(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 PLU.V)
If you are reading this, there's a good chance that you have seen me write on Plateau Uranium (PLU.V, last at $0.41) before. Plateau is unique in a couple of ways. For one, it controls a large, and unique, "energy metal" (uranium-lithium) deposit in Peru that really has no global comparable in terms of mineralogy or deposit type. Second, a PEA completed in January 2016 pegged operating costs at $17.28 per pound U3O8 without any credits for the subsequently evaluated lithium potential, which puts the project at the low-end of the global uranium cost curve. The lithium has been shown to be amenable to acid leaching at atmospheric pressures with good recoveries after only limited metallurgical/processing work. In short, Plateau has shown that it is sitting on a true "energy metal" deposit given that uranium and lithium are critical inputs into any realistic projection of the world's energy future in light of rising concerns surrounding urban air pollution and global warming.
This morning PLU put out a press release that detailed the discovery of uranium and lithium mineralization in a completely new area of the project called Falchani within the Chaccaconiza community, south of the company's already defined uranium-lithium deposit to the north. And what a press release it was... grades of 633 ppm U3O8 were intersected from surface to 45 metres depth (that's over 2x the grade of the existing resource to the north) and a new lithium-rich rock unit was discovered at a depth of 95 metres that graded 0.71% lithium oxide (Li2O) over 36.5 metres. These intervals are estimated to have true thicknesses of 37 metres and 30+ metres respectively. Drilling is ongoing in the Falchani discovery area within a radiometric anomaly on surface that covers some two square kilometres.
Now, granted it's relatively early days, but two square kilometres is just a monster deposit footprint. I would argue that at this scale and with these two energy metals occurring at or very close to surface, Plateau has found something capable of attracting the largest players in the mining industry. If Falchani is as big as the radiometric anomaly suggests it is, it would be truly a world-class deposit that would put Peru on the map in terms of both lithium and uranium potential.
Drilling is ongoing with more results expected over the coming weeks that should further define what Plateau believes is an extensive new area of this unique uranium and lithium mineralization. In my mind, the next step for the company is to attract a major to carry the project costs in order to minimize share dilution in order to maximize per share leverage for shareholders. Unless you've been living under a rock, you are surely aware of Cameco's recent decision to put its McArthur River and Key Lake on care and maintenance, which has sent a very clear signal to the uranium market and uranium consumers about the future direction of the uranium price. Meanwhile, lithium stocks have been on fire this year as investors grapple with the projected growth of electric vehicle (EV) demand and the increased lithium needs of the planet in an EV-dominated future. These are two major macro winds blowing at PLU's back at a time when very few people are looking at the story. There's lots of work to do yet, but there are precedent transactions that put a $1 billion valuation on the table for what PLU has already defined. Should Falchani prove to be even better than what's already been found on the Macusani Plateau, it could make for substantial returns from current levels.
Time will tell.