Mr. Alex Holmes reports
PLATEAU ENERGY METALS PROVIDES AN UPDATE ON CONCESSIONS UNDER ADMINISTRATIVE PROCEDURE
Plateau Energy Metals Inc.'s subsidiary, Macusani Yellowcake SAC, has received resolutions from the Ministry of Energy and Mines (MINEM) in Peru regarding seven of the 32 concessions currently under administrative procedure. Receipt of the resolutions is the culmination of a nearly 12-month process to correct an administrative error made as a result of a government process relating to the timing of validity payments for 32 of its 149 mineral concessions in southern Peru. However, in terms of the resolutions received to date, the mining council within MINEM has denied the company's appeal to suspend the Institute of Geology, Mining and Metallurgy (INGEMMET)'s resolution recommending the cancellation of the validity of these seven concessions by reason of "late receipt of annual concession payments."
"We are extremely disappointed by the resolution of the mining council in this administrative process when the chronology of events and the facts clearly demonstrate the company conducted itself professionally, acted in good faith and did everything in its power to react to a situation it didn't control. We understand shareholder frustration at the long process to get to this outcome and have shared the facts below so that everyone may understand the background to this process," stated Alex Holmes, chief executive officer of Plateau. "The company will consider and pursue all remedies at its disposal to protect the assets of its stakeholders, which includes the people of Peru and our surrounding host communities. We have the utmost confidence in our team and remain confident the rights of all, including foreign companies investing in Peru, will ultimately be upheld."
Macusani has not lost any of its concessions, the process to rectify this situation was of an administrative nature and the resolutions issued are not issued through a court of law.
Pursuant to regulations in Peru, Macusani has three months to appeal against the mining council decision, during which time, and pending resolution, all concessions remain with Macusani.
The company was not able to pay assessed penalties under appeal process with MINEM, in addition to the validity fees, prior to the execution of the MINEM non-penalty resolution reversing the incorrectly assessed penalties (refer to chronology of events herein).
The Principle of Informalism in Peru, which requires the state to support companies in situations such as these, was not upheld.
Validity payments for 2018 on all 149 concessions were paid in April and May, 2019, prior to the validity payment due date in 2019. The company has a receipt and acknowledgment from INGEMMET for the 32 concessions in the administrative process (refer to background herein).
The company does not know when the remaining 25 concession resolutions will be issued to Macusani or their outcome; however, the company will act swiftly and accordingly once the resolutions have been issued to protect any of the affected concessions. A detailed background and chronology of events are included further in this news release.
The resolutions for the concessions received to date are concerning:
These seven concessions represent approximately 3,900 hectares, or less than 4 per cent, of the company's total 93,000-hectare concession package and approximately 10 per cent of the company's 2015 uranium mineral resource estimates on an indicated and inferred (I&I) basis (refer to the attached table). Of the seven concessions, only Lincoln XXVI represents approximately 13 per cent of resource estimates (refer to the attached table) that form part of the Jan. 25, 2016, preliminary economic assessment (PEA) for the Macusani uranium project, filed under the company's profile on SEDAR. The company wishes to remind investors that a considerable amount of its resource base of uranium and lithium will not be impacted should the remaining 25 concessions in the administrative process result in the same outcome. The recent lithium surface discoveries at Tres Hermanas and Quelcaya are not located on any of the 32 concessions in the administrative process.
POTENTIALLY IMPACTED RESOURCES
75 ppm U cut-off Tonnes (Mt) Grade (ppm U3O8) Total resources (Mlb U3O8)
Lincoln XXVI (1) 4.6 350 3.5
Lincoln XXIX (2) 3.4 166 1.2
Total indicated 8.0 272 4.8
Lincoln XXVI (1) 8.5 316 5.9
Lincoln XXIX (2) 6.1 131 1.8
Total inferred 14.7 239 7.7
(1) Refer to the "Macusani Project, Macusani, Peru,
NI 43-101 Report -- Preliminary Economic Assessment,"
prepared by Michael Shor and Thomas Apelt of GBM
Minerals Engineering Consultants Ltd., David Young
of The Mineral Corp., and Mark Mounde of Wardell
Armstrong International Ltd., dated Jan. 12, 2016,
available under Plateau's profile on SEDAR.
(2) Not incorporated into the Jan. 12, 2016,
NI 43-101 PEA for Macusani referenced in Note (1).
Refer to the report filed on SEDAR on June 22, 2015,
entitled "Consolidated Mineral Resource Estimates for
the Kihitian, Isivilla and Corani Uranium Complexes
Controlled by Plateau Uranium Inc. in the Puno
District of Peru," prepared by Mr. Young of The
Mineral, an independent qualified person as defined
by National Instrument 43-101. Mineral resources that
are not mineral reserves do not have demonstrated
The company will continue working toward completing the Falchani lithium project PEA, a significant milestone that will see Falchani go from discovery to PEA in less than two years owing to the hard work and talented team in Peru alongside the strong support of the communities the company works with. The PEA will, however, be delayed, pending the outcome of the administrative process as it relates to the remaining 25 concessions.
An administrative process was initiated as a result of resolutions issued by INGEMMET, first in October, 2018, and more recently in February, 2019, claiming that concession validity payments for 2017 and 2018 were late. The company made concession validity payments for 2017 as soon as was practicable, shortly after it received a resolution from MINEM at 4:03 p.m. Peruvian time as in all other times found herein on July 2, 2018, which confirmed the 32 concessions covering approximately 23,100 hectares should not in fact have a penalty. Validity payments for 2018 were made for all 149 concessions during April and May, 2019, and were receipted by INGEMMET, including the 32 concessions involved in the administrative process. These 32 concessions are not currently recorded in INGEMMET'S online database as being received as a result of the administrative process; however, payments have been made and acknowledged.
The following detailed chronology of events illustrates that the company was held back by a slow process by MINEM, acknowledging no penalties were due, which is the cause of the payment timing. The company has included supporting documentation for stakeholders' information.
2017: MINEM hired an international auditor to conduct an audit of mineral concession expenditures across the entire country, looking back to the early 2000s.
December, 2017: Audit determines that work commitments as of 2016 may not have met the minimum required. Penalty amount is not determined at this point in time.
February, 2018: The cadastre of the Peruvian mining concessions (El Padron Minero) is finally released with delays, probably as a result of the audit, and it included penalties totalling $2.7-million (U.S.) for concessions controlled by Macusani. The audit identified that there had been an underspend on work commitments on a number of concessions dating as far back as to the period prior to Macusani's ownership of the concessions. The majority of the alleged underspend of work commitments arose under the control of the predecessors, but stays with the concession, and thus falls to the current holder, Macusani, to bear the cost to keep in good standing.
February to March, 2018: Macusani identifies errors with the penalty calculations and communicates this to MINEM.
April to May, 2018: MINEM review is completed, which results in a finding of penalty amounts totalling approximately $800,000 (U.S.). Macusani continued appealing the fact that the quantum of penalties was incorrectly calculated on all concessions, in particular for 32 concessions, where the company had overspent.
June 25, 2018: An agreement in principle is finally reached with MINEM on 117 of 149 claims as to the penalty amount, and 32 claims are deemed non-penalty. The penalties were reduced in phases to approximately $520,000 (U.S.). The banking system of INGEMMET will not allow the payment of only the good standing fees at this point, without: (a) also paying the penalties first or (b) presenting a resolution cancelling the penalties.
June 28, 2018: Macusani pays the reduced penalty of $520,000 (U.S.) plus validity fees for all but 32 concessions deemed non-penalty as agreed (recorded as received July 2, 2018). Macusani's appeal to MINEM for zero penalty on the 32 concessions was successful after MINEM reviewed supporting expenditure records demonstrating that Macusani had in fact exceeded the required work commitments. MINEM agreed that Macusani had in fact overspent and consents to issue a non-penalty resolution for the 32 concessions in question. While awaiting the execution of the non-penalty resolution, which formalizes for INGEMMET's records that there are no penalties on the 32 concessions, the company was not able to pay only the validity fees.
The recommendation of non-penalty status for the 32 concessions is made at MINEM internally (see recommendation dated June 28, 2018). The resolution was required from MINEM, and electronic concession records were updated to reflect the zero penalty status. The signed non-penalty resolution stating a non-penalty clause for the 32 concessions in question was signed on July 2, 2018, and received by Macusani at 4:03 p.m. (see herein).
July 2, 2018:
p.m.: Macusani starts making cash payments at National Bank of Peru, anticipating imminent receipt of the signed non-penalty resolution. The bank notifies the Macusani employee that the electronic records for the 32 concessions still show a penalty is outstanding and that payments can only be received along with the full penalty in cash (too late for a wire transfer). The bank recommends in situations such as these to pay under a generic unique code 999 and to later inform INGEMMET which concessions these apply to. The bank takes all payments and issues receipts in 22 cash transactions, representing the 32 concessions. The receipts run from 3:53 p.m. to 4:48 p.m.
p.m.: MINEM non-penalty resolution with regard to the 32 concessions being deemed non-penalty is received by Macusani. Macusani sends an employee to INGEMMET offices to commence the process to have the payments accredited to the concessions.
4:25 p.m.: Attendance ticket is issued to Macusani's representative by INGEMMET.
p.m.: INGEMMET date stamps MINEM non-penalty resolution for 32 concessions as received (refer to Macusani cover letter dated June 28, 2018, written when in anticipation of the MINEM resolution). The electronic records were not updated to reflect non-penalties at this point in time given the timing of the non-penalty resolution.
- 4:35 p.m.: Macusani submits accreditation application without payment vouchers as 22 cash transactions are being made at National Bank of Peru. Macusani requests INGEMMET to allow attachment of the 22 receipts of payment to the accreditation application submitted at 4:35 p.m.
5:16 p.m.: INGEMMET official agrees to receive only 14 of the 22 receipts, claiming eight receipts were time stamped after 4:19 p.m., and should not be accepted after arbitrarily assigning 11 minutes, as the amount of time it takes to walk from the bank, thus 11 minutes prior to closing time of INGEMMET at 4:30 p.m.. INGEMMET reprinted the confirmation of receipt for the accreditation application, specifying that Macusani had attached 14 payment vouchers. Of note, two people from other organizations were attended by INGEMMET with accreditation applications and payments received and accepted after 4:30 p.m. on July 2, 2018.
Post-July 2, 2018:
Owing to the fact that only 14 of the 22 vouchers were attached to the accreditation application, Macusani appealed to INGEMMET on several occasions, starting on July 2, 2018, for this administrative error to be corrected. In October, 2018, INGEMMET declared the accreditation application invalid because the receipts were not attached prior to 4:30 p.m., leading to the ensuing administrative process.
Two thousand seventeen validity fees were paid in accordance with the above chronology, the timing restricted by the administrative process of non-penalty resolution. Validity payments for 2018 on all 149 concessions were paid in April and May, 2019, prior to the final validity payment date in 2019.
June 20 and June 26, 2019: Mining council held two hearings for Macusani's appeal of INGEMMET's resolutions. Both Macusani and INGEMMET were invited to participate, but INGEMMET did not show to present its position.
Based on the timeline of events leading up to July 2, 2018, and guidance provided by external parties in country, the company had no reason to believe that when the facts were presented to the mining council during the subsequent administrative process, it would result in anything other than reaffirmation that the concession payments were valid, not late, and an administrative error was the cause. The treasury of INGEMMET accepted the payments and received the funds for the validity fees and applicable penalties in the last day admissible on July 2, 2018. Peru's General Mining Law does not stipulate a time/hourly limit for the payment of validity fees, but only the last day during which the payment must be provided to INGEMMET. The payment of the validity fees was made on July 2, 2018, in accordance with the General Mining Law.
The fact that INGEMMET changed its opinion subsequently is simply a damaging decision with potentially serious implications toward the stability of future mining should any concessions be cancelled.
Due to the timing of the receipt of the resolutions and a national holiday taking place in Peru from July 27 to July 30, 2019, investigations were hindered, as to gathering all the information necessary to provide a detailed and thorough response to the company's stakeholders.
The company will provide further information and updates as and when it becomes available. Readers are encouraged to visit the updated FAQ page on the company website, and the company invites the submission of additional questions regarding this or any other subject, directly through the
or by email at
Ted O'Connor, PGeo, a director of Plateau, a qualified person as defined by National Instrument 43-101, has
reviewed and approved the scientific and technical information contained in this news release.
About Plateau Energy Metals
Plateau Energy Metals, a Canadian exploration and development company, is enabling the new energy paradigm through exploring and developing its Falchani lithium project and its Macusani uranium project in southeastern Peru. The company, with mineral concessions covering over 93,000 hectares (930 square kilometres), controls all reported uranium mineral resources known in Peru and has significant and growing lithium mineral resources, all of which are situated near infrastructure.
We seek Safe Harbor.
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