Tag Archives: cse issuer stories

Adaptability the watchword for Pasinex Resources

This story was originally published at www.proactiveinvestors.com on February 23, 2016 and featured in The CSE Quarterly.

“It is not the strongest of the species that survives, nor the most intelligent that survives. It is the one that is most adaptable to change.”

The quote above is often wrongly attributed to Charles Darwin. But it does, I am told, summarise eloquently his seminal work ‘On The Origin of Species’.

It might equally be applied, in stock market terms at least, to the junior miners that have survived the recession that has decimated the industry.

Adaptability has been the watchword for Pasinex Resources (CSE:PSE), joint owner of the Pinargozu Mine in Turkey’s Adana Province.

It and local partner Akmetal set out in 2012 to compile a significant zinc resource – in the order 10 million tonnes – from claims staked around the historic Horzum Mine.

Pretty soon the cold harsh realities of life caught up with the companies, which luckily enough had a plan B to fall back on.

This was to mine high grade direct shipping quality zinc, crush it and send it off for export.

In a time where the capital markets have been shut to juniors such as Pasinex, the Pinargozu operation has provided manna from heaven – or at least a welcome source of working capital.

To date 16,000 tonnes of zinc material grading around 35% have been unearthed from this carbonate replacement-style deposit.

The extraction costs are currently around US$140-150 per tonne, while Pasinex and its partner receive “well in excess of US$200” a tonne for what they ship from Pinargozu.

With 120 people on-site, production is ramping up from 25-30 tonnes a day to around 60 tonnes.

This equates to output of around 20,000 tonnes a year. As capacity grows, so costs ought to fall.

Exploration work – the company carried out 12,000 metres of drilling last year – is aimed at finding and chasing high grade veins and delineating enough ore to keep the hoppers full.

“There was an old small-scale miner who went in and dug some high-grade zinc at very small tonnage,” says Pasinex chief executive Steve Williams, explaining how Pinargozu came into being.

“But that was clearly an indication that there was more high-grade zinc and that proved to be the case.

“We went in and started exploration and drilling. We found some very high-grade material and quickly realised there was the opportunity to get in and start mining.

“The horrible situation we have in the market and the terrible situation the exploration industry finds itself in was very much a driver for this.”

Located in the Taurus Mountains, Pinargozu is thought to be the sweet spot for a much larger zinc deposit.

In fact the area, which hasn’t been extensively explored using modern techniques, is itself a small part of a belt that extends into Iran and Afghanistan.

In a different world, one where the capital markets were open, share prices were buoyant and there was ready demand for new zinc projects, the Pasinex-Akmetal ground would have been comprehensively explored and its potential tested.

In the current environment compiling an independent resource estimate is a waste of time and money. When the wind changes Pasinex will adapt its plan of attack, says Williams.

In the meantime, it will look at methods to expand output a little further.

The commodity markets haven’t been especially kind to Pasinex. The price of zinc has come down to 77 cents per pound from around US$1.10 at its height last year.

Pasinex’s budgeting is done at 67 cents, which is more conservative than other operators out there.

But like its rivals it is operationally geared to an uptick in the price of the metal.

This could happen if the older, less economic mines continue to be shuttered. Glencore recently turn the spigots down – but then as Williams points out it could very easily push output up when the market conditions become a little more benign.

Demand for zinc might start nudging up in the latter part of 2016, but don’t bet on a recovery in the mining sector this year, says the Pasinex boss.

“Zinc I think will be one of the first metals to move; capacity is being removed.

“The [equity] markets? Well, I’m really not so confident. The big miners still have some big news to shake out. That will keep pressure on share prices.”

In Turkey foreign companies almost always take a partner. Pasinex’s Williams said he’s has had some minor differences of opinion, but the experience with Akmetal has been an “overwhelmingly positive” one.

The Turkish miner has been able to interact more astutely with the politicians than a foreign company might, while it has also been active and effective on the ground with the local population.

This expertise was used to good effect to fully permit and bring Pinargozu into production in about two years.

Practically, Akmetal had the plant and equipment needed to mine the deposit.

The country itself is caught on the fringes geographically but in the middle politically of one of the most volatile regions in the world.

Millions of Syrian refugees have flooded over the border since the hostilities began, and Turkey’s major cities are on red alert after a series of bombings.

But while Adana is near to the border, the mountain mine of Pinargozu remains isolated from what’s going on around it.

“We are in the northern part of the province so it is business as usual and we don’t see anything,” says Williams.

“But the country as a whole has been influenced by the conflict and in particular the refugee crisis.

“Turkey is a strong country, but in a difficult area of the world.”

Pasinex is an oddity on any exchange – a revenue generating mining junior that is able to survive under its own steam.

Is this recognised by the market? Definitely not at the moment. Neither is the long term potential of its zinc assets, or the copper property we haven’t even touched on.

But this is the harsh reality of life for the likes of Pasinex.

“This last three years have been very tough for us as it has for everybody,” says Williams.

“I think doing what we have been doing is the right thing for this moment in time.

“At some point we’ll get recognition for what we have done and the assets we have.”

Learn more about Pasinex at http://pasinex.com/ and on the CSE website at http://thecse.com/en/listings/mining/pasinex-resources-limited

Western Uranium blends big resource base, new technology in low-cost model

This story originally was published at www.proactiveinvestors.com on February 23, 2016 and featured in The CSE Quarterly.

Two things make Western Uranium (CSE:WUC) stand out from the junior mining pack: size and technology.

The first is straightforward enough. Western Uranium is the second largest holder of uranium resources in the United States, according to chief executive George Glasier.

The largest holder is Energy Fuels (NYSE MKT:UUUU), a company to which Western Uranium has close connections.

“We acquired our base assets from Energy Fuels in August 2014,” says Glasier, so there’s one connection. There’s also the small matter of Glasier having founded Energy Fuels himself.

So if there’s a man who knows his US uranium, it’s Glasier. And the company he’s now proceeding to build is a clear reflection of that.

A lot has been achieved in a short time.

At the time of the acquisition from Energy Fuels, Western Uranium was private. But shortly after that, in December 2014, it listed publicly on the Canadian Securities Exchange.

And following on from there Western Uranium acquired Australian company Black Range Minerals in a 1-for-750 all-share deal.

The entity thus created now controls a total resource base of upwards of 100 million pounds of uranium and 35 million pounds of vanadium across two of the key US uranium mining states, Utah and Colorado.

It was the acquisition of the seven permitted uranium mines that came with Black Range that catapulted Western Uranium into the number two slot behind Energy Fuels.

But there was more to that deal than just building scale.

Because it was with Black Range that Western Uranium acquired the second factor that gives it the edge over its junior peers: technology.

New technology in mining can be a mixed blessing, as anyone who’s followed the trials and tribulations of investing in nickel laterite processing can testify.

In uranium, certain types of deposit are amenable to leaching in-situ, which cuts down considerably on waste and completely does away with the need for tailings facilities.

Black Range’s technology doesn’t quite do that, but the effects and benefits are comparable.

It’s called “ablation”, a term borrowed from the medical profession, and it was originally developed by metallurgists looking to apply it to refractory gold deposits.

That didn’t work, but the same metallurgists then applied the technology to sandstone-hosted uranium deposits and the results were a whole lot better.

“Ablation causes a collision between sand grain particles,” says Glasier. “It removes the uranium coating and leaves a clear particle. That means it can leave up to 80% of the rock at the mine site.”

Perhaps even more significant in this environmentally conscious age, it’s a completely physical process and doesn’t involve any chemicals. Thus, the use of sulphuric acid in the milling process at a uranium mill can be significantly reduced. “It should substantially reduce the cost of producing uranium from our mines,” says Glasier.

So, with the two arms of the company – the resource base and the technology – in place, the next trick will be to find the finances to initiate production.

To that end, Glasier is about to embark on an extended roadshow that will encompass the US, Canada and Europe.

The thinking is that it will take approximately US$3million to get mining operations at the Sunday complex in Colorado into production while building the required additional ablation production units (‘ABT Units’), addressing the additional permitting costs of the State of Colorado for use of the ABT Units in the mining process and to retire the remaining debt.

That money will probably be raised through equity.

At the same time though, the company will also be working on putting together a US$35 million debt package to allow for the construction of a mill at a site already permitted at Pinon Ridge in south-western Colorado. The permitted mill site is currently owned by Pinon Ridge Mining Inc., an affiliate of the Company with common ownership interests of the principles of Western.

Ultimately, says Glasier, the plan is to produce upwards of 3 million pounds of uranium per year, and at very low cost.

Why so low? The first answer to that is the ablation technology, which is patented and tested. The second is that Western Uranium’s tenements also allow for a substantial vanadium credit to be applied in any economic model that gets built.

All told, Glasier reckons that Western Uranium will go into the lowest 10% of the cost quartile, which is welcome given that the uranium price has been relatively depressed of late.

Indeed, that weaker uranium price is the reason why the seven mines that Western Uranium acquired from Energy Fuels ceased production back in 2009. Other than the naked economics, they are ready to go.

But will the uranium price improve?

Longer-term, there’s plenty to be optimistic about. China is building nuclear reactors at a rate of knots. And Russia too is set to add significant new nuclear capacity, although the country is also one of the main producers of uranium. It’s estimated that by 2025 the number of nuclear power reactors in the world will have risen from the current 439 to a more substantial 497.

Western Uranium itself already has one secured customer.

An off-take agreement is in the bag with one US utility and doubtless there’ll be more to come. What the pricing will be in further deals is an open question, but it was interesting to see commentary from Cameco (TSE:CCO) recently in which the uranium giant argued that a position of oversupply is likely to linger for most of this year, but that an uptick may then be likely.

If so, the timing would suit Western Uranium nicely. “By the end of the year,” says Glasier, “we’re going to get production at the Sunday mine complex.”

Work on the mill will probably be well underway too, and there will be the additional kicker of marketing the ablation technology to companies overseas. The application to sandstone-hosted uranium deposits would suit some of the more well-known African uranium deposits in particular, and could well have a significantly beneficial impact on the economics of these projects.

More immediately though, the next crucial steps will involve the financing, a listing on a US exchange, and then deployment of those funds to generate early production.

Because this is not a market in which a junior miner can afford to take its time. But George Glasier knows that.

“The company’s moving fast in a tough market,” he says. “We are a low-cost and near-term producer.”

Learn more about Western Uranium Corporation at http://western-uranium.com/ and on the CSE website at http://thecse.com/en/listings/mining/western-uranium-corporation