- The company made a lithium discovery a little over two years ago, advanced it through two resource studies and preliminary economic assessment that was released about two months ago.
- “The uranium market is starting to shape up to be that structural change that people were looking for because uranium for additional reactors is a great source of the green energy, and we’re going to need more base load stable, clean energy as we electrify the world.”
- Despite optimism for the global lithium and uranium markets, the company plans to stay focused on current projects and keeping overhead costs low for now.
Alex Holmes is CEO of Plateau Energy Metals based in Vancouver. He joined Lara Smith, founder of Core Consultants to discuss their Lithium and Uranium projects in Peru, their outlook on the current market for battery metals, and to give us an update on how they are moving forward in the covid-19 world. The following is a transcript of the interview:
Lara Smith: Hello, I’m Lara Smith from Core Consultants. I’m sitting here on my sofa in Tel Aviv under lockdown, and I’m joined by Alex Holmes who is in Canada right now. Hi, Alex.
Alex Holmes: Hi Lara. How are you?
Lara Smith: I’m well, thank you. How’s the situation there?
Alex Holmes: Well, it’s different to be self isolating, that’s for sure, but you know, we’re doing our part.
Lara Smith: Your mine’s in Peru. So are you normally working from home or are you normally in Peru?
Alex Holmes: Not normally working from home. I’m Vancouver based in Canada and we have an office in Lima and our project is in the Southeastern part of Peru. So normally I spent a lot of time back and forth to Peru.
Lara Smith: So Plateau Energy Metals is an interesting company. It’s advancing both a uranium and a lithium project right now, right?
Alex Holmes: That’s correct, yes. We made a discovery of our lithium project a little over two years ago now, and advanced it through two resource studies and then into a preliminary economic assessment that we released about two months ago.
And I think the really exciting thing, from our perspective, outside of being part of what we see as a big macro trend in the electric revolution, if you will, is this is a first for Peru; lithium project. And we were able to demonstrate a project that through phase expansion can scale up and be a very considerable producer of lithium chemicals in the future.
We’ve been working in the country for about 15 years and we’ve had tremendous government support and community support, and we actually started life in Peru with our uranium project, that’s over a period of about 10 years, we grew, ultimately took to a preliminary economic assessment that was completed in 2016.
The uranium market’s been a little more challenging in terms of commodity perspective, however, we are really excited about the prospects of that project and I think that what’s happened in the last little while, the uranium market is starting to shape up to be that structural change that people were looking for because uranium for additional reactors is a great source of the green energy, and we’re going to need more base load stable, clean energy as we electrify the world.
Lara Smith: Yeah. Well, uranium, I mean, last I checked, there are 29, $30. I mean, it’s not back up to the 50, $60, which a lot of the producers need, but it still has increased, whereas oil during this time has completely plummeted. What do you think of that?
Alex Holmes: It’s true. Yeah, it’s been trailing up this year, absolutely in the stock market. It’s definitely an off-take market and we haven’t seen a whole lot of long term offtake contracts sign over. There was one in Japan, about four months ago, a seven year contract. We’ve had projects coming offline, being shut down by camico, partly Covid 19 related.
And it sounds like those shut downs will last a little bit longer and they have obligations to deliver uranium, and as a result, they’re buying on the spot market, and so that has all started to help percolate, bubble up that small broken bit.
Lara Smith: And lithium, do you expect lithium to come back? It’s also taken a bit of a wobbly and it’s been quite volatile recently, but now with covid 19, I think quite a lot of the battery supply chain has been disrupted. Do you think this could bode well? Do you think this could have a positive outlook for lithium?
Alex Holmes: Yeah. I think what covid has identified is the reliance of the supply chain on, you know, one or two countries, and that presents a bottleneck and a risk, a problem. We see that the biggest growth area for electric vehicles is coming out of the European markets and they’re building their battery ecosystem now. And I think that most, if not all, of the tier one batteries today, the ones the OEMs in Germany will use, are coming out of Japan and Korea.
And so the prices there on contracts have been relatively more or less stable. They haven’t been as volatile as let’s say the spot market in China, which is quite a small market, but there’s still transactions happening at 10,000- $12,000 per ton of lithium chemicals for those tier one batteries.
So I think that one thing that we have seen out of covid is we’ve seen a big reduction with pollution globally, and I think that a large driving force of the desire to have electric vehicles is to reduce pollution. And that’s from a consumer behavior perspective. I think we all generally want to be able to breathe cleaner air, and so I think that what we’ve seen is supply chain risk, I think we’ve seen the projects themselves being stalled or held up for other reasons prior to covid 19 and I think this is all building up towards something that’s going to be quite positive for lithium over the next few years.
Lara Smith: I was actually speaking to another lithium junior company the other day, and he said something very interesting. He said, now that we’ve had this experience of the world being shut down, the positive side is that we’ve all started breathing in cleaner air, so we see the benefit of that. So potentially that could kickstart the desire to have electric vehicles and a battery economy and the flip side of that, of course, is that the oil price is so low.
So the question is, is there now incentive to go back to using the internal combustion engine and to see how those dynamics play out over the next while should be quite interesting to watch those trends.
Alex Holmes: Yes. Yeah. No, I would agree. I think we have two things really pushing this change.
One is the government regulations to reduce emissions and that is forcing the change to have electric vehicle options. And then the other change is the technological change where we’re seeing economies of scale come into play, really driving down those costs of batteries, which enables OEMs, car companies to have batteries as a lower cost component of the overall vehicle, and that will really help drive down the costs that a consumer can go in, to buy a car. And I think ultimately that will help if you’ve got low oil prices, low cost to fill up a car, and you offset that against, you know, the life cycle ownership of the car as well as battery costs coming down to result in lower retail prices. I think that’ll be a double double whammy, if you will.
Lara Smith: Yeah absolutely. And then just getting back to your operation Plateau Energy Metals, so you’ve had your private placement, congratulations, in a time when liquidity is not as great as it probably was, and a lot of other projects have stalled.
So what’s next? Are you able to continue right now? Have you had to put the brakes on because of covid? What’s the timeline?
Alex Holmes: Well, we’re definitely, you know, managing our capital more restrictively. So we’ve cut costs where we can and in certain areas, and then corporate head office costs we cut quite considerably. In Peru right now, Peru is on a lockdown as well. So there’s not work happening at the project site today, although we have our geologic team up there currently. So, for 2020 as we see our way through, you know, where we are today, there’ll probably be more technical work being happening offsite as it relates to processing a metallurgy.
And then anything on site is going to be probably more utilizing our existing team to go out and prospect and identify additional areas for potential growth. It’ll be less significant advancements in the project cause we are trying to manage the capital to navigate through these difficult challenging time that we’re all faced with.
Lara Smith: Yeah. So, you’re a buyer in this market; you could potentially see yourself invest in more deposits?
Alex Holmes: Well, I think we’ll probably focus on our two projects for now. You know, I think we have two very large projects. We have other showings, uranium on the uranium side of the project, and more extensions for lithium.
I don’t necessarily think we need to make our existing deposits bigger. I think what we need to do is make what we have better. And that’s really about some effectively refining the p engineering and the processing to prove what we already think are solid projects.the uranium market is starting to shape up to be that structural change that people were looking for because uranium for additional reactors is a great source of the green energy, and we’re going to need more base load stable, clean energy as we electrify the world.
Lara Smith: Thank you so much. Is there anything else you’d like to add?
Alex Holmes: I think that it’s really important during these times to try to remain positive, look for where we’re going, not what we’re in. And I know that our team is obviously keen to get back to work, but we’re looking to respect the situation we’re in and think outside the box as we navigate this and ultimately move the projects forward.
Lara Smith: Absolutely. Thank you so much, Alex. Stay safe.
Alex Holmes: Thank you Lara, take care. Bye.
