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Macusani Yellowcake &Southern Andes Proposed AmalgamationMarch 2012
YELSURTSX-V TSX-V
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 may contain forward looking statements concerning future operations of Macusani Yellowcake Inc. All forward looking statements concerning the Company's future plans and operations, including management's assessment of the Company's project expectations or beliefs may be subject to certain assumptions, risks and uncertainties beyond the Company's control. Investors are cautioned that any such statements are not guarantees of future performance and that actual performance and exploration and financial results may differ materially from any estimates or projections. No securities commission or other similar regulatory authority has reviewed or passed on the merits of this presentation and any representation of the contrary is an offence. This presentation is not, and under no circumstances is to be interpreted as, a prospectus, public information, solicitation or advertisement for the sale or trade of securities.
These materials present an overview of Southern Andes Energy’s projects in southern Peru. Readers are cautioned that the projects are at an early stage and that all estimates and information contained herein are based on limited and incomplete data. Additional work is required before the mineralization and the economic potential of the projects can be confidently modeled. Statements reflected in this presentation may contain “forward-looking statements” including management’s assessments of future plans and operations including expectations of future production and capital expenditures. These statements regarding potential mineralization and resources, estimated or potential future production, potential ranking of properties and future plans and objectives of the Company, are forward-looking statements that involve various known and unknown risks, uncertainties and factors. Consequently, actual results may differ materially from those anticipated in the forward-looking statements. While the work, results, estimates and projections in the presentation may be considered indicative of the nature and quality of the work undertaken, they are not definitive. Readers are advised that undue reliance should not be placed on forward-looking statements.
Disclaimer
Transaction highlights
The dominant uranium exploration and development company in the Macusani District, controlling over 900 km2 of prospective claims in one of the largest, most highly prospective uranium districts in the world
The contiguous nature of the 2 companies' claims demonstrates the strong, clear strategic rationale for the transaction
Well funded with strong existing resource base, poised to add more lbs
Paves the way to move from advanced explorer to producer
MacusaniDistrict
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Increased Property Portfolio
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• Southern Andes’ recent discovery at Tupuramani located immediately adjacent to and on strike with Macusani’s Colibri 2 & 3 property, which was subject to a Preliminary Economic Assessment in 2010
• A maiden resource at Macusani’s Kihitian property is expected in Q1/2012, where preliminary results indicate that mineralized potential may continue to extend along strike onto Southern Andes’ properties
Important Project Synergies
Highly prospective uranium district
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Transaction Details
•Macusani will acquire all of the outstanding common shares of Southern Andes by way of an amalgamation between Southern Andes and a wholly-owned subsidiary of Macusani.
•Shareholders of Southern Andes will receive 0.8 of a common share of Macusani in respect of each common share of Southern Andes.
•Southern Andes shall distribute all of its common shares of Caracara Silver Inc. to the shareholders of Southern Andes as a return of capital such that each Southern Andes shareholder will receive approximately 0.45 shares of Caracara for each common share of Southern Andes.
•The combined board of directors will draw from the expertise of both companies and consist of six members from Macusani, and two from Southern Andes.
•The board of directors of Macusani and Southern Andes have unanimously approved the terms of the transaction and strongly recommend that shareholders vote in favour of the proposed transaction.
•Amalgamation requires approval of at least 66 2/3% from Southern Andes shareholders and the majority of votes cast by Macusani shareholders.
•Proposed transaction is subject to applicable regulatory approvals and the satisfaction of certain closing conditions customary for transactions of this nature.
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43-101 Compliant Resources
Corachapi Colibri 2 & 3
Measured resources* 0.3 M lbs (1.0 M t)0.014% U3O8 (0.28 lbs/ton)
n/a
Indicated resources* 4.7 M lbs (10.6 M t)0.020% U3O8 (0.40 lbs/ton)
5.4 M lbs (9.2 M t)0.027% U3O8 (0.53 lbs/ton)
Inferred resources* 1.9 M lbs (3.8 M t)0.023% U3O8 (0.46 lbs/ton)
15.1 M lbs (34.3 M t)0.020% U3O8 (0.40 lbs/ton)
Ownership 99.5% 99.5%
Strike length drilled 32% 82%
Down-dip extension open open
• Large near surface deposits• Open ended at strike and depth• Near term maiden resources expected at Kihitian and Tupuramani
* 75 ppm cut-off
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• Technical data from RAM Resources Ltd. (formerly Contact Uranium Ltd.) in June 2009
• RAM Resources Ltd. completed over 10,000 m of drilling in 193 diamond drill holes which covers the largest radiometric anomaly outlined by IPEN in the 1980s
• Macusani drilled 50 confirmation holes including 0.06% of U3O8 over 36 m and 0.05% of U3O8 over 49 m from some of the 87 previously unassayed RAM holes
• Strike length drilled: 32%
Properties – Corachapi
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• Colibri 2 & 3 PEA completed in April 2010
• Current drilling platforms include strike length of 3 km, width of 0.5 km, average hole depth of 60 m
• Metallurgical recoveries of 98.6% and 84.4% after 31 days with low acid consumption
Properties – Colibri 2 & 3
Colibri 2 & 3 PEA Summary
Life of mine 10 years
Strip ratio 0.1:1
Mill rate 3.0 Mt/yr
Uranium head grade 0.44 lb/t and 0.02%
Recovery 88%
Annual production 1.17 M lbs of U3O8
Life of mine production 11.7 M lbs of U3O8
Cash cost US $21.65/lb of U3O8
Mining & operating cost US $8.09/lb of U3O8
Initial capex US $ 147.9 M
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• Southern Andes’ recent discovery at Tupuramani located immediately adjacent to and on strike with Macusani’s Colibri 2 & 3 property
• Significant potential to expand the extent of mineralization with more than 3km of prospective strike identified
Properties - Tupuramani
0.065%/2.85m
0.31% in pit
0.43%/2.6 m0.59%/1 m
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• New high-grade discovery at Kihitian
• Drilling has returned average uranium assays of:
• 0.626% U3O8 with assays ranging from trace to a high of 11.24% U3O8
• Shallow ‘A’ zone – 3.0 to 5.0 m ranging from 0.081% U3O8 up to 0.260% U3O8– Jan 12, 2011
• Deeper ‘B’ zone – 7.0m at 1.8% U3O8; 65m wide mineralized zone – Nov 26, 2010
Properties – Kihitian
• Recent mineralized trenching has extended the potential at Kihitian
• Southern Andes surface sampling:• 0.3% U3O8 over 3.9 m• 0.06% U3O8 over 14.0 m• 1.24% U3O8 over 0.9 m
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Properties – Kihitian
*Grades include weighted average grades. Please see appendix slide 31 for detailed assay results.
drill holes demonstrating continuous mineralization over a strike length of 700 m
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Properties – Kihitian
Kihitian topography looking South West.
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Properties – Kihitian
Kihitian view looking SW showing Manto A and B (red >500 ppm) and diffuse mineralization.
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Properties – Kihitian
Kihitian section cut-away looking North.
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Properties – Kihitian
Potential open pit outline.
Kihitian (Chilcuno-Chico project) sample cross section showing potential open pit.
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A strong pro forma balance sheet with a cash position of over CAD$13 million, fully financed to take the combined company through 2013 exploration and development programs
Post-Merger Capitalization
Shares 159.5 M
Warrants 66.7 M(from CAD$0.35-$0.85)
Options 13.1 M
Fully Diluted 239.2 M
Cash (Approx. as of transaction closing) CAD $13 M
Share price (TSX-V: YEL as of Feb. 18, 2012) CAD $0.18
Market Capitalization CAD $28.7 M
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Upcoming Milestones
2012
2013
Kihitian 43-101 Resource Statement
Mineral Processing and Metallurgical Testing 43-101 Report
Updated Preliminary Economic Assessment (encompassing multiple projects)
Colibri 2&3 + Tupuramani 43-101 Resource Statement
Further Exploration: Corporate Target of 80-100 M lbs U (all categories)
Prefeasibility Study
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Experienced Management Team & Board
Alan Ferry – Chairman & Director>25 years of industry experience following a career as a geologist primarily focused on uranium exploration; Director of Guyana Goldfields Inc. and Avalon Rare Metals Inc.
Peter Hooper – President, CEO & Director
Consulting engineer to projects in Europe, Asia, Africa, Australia, North and South America; former mine manager, Beaver Lodge Uranium Mine, and consultant on Canada’s Candu nuclear reactor
Laurence Stefan – Managing Director (Peru) & Director
Founder of the Colibri Group of Companies in Peru and Managing Director of Mineral Colibri; has been involved in research on uranium metallurgy and enrichment at various gold-uranium mines in South Africa
Jean-Pierre Chauvin – Director>30 years experience in mining and construction, including a career as a consulting engineer in the mining industry focused on operational reviews and feasibility studies; former President and COO of Globestar Mining Corp.
Philip Williams – DirectorVP Business Development at Pinetree Capital; former uranium analyst focused on companies with advanced development projects
Michael Harrison – DirectorFormer Director of Investment Banking, Mining, at Cormark Securities following experience in BHP Billiton’s Global Exploration Group
Nick Tintor – DirectorPresident & CEO of Southern Andes Energy Inc. and Homeland Uranium Inc; >25 years experience in the mining industry including all junior mining company management, finance and project acquisition
Robert Boaz – Director >18 years in the investment industry following a career in the power and natural gas industry; former Managing Director of Investment Banking with Raymond James, including a focus on mining
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Key benefits of the transaction
Provides the combined company with the flexibility to evaluate various development scenarios, including a significantly larger production facility than previously contemplated in the Colibri 2 & 3 PEA (2010).
Experienced Management and Board of Directors with substantial in-country synergies.
Creates an attractive South American growth platform that will continue to evaluate accretive M&A opportunities in the uranium sector.
Enhanced market presence, capital markets exposure and liquidity.
Enables Southern Andes shareholders to realize the value of Southern Andes' investment in Caracara Silver Inc. (TSX-V: CSV)
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Looking Northeast
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Peter Hooper Nick Tintor
President & CEO President & CEO
Macusani Yellowcake Southern Andes Energy
416-360-3402 416-987-0855
[email protected] [email protected]
www.macyel.com www.southernandes.ca
Contact Information
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Appendix A: Why Uranium?
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Source: Energy Information Administration
World energy consumption is doubling
Uranium is part of the clean energy solution
2011
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Why nuclear power?
•Emission free
•Small amounts of waste by comparison
•Nuclear plants require small amounts of land
•Reliable and continuous source for electricity
•Today’s reactor technology is safe
Nuclear 13.7%
Oil
5.9%
Other
2.6%
Coal
41.4%
Gas
20.8%
Hydro
15.9%
World Electricity Usage by Power Source
Biomass 1.0%
Wind 0.9%
Waste 0.3%
Geothermal 0.3%
Other 0.1%
Uranium fuels nuclear power
Source: International Energy Agency (2007) data
Nuclear energy is more viable than green energy
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• 434 reactors are in operation world-wide
• 560 new reactors (343 proposed, 156 planned, 61 under construction)
• 30% growth in number of reactors by 2020
• China, Russia, India and Korea are primary drivers
New reactors fueling Uranium’s demand
0 20 40 60 80 100 120 140 160 180
South Korea
UAE
Japan
Ukraine
USA
India
Russia
China
Under Construction
Planned
Proposed
New Nuclear Reactors – Top 8 Countries
Source: World Nuclear Association (Jan 2010)
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• Annual demand is 180 M lbs
• Current supply is 140 M lbs
is the growing annual demand
Demand exceeds supply
The gap largely filled by secondary sources including military warheads (US and Russia) ends in 2014
* Source: Morningstar, August 19th, 2011
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• Uranium should see higher short and long term prices
• Spot price in the low $50’s/lb
• Term price of $68/lb
Higher Uranium prices forecast
“There is good fundamental support for the commodity price.”Dr. Geordie Mark, Research Analyst, Haywood Securities
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Appendix B: Project Photos
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