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Macusani Yellowcake Inc (TSX-V) Investor Presentation

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June 2014 Corporate Presenation for Macusani Yellowcake (TSX-V: YEL) Uranium Project in Peru.

June 2014 Corporate Presenation for Macusani Yellowcake (TSX-V: YEL) Uranium Project in Peru.

Published in: Economy & Finance, Business

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  • 1. TSX-V:YEL FSE:QG1 Investor Presentation November 2014 TSX-V:YEL FSE:QG1
  • 2. Disclaimer The particulars contained herein were obtained from sources which we believe reliable but are not guaranteed by us and may be incomplete. The opinions expressed are based upon our analysis and interpretation and are not to be construed as a solicitation or offer to buy or sell the securities mentioned herein. This presentation includes certain forward-looking statements concerning the future performance of Macusani's business, operations and financial performance and condition, as well as management's objectives, strategies, beliefs and intentions. Forward-looking statements are frequently identified by such words as "may", "will", "plan", "expect", "anticipate", "estimate", "intend" and similar words referring to future events and results. Forward-looking statements are based on the current opinions and expectations of management. Forward-looking statements and forward-looking information include, but are not limited to, statements with respect to estimated production and mine life; the future price of uranium; the estimation of mineral reserves and resources; the realization of mineral resource and reserve estimates; the timing and amount of estimated future production; costs of production; success of exploration activities; and currency exchange rate fluctuations. Except for statements of historical fact relating to Macusani, certain information contained herein constitutes forward-looking statements. All forward-looking information is inherently uncertain and subject to a variety of assumptions, risks and uncertainties, including the speculative nature of mineral exploration and development, fluctuating commodity prices, competitive risks, the availability of financing, variations in grades or recovery rates, risks relating to international operations, fluctuating currency exchange rates, changes in project parameters, the possibility of project cost overruns or unanticipated costs and expenses, labour disputes and other risks of the mining industry, failure of plant, equipment or processes to operate as anticipated, as described in more detail in the Company's recent securities filings available at www.sedar.com. Actual events or results may differ materially from those projected in the forward-looking statements and Macusani cautions against placing undue reliance thereon. Neither Macusani nor its management assume any obligation to revise or update these forward-looking statements. Qualified Persons The scientific and technical information contained in this news release relating to preliminary economic assessment was prepared by or under the supervision of, or reviewed and approved by, Mr. Michael Short, B.E., CEng., FIMMM and Dr Thomas Apelt, PhD, CEng., MAusIMM, of GBM Minerals Engineering Consultants, and/or Mr. Mark Mounde, BEng., CEng., MIMMM of Wardell Armstrong International, who are independent technical consultants to the Company and "Qualified Persons" under NI 43-101 Standards of Disclosure for Mineral Projects. The scientific and technical information contained in this news release relating to the Mineral Resources was prepared under the supervision of, or reviewed and approved by Mr. David Young, B.Sc. (Hons), FGSSA, FSAIMM, FAusIMM, Pr Sci Nat (No 400989/83) of The Mineral Corporation that is an independent technical consultant to the Company and a “Qualified Person” under NI 43-101 Standards of Disclosure for Mineral Projects. 2
  • 3. Investment Highlights • Large Scale – Proposed production of 5.2M lbs U3O8 /year* • Low Cost - <$21/lb* estimated cash production cost • Robust Economics - NPV: $708 M / IRR: 47.5% (pre-tax)* • Growing Resource** – 49.7 M lbs U3O8 Measured & Indicated; 47.5 M lbs U3O8 Inferred; through organic growth & consolidation • Excellent Infrastructure - roads, inexpensive power, water, etc. • Mining Friendly Jurisdiction of Peru Well-positioned for Uranium sector recovery * Dec 2013 Preliminary Economic Assessment – see slides 9 & 10 for details. ** See Slide 19 for resource details 3
  • 4. Consolidating An Emerging Uranium District 4 Macusani Projects • Macusani controls one of the largest undeveloped uranium projects in the world • Located on the Macusani Plateau, Puno, Southern Peru: concessions cover over 1,000 km2 • District offers exceptional exploration prospects & development potential • Excellent infrastructure: • Access to labour, water and inexpensive hydro-electric power • Transport (major highway runs past properties) • Plentiful supply of sulfuric acid • Good government and local community relations
  • 5. Consolidated Strategic Land Position • 10 km radius • Macusani controls 5 49.7M lbs M&I; 47.5 M lbs Inf. • 7 main deposits (see Slide 19) • 100 – 635 ppm avg. grade all uranium resources Over 1000 km2 of claims holding all known resources in the region
  • 6. Development & Growth to Date 6 Strategy to consolidate and grow resources at below-industry valuations/discovery costs 2008 2009 2010 2011 2012 2013 2014 Key Milestones Resource Es timate for Col ibri 2&3 Acqui s i tion of Corachapi and Kihi tian conces s ions Resource Es timate for Corachapi and updated for Col ibri 2&3 PEA for 1.2 M lb/year operation; cash cos t of $21.65/lb U3O8 $14.4 M Financing Dri l l ing s tarts at Kihi tian Merger with Southern Andes to become dominant land holder on Macusani plateau Resource Es timate for Kihi tian Resource Es timate update PEA for 4.3 M lb/year operation; cash cos t of $20.57/lb U3O8 Acqui s i tion of Minergia, further consol idation of the Macusani Plateau 13.0 13.0 30.0 30.0 40.6 1.6 1.6 11.7 11.7 13.1 30.1 31.5 47.5 49.7 2008 2009 2010 2011 2012 2013 2014 2008 2009 Measured 2010 & Indicated 2011 Inferred 2012 2013 2014 Please see SEDAR for historic resource estimates. Breakdown of cut-off and current resource estimates available on slide 21.
  • 7. 2013 PEA Highlights • Robust financials • Low cash costs • Large-scale production • Manageable CAPEX • Resource expansion potential • Prepared by GBM Minerals Engineering Consultants, The Mineral Corp. & Wardell Armstrong International Paves the way for Pre-Feasibility Study in 2015 7
  • 8. PEA Highlights & Update PEA based on pre-Azincourt acquisition resource base: 31.5 M lbs U3O8 Measured & Indicated and 30.1 M lbs U3O8 Inferred Resources (see Slide 21*) PEA contemplates open pit and underground mining of these deposits over 10 year mine life to feed a centralized heap leach processing facility Updated PEA planned for Q1- 2/15 to incorporate entire expanded resource base and additional data = Expected synergies with potential Capex/Opex reductions 8 Multiple deposits serviced by centralized processing plant
  • 9. PEA Financial Highlights Financial Parameters* Uranium price $65 / lb U3O8 Average cost of production $20.57 / lb U3O8 Initial capital expenditure $331 million Sustaining capital $228 million Pre-tax Post-tax NPV (8% discount rate) $708 M $417 M IRR 47.5% 32.4% Payback period 2.9 years 3.5 years Low cost production potential * All figures in US dollars 9
  • 10. PEA Production Highlights Large-scale production potential 10 Production Parameters* Mine life 10 years Average annual potentially mineable tonnes 8.5 million tonnes Processing recovery rate 88% Open pit strip ratio 1 : 0.65 Average grade 259 ppm U3O8 Average annual production (LOM) 4.3 million lbs U3O8 Average annual production (Operating Years 1-5) 5.2 million lbs U3O8 * ~23 400 tonne per day heap leach operation. Conventional open pit and underground mining.
  • 11. Large Scale Production Potential 20,000,000 16,000,000 12,000,000 8,000,000 4,000,000 - World's Largest Uranium Mines (lb U/yr) 6th Largest World Nuclear Association Market Report data Paves way for Pre-Feasibility Study in 2014 World Nuclear Association Market Report data 11 Ranked against world-class projects
  • 12. Low Production Cost vs Global Cost Curve $20.57/lb Source: November 10, 2014 Cantor Fitzgerald Canada Estimates, Ux Consulting, Company Reports 12
  • 13. Low Production Cost vs Developers 13 Source: Company Reports and Technical Reports. $70 $60 $50 $40 $30 $20 $10 $0 A-Cap Bannerman Forsys Metals GoviEx Extract Acquisition (Feb. 2012) Toro Energy Mantra Acquisition (Mar. 2011) Berkeley Macusani LoM Operating Cash Cost (US$/lb U3O8)
  • 14. Uranium Supply and Demand * World Nuclear Association 14
  • 15. Growing Uranium Demand Global Demand For Electricity to grow 76% by 2030 Nuclear Reactors Worldwide: 436 Operating Worldwide 71 Under Construction 174 Planned 301 Additional Proposals Today’s Uranium Supply Crunch: 85% of demand met by mining Around The World: The Rise Of Nuclear Energy by 2030 15% from secondary sources Source: World Nuclear Association (October 1, 2014) 15
  • 16. Uranium Inducement Price for New Production 16 $160 $140 $120 $100 $80 $60 $40 $20 $0 Source: JPMorgan Research, July 28th, 2014. Macusani data based on 2013 PEA. U3O8 Price Required INDUCEMENT PRICE FOR NEW PRODUCTION (15% IRR)
  • 17. Global Peer Comparables • Company is undervalued compared to uranium development peers • Macusani currently has the lowest market capitalization amongst >2Mlbs per year uranium developers 17 Macusani $70 $60 $50 $40 $30 $20 $10 Mkt Cap as of November 17th 2014 unless otherwise specified. Source: Company Reports and Technical Reports. Bannerman Berkeley Deep Yellow Forsys Laramide A-Cap $- $15.00 $20.00 $25.00 $30.00 $35.00 $40.00 $45.00 $50.00 $55.00 Market Capitalization (C$M) LoM Cash Op Cost (US$/Bubble Size (Lighter Shade) denotes M&I Resources. lb) - Economic Study Bubble Size (Darker Shade) denotes Inferred Resources.
  • 18. Board of Directors 18 Ted O’Connor CEO, Director Over 22 years of experience in the exploration industry, most recent as Director of Corporate Development at Cameco. In that role, he was responsible for evaluating, directing and exploring for uranium deposits worldwide. Mr. O’Connor has successfully led new project generation from early exploration through to discovery on multiple unconformity uranium projects. CEO & President of Azincourt Uranium for the past 18 months. Laurence Stefan President & COO, Director Founder of Macusani, serving as Managing Director in Peru since Oct. 2007. Dr. Stefan previously worked at Gold Fields of South Africa and JCI (Pty) Ltd. with recent years spent mainly on South American projects. Alan Ferry Chairman, Director Over 25 years of experience in the investment industry following a career as a geologist, mainly in uranium exploration. Significant experience in mining analysis, mineral economics and corporate finance. Current Lead Director of Guyana Goldfields Inc. and Chairman of Avalon Rare Metals Inc. Marc Henderson Director Over 20 years of CEO experience. Currently President & CEO of Laraminde Resources Ltd. Mr. Henderson previously served as President of Aquiline Resources Inc., prior to being acquired by Pan American Silver in Jan. 2010. Mr. Henderson is a Chartered Financial Analyst, and holds an economics degree from the University of Colorado. Richard Patricio Director Current VP Legal & Corporate Affairs at Pinetree Capital Ltd. Mr. Patricio is responsible for merger and acquisition activity, corporate transactions, compliance, corporate governance and the administration of Pinetree. Mr. Patricio received his law degree from Osgoode Hall and was called to the Ontario bar in 2000. Ian Stalker Director Over 30 years experience in mining development and operations in Europe, Africa, and Australia. Former CEO of UraMin Inc. until its acquisition by Areva in 2007 for US$2.5 billion. Former VP Exploration of Gold Fields Ltd., the fourth largest gold producer in the world at that time. Experienced, proven and committed
  • 19. Macusani: 43-101 Compliant Resources * Resource shown at a 75 ppm U cut-off (88.4 ppm U3O8 cut-off) Conversion of U to U3O8 is 1.179. Source: Technical Report dated September 20, 2013 by The Mineral Corporation: “Mineral Resource Estimates for the Colibri 2 & 3 / Tupuramani, Kihitian and Triunfador Uranium Projects, held by Global Gold S.A.C. in the Puno District of Peru.” & Technical Report dated February 22, 2012 by Foremost Geological Consulting: “Technical Report on the Corachapi and Kihitian Uranium Properties, Macusani District, Department of Puno, Peru.” **Resource shown at a 77 ppm U cut-off (90.7 ppm U3O8 cut-off); Conversion of U to U3O8 is 1.179. Source: Technical Report dated August 31, 2014 by Henkle and Associates “Updated Technical Report of the Macusani and Muñani Uranium Exploration Projects Department of Puno, Perú”, prepared for Macusani Yellowcake Inc. 19 Project Measured & Indicated Inferred Tonnes (Mt) Grade (ppm U3O8) Contained lbs (Mlbs U3O8) Tonnes (Mt) Grade (ppm U3O8) Contained lbs (Mlbs U3O8) Kihitian* 8.4 Mt 635 ppm 11.8 Mlbs 12.8 Mt 615 ppm 17.4 Mlbs Colibri 2 & 3 / 27.9 Mt 240 ppm 14.7 Mlbs 20.4 Mt 170 ppm 7.7 Mlbs Tupuramani* Corachapi* 11.6 Mt 195 ppm 5.0 Mlbs 3.8 Mt 230 ppm 1.9 Mlbs Triunfador* - - - 3.5 Mt 409 ppm 3.1 Mlbs Tantamaco** 32.7 Mt 220 ppm 16.0 Mlbs 13.2 Mt 119 ppm 5.6 Mlbs Isivilla** 4.5 Mt 150 ppm 1.5 Mlbs 6.9 Mt 420 ppm 6.4 Mlbs Nuevo Corani** 3.2 Mt 100 ppm 0.7 Mlbs 7.3 Mt 210 ppm 3.4 Mlbs Tuturumani/ - - - 6.8 Mt 134 ppm 2.0 Mlbs Calvario Real** Sub-Total 88.3 Mt 256 ppm 49.7 Mlbs 74.7 Mt 288 ppm 47.5 Mlbs
  • 20. High Elevation Mines metres above sea level 5400 5200 5000 4800 4600 4400 4200 4000 Minsur - San Rafael Tin Mine Chinalco - Toromocho Copper Mine Collahuasi - Copper Mine Antamina - Cooper / Zinc Mine Macusani Yellowcake Other Operating Mines in the Andes 20
  • 21. Near-Term Milestones 2015 Except for statements of historical fact relating to Macusani , certain information contained herein constitutes forward-looking statements. All forward-looking information is inherently uncertain and subject to a variety of assumptions, risks and uncertainties, including the speculative nature of mineral exploration and development, fluctuating commodity prices, competitive risks, the availability of financing, variations in grades or recovery rates, risks relating to international operations, fluctuating currency exchange rates, changes in project parameters, the possibility of project cost overruns or unanticipated costs and expenses, labour disputes and other risks of the mining industry, failure of plant, equipment or processes to operate as anticipated. 21 Q4-2014 2016+ • Resource Integration & Revised PEA incorporating entire portfolio initiated • Initiate prospecting & sampling on unexplored land and prioritize known un-drilled prospects • Further metallurgical testwork planned • Community Agreements & Environmental Permits in place • Bankable Feasibility Study • Project financing • Commence construction • Production Visibility - 2018 • Revised PEA completion • Environmental studies • Additional engineering • Drilling for new discovery & to convert inferred to measured and indicated • Pre-Feasibility Study • Initiate Mine Permitting
  • 22. Capital Structure 22 Shares 259.7 M Warrants @ $0.10 31.9M Options 10.0 M Fully Diluted 301.6 M Recent share price (Nov 14, 2014) CAD $0.065 Market Capitalization CAD $16.9 M Key shareholders: Khan Resources, RMB Resources, Robert Disbrow, Sprott & Mega Uranium
  • 23. Contact Information 23 Ted O’Connor Chief Executive Officer & Director 416-628-9600 ted@macyel.com OR Laurence Stefan President & Chief Operating Officer 416-628-9600 laurence@macyel.com Head Office 141 Adelaide Street West, Suite 1200 Toronto, Ontario M5H 3L5 www.macyel.com