understood and lightly followed by the market and my review of the publicly data has me looking forward to the progress of the company under the Plateau Uranium banner. In addition to updating the existing PEA after the new resource is released, I expect management will actively market the story throughout 2015 as the market begins to once again focus on the growth of the global reactor fleet and looming uranium supply shortfall. I believe the project has both the scale and economics to attract the interest of institutional investors and global uranium players alike, which is always something that I look for in early stage opportunities. Given the access, infrastructure, and Pacific Rim location of the project I can see a number of countries, including Peru, who could benefit economically and strategically from this asset; particularly given its projected low-cost attributes. As always, time will tell.
For a more comprehensive summary of the project, link to a more detailed article on the asset here:
See today's press release below:
April 30, 2015 08:00 ET
Macusani Yellowcake Changes Name to Plateau Uranium and Announces Share Consolidation
Re-branded Company Appoints New Chairman and Welcomes New Director
TORONTO, ONTARIO--(Marketwired - April 30, 2015) - Macusani Yellowcake Inc. ("Macusani" or the "Company") (TSX VENTURE:YEL)(FRANKFURT:QG1) is pleased to announce that the Company has changed its name to Plateau Uranium Inc.. The Company also announces that all outstanding common shares have been consolidated on the basis of one new post-conolidated share for every 8 pre-consolidated shares. The Company also announces the appointment of Ian Stalker as Chairman of the board of directors and welcomes new director appointment, Engin Özberk, to the Company's board.
Name Change and Consolidation
The Company has changed its name to Plateau Uranium Inc. (the "Name Change") and consolidated its issued and outstanding common shares on the basis of one (1) new common share for every eight (8) existing common shares (the "Consolidation"). The Name Change and Consolidation were both overwhelmingly approved by shareholders at the Company's Annual General Meeting ("AGM") held on March 5, 2015. The Company's shares will commence trading on a consolidated basis under the new name, symbol "PLU" and new CUSIP (727638108) and ISIN (CA 7276381083) numbers on the TSX Venture Exchange at opening of trading on Friday, May 1, 2015. As a result of the Consolidation there are now approximately 32,861,359 common shares outstanding (subject to adjustment for fractional shares).
All outstanding warrants and options of the Company will be automatically adjusted, with the number of shares eligible to be acquired on exercise being reduced by dividing that number by 8 and increasing the exercise price of such warrants and options by multiplying the prior exercise price by 8.
The Company's board and management believe the share consolidation to be necessary and in the best interest of shareholders, as it will improve the re-branded Company's ability to attract new institutional and retail investors in order to raise the additional capital necessary to advance the Company's Peru projects.
Ian Stalker has been appointed Chairman of the Company's board of directors, replacing Alan Ferry, who will continue to serve as a director. Ian has been a director of the Company since September 2014, following the the acquisition of the Azincourt Uranium projects. The Company wishes to thank Alan for his capable guidance and oversight of the board as Chairman and as a long standing director during a period of signficant acquisitions and organic growth for the Company in the midst of a tremendously challenging uranium market.
The Company also wishes to officially welcome Engin Özberk to the board of directors. Engin was elected as a director at the company's AGM held on March 5, 2015. Engin has a Masters in Metellurgical Engineering from McGill Univeristy with vast technical expertise in mineral processing. He is currently the Executive Director & Senior Technical Advisor and Mitacs Industry Executive in Residence - Minerals, with the International Minerals Innovation Institute. Prior to his current role, Engin spent 17 years with Cameco Corporation, most recently as Vice President, Technology and Innovation. Prior to Cameco, Engin worked in mineral processing design, operation and commisioning for 18 years with predecessors of Sherrit International and SNC-Lavalin.
About Plateau Uranium
Plateau Uranium Inc. is a Canadian uranium exploration and development company focused on the exploration of its properties on the Macusani Plateau in southeastern Peru. The Company controls all reported uranium resources known in Peru and mineral concessions that cover over 100,000 hectares (1000 km2) situated near significant infrastructure. Plateau Uranium is listed on the TSX Venture Exchange under the symbol 'PLU' and the Frankfurt Exchange under the symbol 'QG1'. The Company has approximately 32,861,359 shares outstanding. For more information please visit our website at www.macyel.com or eventually www.plateauuranium.com.
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.