American Lithium (LI) - World Nuclear Association (WNA) Fireside Chat

American Lithium Corp. is developing world-class lithium projects in the Americas and also has one of the largest underdeveloped uranium projects globally. The company has a near-term focus on mining-friendly jurisdictions and has an advantage when it comes to geographic and geological diversity in the development of world-class, scalable projects. American Lithium is a developer of advanced lithium projects in the Americas focused on Nevada and also some really high-grade, high-quality projects in Peru.

Matt Gordon caught up with Simon Clarke CEO, and Director, along with Laurence Stefan, President, COO, and Director, American Lithium.

Mr. Clarke brings over 25 years of experience in building companies and implementing successful capital markets and growth strategies focused on mining, energy, and energy technology. Most recently, Mr. Clarke was the Founder, CEO, and Director of M2 Cobalt Corp. (cobalt/copper exploration in East Africa), which was acquired by Jervois Global in June 2019. Jervois is a world leader in the development and mining of cobalt and nickel projects and is operating cobalt and nickel refineries, benefitting from a market capitalization exceeding CDN$1Bn. The transaction involved Mr. Clarke remaining with Jervois for 12 months as a Director and Senior Executive. Mr. Clarke was also a Co-founder, Executive, and Director of Osum Oil Sands Corp. a company valued in excess of US$1Bn at its peak market capitalization. Osum grew its production to approximately 20,000 bopd (barrels of oil per day) before being acquired by Waterous Energy Fund for around CDN$400M in 2021. Mr. Clarke benefits from extensive experience and knowledge of the battery metals space spanning more than a decade. This includes his past senior executive roles with M2 Cobalt and Jervois Mining, as well as advisory roles in the vanadium exploration/development sector. Mr. Clarke holds an LLB and Diploma in Legal Practice from Aberdeen University, Scotland.

Dr. Laurence Stefan, the Founder of Plateau Energy Metals (formerly Macusani Yellowcake), has over 30 years of experience in the mining industry (exploration, development, mining, processing, and marketing), serving as Managing Director in Peru since 2007. Dr. Stefan previously worked at Gold Fields of South Africa and JCI Pty. Ltd, where he was involved in the beneficiation of a wide variety of solid metal/non-metal commodities. He has vast experience covering over 100 projects on six continents and is responsible for leading the discovery team for the Falchani lithium project.

Company Overview

American Lithium Corp. (formerly known as Menika Mining Ltd.) is a mining and exploration company focused on the development of its world-class lithium projects located in the Americas. The company is listed on the Toronto Stock Exchange (TSX-V: LI), the OTC Markets (OTCQX: LIACF), and the Frankfurt Stock Exchange. (FSE: 5LA1). The company was founded in 1974 and is headquartered in Vancouver, Canada. Lillooet Mining Ltd., Exploraciones Macusani S.A.C, and Minergia S.A.C are the company's subsidiaries.

The WNA Conference

American Lithium’s representatives recently attended the WNA (World Nuclear Association) event in London, the annual symposium. This is the first in-person WNA event held in 3 years. The company talked at length about its Macusani Uranium asset, which was a part of the Plateau Energy acquisition 18 months ago. American Lithium is looking to ensure that its asset brings value to the company and its shareholders. The company has a number of strategies to achieve this goal.

The Macusani Uranium project is one of the world’s largest undeveloped assets. It is one of the best assets in terms of OpEx (Operational Expenditures). Notably, the project has had 5 highly-robust PEAs (Preliminary Economic Assessment). While the asset is well-known, people don’t automatically think of the company as a uranium player. Plateau Energy, the project’s previous owner, was primarily a uranium company. It built an exceptional resource with tremendous growth potential over a 15-year period. American Lithium is looking to find ways to bring value to the company and its shareholders.

Uranium is in the early stages in American Lithium’s context, however, Plateau Energy started building the Macusani project in 2004-2005. Before Fukushima, the project had a 10Mlbs resource along with a $125M market cap. Currently, the resource is 12.5 times higher and has the potential to get a lot bigger. The Macusani Uranium project is a well-developed asset that features uranium sitting at the surface. The material is highly susceptible to acid, making the extraction process fairly simple.

American Lithium believes that this project can be fast-tracked and advanced quickly. However, in order to achieve that, the project needs to be in its own vehicle. Taking this route, American Lithium will retain a good percentage holding on the asset in order to ensure that the company’s shareholders benefit from a dividend paying out stock in a new company. This will also enable the company to retain the team expertise that was built up over the years. While there can be cross management and directors, the spin-off vehicle will have its own strategy to fast-track the uranium.

According to the company, the atmosphere at this year’s WNA is slightly different. There is a strong, positive sentiment around uranium. Due to the ongoing Russia-Ukraine crisis, the world is now looking for alternatives to cheap Russian gas. Nuclear energy is one of the best alternatives as its green, strong and reliable. Due to the Chernobyl and Fukushima incidents, uranium does not have the best reputation. There is a need for public awareness to educate people about the new, safer technologies that are now being used in nuclear reactors.

At the conference, there has been a lot of talk surrounding modular reactors. These reactors are safer nuclear units that can provide energy to smaller villages, small enterprises, and corporations. However, the implementation process is expected to take time. Before big cities like London can transition completely to nuclear power, the public needs to be convinced that nuclear energy is safe and the ideal way to go. In order to ensure a stable community, uranium pricing needs to be secure. While uranium has been trading at over $50/lb for a long time, the price is expected to go much higher in the near future.

In order to generate nuclear power, companies will need the government’s support. Across the world, building a nuclear power station can take anywhere between 15-20 years. The timeline can be accelerated significantly if the permitting process is fast-tracked by the government. There are a lot of uranium projects in the world that can have shorter development timelines if the governments become more supportive, especially when it comes to the permitting process.

According to the company, the Macusani project could be a lot different if the Fukushima nuclear disaster didn’t occur in 2011. In fact, the company anticipates that in the absence of the incident, Peru would have been a uranium producer. The hibernation of the Fukushima plant and the pandemic have shaped the perception of uranium. There are a lot of positive developments coming out of the WNA.

Small Modular Reactors

SMRs (Small Modular Reactors) can be used to power a small town or a couple of villages. However, it is important to note that SMRs cannot replace a nuclear power station, which usually generates between 4000MW - 10,000MW power. This is equivalent to 4-6 power stations running on gas or coal with 1M modular stations. Ideally, energy should be consumed as its produced. Due to transportation and heat regeneration, a loss of 10%-40% of power can occur.

The United States currently has the largest fleet of nuclear reactors in the world. At the WNA conference, the DoE (Department of Energy) declared that it plans on increasing the number of nuclear reactors in the country. According to American Lithium, uranium is moving into a sellers’ market, which is a highly-positive transition for the industry that includes explorers, prospectors, producers, and also uranium enrichers. The development time frame of a uranium mine can vary between 5-20 years depending on the country.

In order for more uranium projects to come online, the permitting process needs to be shorter. Another bottleneck for uranium is the limited number of enrichment facilities that are limited to a couple of countries and tightly controlled. Russia, one of the biggest uranium enrichers has fallen out of the Western system following the ongoing crisis. The Western world is now realising that it needs to produce more uranium and enrich it. A future uranium supply needs to be secured for modular, medium, and large reactors.

In recent times, there has been a significant jump in energy prices on a global scale. The world is in dire need of cheap energy sources. According to American Lithium, governments will need to step in and help accelerate the permitting process in order to make nuclear energy a reality. The Russia-Ukraine conflict has shown the world that nuclear energy is the need of the hour. In addition to government assistance, there is also a need for a new generation of nuclear scientists. This will help further improve the safety component of nuclear power generators. While several governments around the world are willing to provide the support, there are concerns that the lack of Russian gas could potentially lead to shortages in the coming winters.

At the conference, the company realised that governments are currently in two phases. Countries such as Japan and Korea are increasing the life of existing plants. A lot of governments are also looking to add a number of new nuclear power plants to the system, including SMR. These developments are bound to drive up a lot of demand in the short term, however, the supply needs to be able to keep up.

While renewable energy is a key source for green power generation, countries can’t rely on these sources to fully meet the growing energy needs. Combining nuclear power plants with renewable sources is expected to pave the way for an increase in the use of renewable sources.

Financing Considerations

American Lithium is currently having targeted discussions with banks around financing. It has also provided some of its end product for analysis. As the project moves towards a pilot plant by the end of the year, these conversations will play a key part in funding the project CapEx (Capital Expenditure). As per the PEA, the project CapEx is at $300M, which is the same as the previous study.

According to the company, the Macusani project would have been in production had it not been for the Fukushima nuclear disaster or the pandemic-induced economic crisis. The deposit is expected to provide 5Mlbs-6Mlbs of yellowcake annually to the nuclear industry for at least 30-35 years. As the project moves into a Feasibility Study in the near future, the company expects to find more information on the underlying deposit. Currently, the company is awaiting permits from the Peruvian government. This project can potentially lead South Africa to be recognized as a uranium producer. The company is also working with ANSTO (Australian Nuclear Science and Technology Organization) to develop a relationship on both the uranium and lithium fronts.

ANSTO has provided a system for most of the lithium across the world. The organisation has helped most of the uranium companies in Australia, a country that probably has the largest lithium resource in the world. The specifications will be provided by American Lithium by the end of 2022.

The role of utilities is important in the uranium space. However, it’s important to note that utilities are often looking to source lithium at the cheapest price possible. As per the company, this aspect needs to be corrected because as the uranium price continues to rise, the energy generated from the nuclear power plant would remain the same. The company recently had a meeting with one of the larger groups. It anticipates that in the current environment, funding a uranium project won’t be a challenge.

Within the uranium space, the Macusani project’s economics continue to remain very strong. The company is looking at a combination of equity and debt. It has received a lot of interest from the right trading groups that are willing to sign forward contracts. The company needs to decide the amount of material it is willing to lock up at a set price in order to generate capital for funding a part of the project.

The Macusani project separates itself from the competition as it has higher cost-effective ways to produce yellowcake. The project has had 4-5 PEAs to date. As the project moves through the PFS and Feasibility Study, the material prices are expected to increase further. Even at a $50/lb uranium price, the margins are exceptional. At the Macusani uranium project in Peru, the company is looking to produce uranium at $17 a pound. These metrics are close to Kazakhstan in terms of uranium production costs.

Kazakhstan has a cheaper cost of uranium production due to significantly lower reagents and consumable costs that are needed for production. American Lithium’s sulfuric acid and sulphur consumption had increased substantially in the past, but it has started coming down. Companies like Kazatomprom consume 100-200kg of acid to leach one ton of material. In comparison, American Lithium has negligible reagent costs as the material has clean mineralogy, is easy to leach, and is free of any delirious elements.

The uranium available on the surface is easy to strip and mine, making it a highly-compact operation. These factors have a significant impact on the economics of scale. Since uranium is free of molybdenum, vanadium, thorium, arsenic, and other delirious elements, the need to refine the product is expected to be non-existent. This will enable the company to produce one of the cleanest and purest final product to the market, making it highly desirable for traders, utilities, and enrichment facilities.

Targets 2022 and Beyond

According to American Lithium, the uranium market has been back for a year and is moving ahead in a positive direction. The company has faced delays in operations due to Peru’s permitting process. In the meantime, the company has done a lot of work in the background. It has demonstrated the head grade can effectively be doubled through pre-concentration. It has also progressed with ANSTO in terms of the parameters that will be fed into the upcoming Feasibility Study.

The company is currently focused on moving this asset into a transaction that maximises value. The company anticipates that uranium is here to stay and is only expected to get stronger with time. As uranium is now a sellers’ market, the prices are expected to either remain at current levels or go even higher. The pricing will lead to the development of more uranium companies as the demand for nuclear energy continues to grow.

Although the industry is still in its infancy, there are clear indicators from the major economies of the world that the government and regulators are looking to help. Higher material prices and the government’s inclination to help will ensure that the uranium market continues to remain safe.

To find out more, go to the American Lithium website