Plateau Energy Metals (TSXV: PLU) has lost its appeal to overturn a decision by the Instituto Geológico Minero y Metalúrgico (Ingemmet) to cancel 32 of its 149 concessions in Peru. Ingemmet is an agency under Peru’s Ministry of Energy and Mines.
The 32 concessions represent 231 sq. km, or less than 25% of Plateau’s 930 sq. km land package in Peru. Of the 32 concessions, one affects the Falchani lithium project, six impact the Macusani uranium project, and the other 25 concessions cover exploratory grounds.
Ingemmet’s decision to cancel the 32 concessions stemmed from the timing of concession fee payments. The company says the issue arose from administrative delays and errors related to the Ministry incorrectly applying penalties to the company for underspending on work commitments at the concessions in question.
The company launched an appeal to overturn Ingemmet’s decision. The Ministry held two hearings for the appeal on June 20 and 26, 2019. On July 31 and Aug. 6, Plateau announced that their appeal has been rejected, despite the company making the necessary payments on time to the National Bank and receipted by Ingemmet. Subsequent appeals to reconsider the facts and arguments have been made.
“We have not lost the concessions at this point in time … We are going to let the appeal process play itself out and see what the outcome is.”
Alex Holmes, CEO
Plateau Energy Metals
Gabriel Gonzalez, an analyst at Echelon Wealth Partners in Toronto, says the Energy and Mines Ministry’s rejection of the appeal “harmed Plateau Energy Metal’s ability to protect its rights and register its concession payments in compliance with regulatory requirements.”
A research report from Haywood Capital Markets dated Aug. 1 placed Plateau under review, pending clarity on the concession issues. “We are hitting pause on this investment thesis in the wake of the concession dispute, awaiting clarity on … Plateau’s strategy, cost and process to ultimately retain the concessions,” the report says.
Plateau’s CEO Alex Holmes says the company has three months to launch another appeal. “We have not lost the concessions at this point in time,” Holmes says in an interview with The Northern Miner on Aug. 13. He adds that the process could be administrative, since the appeal was not rejected through a court of law.
Holmes says the company will pursue all options available to resolve the matter. “At the end of the administrative procedure, if the outcome is still not favourable to us, then there is the judicial path which we can pursue.”
At the Falchani lithium project, on the Macusani Plateau in the Puno district of Peru, where only one concession is among the 32 in question, 80% of the project’s indicated resource has not been impacted, the company notes. Falchani hosts an indicated resource of 61 million tonnes at 0.64% lithium oxide and 1.57% lithium carbonate equivalent, for 390,000 contained tonnes lithium oxide and 960,000 tonnes lithium carbonate equivalent. Inferred resources total 260 million tonnes at 0.58% lithium oxide and 1.44% lithium carbonate for 1.52 million contained tonnes lithium oxide and 3.75 million tonnes lithium carbonate.
The company has several other properties on the Macusani Plateau, which are mostly uranium properties. These exploration properties are collectively known as the Macusani project, which is 650 km southeast of Lima and 25 km from Macusani, the closest town. Recent lithium surface discoveries at Tres Hermanas and Quelcaya are also outside of the 32 concessions.
Holmes said the company has put a pause on the preliminary economic assessment (PEA) for Falchani, pending the outcome of the appeal.
University students visiting the Ingemmet building in Lima, Peru. Credit: Ingemmet.
For the Macusani uranium project, two of the six concessions under administrative procedure are not included in the project’s January 2016 PEA. The remaining four concessions that were included in Macusani’s PEA represent 52% of the uranium project’s indicated and inferred resources.
At 0.0075% uranium oxide (U3O8) cut-off grade, the Macusani uranium project has a measured and indicated resource of 95 million tonnes grading 0.0248% U3O8 for 52 million contained lb. U3O8. Inferred resources add 130 million tonnes grading 0.0251% U3O8 for 72 million contained lb. U3O8.
The latest development has cast a pall over the two projects, which Holmes says could produce high-quality products, and are key to economic development in Puno in southern Peru.
“We are going to let the appeal process play itself out and see what the outcome is,” Holmes says. “Logic and law will prevail here.”
On Aug. 19, the company announced it finished filing appeals to the Mines and Energy Ministry “requesting the recent administrative resolutions issued with respect to its 32 concessions be overturned.”
Plateau’s shares took a tumble on the concession-dispute news and at press time traded at 29¢ each, giving the company a $23-million valuation. In the past 52 weeks shares have ranged from 24¢ to $1.27.
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