Transcript: Global Atomic (GLO) - Operations on the Ground Already in Motion
Global Atomic is a Canadian resource company advancing the large, high-grade Dasa uranium deposit in the Republic of Niger. In addition, Global Atomic benefits from the dividend stream generated by its share in the Befesa Silvermet zinc concentrate production facility in Turkey.
Global Atomic has started it’s 15,000m drill programme to work around the flank zone, on strike and do some in-fill drilling at the Dasa project. The aim is to produce results to move categories into a higher level which can be included in the feasibility study to increase the value of the entire deposit. If the company can increase the size of the flank zone area and can continue to mine on that part of the ore-body, it will be an inexpensive addition as it is a shallow area to gain access.
In addition, Global Atomic has been working on infrastructure on-site and is now building a much larger camp in which to house the construction personnel. Local contractors are bidding to do this work ready for construction personnel to start excavation work in January 2022.
Global Atomic is recruiting additional people both at management and at corporate level with the end goal to start work on the project, getting underground and opening up the mine. The company has signed a letter of intent with CMAC-Thyssen Mining Group to complete initial underground development at the Dasa project.
Oranu has closed its Cominak operation in Niger at the end of March and Global Atomic is in discussions regarding equipment and personnel from that site to potentially move to the Dasa project. These discussions are on-going and should be completed within the next couple of months.
The Dasa project has a world-class ore-body and Global Atomic has the expertise to develop it into a producing mine. The process is well underway and the feasibility numbers will be out by the end of the year. In the meantime, Global Atomic is getting contractors organised to start the physical work with excavation starting in January with ramping up starting in April.
The main aim for Global Atomic is to get the product available for utilities by January 2025 and the company is currently in discussions with utilities. Investors will soon be able to see that the Dasa project is a viable project and that Global Atomic will be a uranium producer in the near future.
0:00 – Company Overview
00:17 – Progress, Loan & C. Mac Dyson
08:22 – Current; Options, Company Position & Focus
15:44 – Utilities, Mna & Production
20:54 – Outro
Stephen Roman: Good afternoon, Matthew, Stephen Roman here, president of Global Atomic, and I guess it’s been a few months since our last interview, so a lot has happened in the market since then.
Matthew Gordon: Well, I wanted to catch up. I’ll tell you what happened - almost immediately after our last interview, middle of August, in terms of share price you went from $2.40 up to about $4.40 because of a certain Sprott Physical Uranium Trust. Did you see it coming? What have you made of their performance so far?
Stephen Roman: Listen, I think everybody was anticipating something coming out of Sprott and their acquisition of Uranium Participation Corporation. We felt that there would be some move higher in the uranium price. I think the fact that it moved from about $30 to over $50 was quite a rapid move, and of course, people that like the uranium space really piled in. I think recently, there has been some profit-taking, of course, a bit of a pullback in the whole sector, which is healthy. I think technically speaking, it looks good on the chart, and it consolidates some of this and gets the day traders and some of the shorts out of there. I think we’re bottomed out here and we’re starting to build the base here, and we’re going to move higher as the fall progresses.
Matthew Gordon: Yeah, I think the interesting thing is spot has come back down to around the $41, $42 level. It seems like Sprott has taken the foot off the accelerator, just waiting to see what this reset will bottom out at, and then maybe step back in. I guess we’ll find out over the next few days and weeks on that one. The other thing that has happened, as you mentioned, is equities have come off to slightly higher highs, and higher lows, which is good news for you guys. How do you guys take advantage of that? Because you can go and borrow some quite cheap money now. Is that in the plans?
Stephen Roman: Well, we weren’t planning on borrowing any money at the moment. We are working on a project financing plan right now with our consultants in the UK, so we’ve got a number of shortlisted banks; we’re showing them data right now. There’s a process underway, and of course, they’re very interested in the project and the new development in Niger. The project has some tremendous attributes, as you know. I think at some point here, it would be to announce a term sheet with a financing group, and obviously, that’ll allay the fears of the market on how we’re going to finance this thing. We’ve been very, let’s say, tight with our equity. We don’t like issuing a lot of shares. We did a little raise back in March. There have been a lot of inbounds wanting to put more money in. We’ve resisted for the moment, and we’d like to see the share price higher.
Matthew Gordon: Okay, I think all your shareholders are happy, and they’ll be even happier if it does go higher. I saw the press release with regards to CMAC-Thyssen, you signed a letter of intent with them. What’s happening on the ground? You’ve told us a lot about the flank zone, you’re going after the high-grade stuff, you’ve put out your study on that one. What are you going to be doing with CMAC-Thyssen?
Stephen Roman: First of all, there’s a lot going on on the ground since we spoke in August. One is we’ve started our 15,000m drill program. The idea behind that is to do work around the flank zone on strike; also, to do infill drilling of the rest of the deposit so we can move the category to a higher level so we can include that in the Feasibility Study. Because the flank zone, just for everybody to remember, is only about 20% of this deposit. If we can increase the size of the flank zone area then we can continue to mine on that part of the orebody, it’s very shallow, it’ll be inexpensive to mine, it’s ramp access again, and then doing the drilling on the balance of the deposit will increase the value of that entire part of the deposit. This is ongoing right now. In addition, we’ve been working on infrastructure on-site, so including we’re now building a much larger camp that will house the construction personnel. We’ve got bids out there for infrastructure from local contractors, so we have now engaged with a local contractor to actually, with the management of our owners’ team being on-site, present, they will start excavating the box cut for the portal in January. This is a very important milestone, the fact that we’re going to have a crew moving in in January and starting to do excavation in order to start moving underground. CMAC-Thyssen then would come, they’re going to start mobilising in February. The idea is that by the end of March, we will have the box cut completed, the face ready to go, CMAC will move in with their crew and start the ramping right away into the flank zone. All of this has happened since we last met in August, and of course, also, we’ve been hiring additional people, we’ve got searches going on for talent both on a management level and also the corporate level, finance people, accountants, etc. that are going to form part of our team in-country. We’ve also secured an office location in Niamey. It happens to be a great location right in the heart of the city and it’s a new building, so we’ve got that secured, we’ve got housing in Niamey secured now for our ex-patriot staff that’ll be coming and going. There’s been a flurry of activity since we last spoke, and this is all with the end goal of starting the work on the project, getting underground, and opening up the mine.
Matthew Gordon: These new hires of yours, are they French-speaking?
Stephen Roman: Yes, absolutely.
Matthew Gordon: Was their former employer Orano?
Stephen Roman: There are some people that were formerly with Orano, and others, international people that have worked in West Africa for many years that speak French, that are mine builders, developers. Also, people that are capable and have done plant construction. A big component of this project is building our processing plant. That’s all been finalised now as part of our Feasibility Study. We’re hiring people that will be in charge of that construction process. We have also been putting out bids for EPCM contractors, so there are a number of big firms that want to do the EPCM on the plant. That’s all in the works right now, and that’s one reason why this week, the entire team here in Canada is at our head office and we’re doing a session on all of the rollouts, let’s say, of the work program.
Matthew Gordon: What are some of the options available to you? We’ve talked in the past about Orano leaving, and what they’re potentially going to leave behind for you to pick up. Are you waiting for them to go, or are you in discussion with them now? What’s that going to mean for your bottom line?
Stephen Roman: Well, Orano is operating the Somaïr facility currently, and that’s the group that is interested in taking ore, direct shipping ore, from Dasa right up to Somaïr. We are still in the process of negotiating a finalised agreement with them. We have now secured trucking and costs on all of that. We need to see the final number that they’re going to supply for milling, and then button up that agreement.
Matthew Gordon: What’s happening with them? Somaïr is due to run for how long?
Stephen Roman: Somaïr has been running for about 50-years.
Matthew Gordon: Right. How long is it due to continue running? What’s its life of mine?
Stephen Roman: That’s a hard number to pin down because Orano doesn’t really want to say. I would say in the range of 5 to 10-years.
Matthew Gordon: Right, okay. That’s interesting. What about some of the other local infrastructure that you may be able to pick up? Obviously, it’s long been a uranium mining district. Are you going to be the beneficiary of other companies perhaps leaving?
Stephen Roman: Orano shut down their Cominak operation at the end of March. We looked at equipment there. There are some pieces of equipment in that plant that we could use, we could refurbish. They are currently in the process of demolishing that plant and rehabilitating the site. Clearly, the people that work there are available and we’ve been interviewing people to move right onto our site. We’re also looking at equipment and any other potential synergies we can have with Orano, including sulphur. Orano brings sulphur into the Port of Cotonou, they ship it up by truck to the operation at Somaïr. If we could achieve synergies by partnering with them on some of these key supply components, then that’ll reduce their cost as well as our cost. These are discussions we’re having with them right now, as well as potentially buying some used equipment.
Matthew Gordon: Right, that’s what I was trying to get at, when will you be in a position to know what you’re going to be able to discuss with them, which may affect your bottom-line positively in terms of equipment, not just people but-?
Stephen Roman: Matt, that’s all ongoing right now, like every week. We have the discussions ongoing; we have people on-site, we have people speaking with their crews at Cominak and at Somaïr. It’s an ongoing situation. We haven’t nailed anything down yet, but I would expect in the next 2-months, we should have some clarity on whether we can do some sort of synergistic deals with them, also buying some equipment etc. That’s going to be probably a couple of months, yeah.
Matthew Gordon: Okay, fine, and that’ll come into the Feasibility Study when that gets done. Right, I know you said you’re tight with your money and you’re looking at the process of many raising some money at some point when you feel it’s right, but you’re looking at using 20% of the data at the moment, you’ve got a much bigger orebody in front of you, you’ve got the Chinese government saying to Chinese energy providers, ‘Go and get me energy. Get me energy secured by any means.’ They are making 50-year plans in the way that the west is not. Do you feel to have contestations with people, with the Chinese government etc., you would need to show scale, or are you just going to do this at your own pace and focus on what’s in front of you now, and you’ll come back to the rest of the orebody at some point further down the line?
Stephen Roman: Well, of course, I believe everyone knows this is a world-class orebody, and for a company like ours, and with the low uranium prices, we’ve put together a plan that would get us into production doing between 4Mlb and 5Mlb a year, which we felt is a good entry point for a new developer. Clearly, if a huge company had this, they might have tackled it in a different way. The Chinese, of course, would like to mine it as large as possible and take all the uranium back to China. That’s 1 scenario. Right now, we are a mining group. We’re a mining company. Our history is mining. We’ve developed many projects around the world. My father started Denison Mines, built Elliot Lake, built the largest uranium mine in the world, and that was here in Ontario. Our heritage is mining. We’re not here to flip a project. We want to actually build this. We are well underway in that process. Feasibility numbers, as we mentioned previously, should all be out before the end of the year. In the meantime, we are getting contractors organised to actually do the physical work. Excavation will start in January; ramping will start in April. The key thing is to get product available for utilities by January 2025. That’s what we’re working towards right now, to get the work done in a proper sequence so that we can be producing yellow cake in a drum in 2025 in January, and utilities that we’re speaking to right now, that’s the timeline we’re giving them. We have discussions with utilities right now. We are participating in RFPs for supply with a number of utilities. What I think, once we have 1 or 2 of these utilities signed on, and we have a definitive timeline, people will see that this is not just smoke and mirrors and promotion, this is actually a mine going into production. This is what we’re doing right now. We’ve got all of these things, different legs going on at the same time here. People will soon see that this is a viable project that is going ahead, that will be a producer, and that’s what people need to see.
Matthew Gordon: I was talking to Dustin Garrow the other day and I’ve spoken to other commentators in the uranium space. They say that the big problem for the uranium juniors is the lack of skilled workers and the lack of people who have actually done it before and that some of these companies will be learning on the job. That’s where mistakes happen. I appreciate your track record there, but are you getting any advantage because of your track record of having built mines before, with utilities? Are they more likely to listen to you than someone who hasn’t, or are you all in the same boat?
Stephen Roman: No, I think history goes a long way with the utilities. They can look at all the projects we’ve done over the years, and say, ‘These are people that actually build projects and make production.’ That goes a long way. They appreciate that, and they know the name. My name, the Denison name, etc. We were big suppliers in the world market, and Denison still exists today doing projects in Saskatchewan.
Matthew Gordon: That’s if you make it. Would you like a glass of water?
Stephen Roman: I’m going to have a little water.
Matthew Gordon: Good idea. Okay, this is the bit that interests me because we get all sorts of companies coming on here, and with the uranium juniors specifically, everyone says the same thing. They do a peer analysis; they show you where they look in relation to other people in terms of valuation and stuff. My question is what’s the difference between a paper valuation and share price, and actually fundamentally being able to get into production? There seems to be a disconnect there. For me, I see a disconnect there. I’m just wondering what the reality is. Will these companies get there? Will it just be a case of it being a little bit more expensive than they thought, it’ll take a little bit longer than they thought? Or is M&A going to have to come into play if they are to work out how to actually get into production?
Stephen Roman: Matt, I guess I didn’t really answer the question previously, but there is a shortage of skilled technical labour for uranium because it’s been out of favour for a long time and people have done other things. The key thing from our point of view is we know where these uranium process experts are, and we have them on our team. That includes a group like Process Research ORTECH here in Toronto that has been involved in every uranium project in Canada over 40-years designing flowsheets, plants, doing the metallurgy, all of that. We have experts from Australia involved with us, we have experts from the UK, and people know what we have, and they want to be a part of Global Atomic, and they want to be a part of this project. We have the technical expertise, we’ve put the whole flowsheet plant plan, the whole mine plan, all that together, and the people we have are on board now and of course, with Cominak shutting down, we have an entirely trained labour force that’s ready to come on, that knows the mining, knows the processing because they’ve been doing it up the road for 50-years at Cominak. All of these people, there’s a second and third generation of people that have been working there producing uranium for Orano that we can tap into. That’s something that maybe a lot of other juniors out there don’t have. Typically, juniors will find a deposit that looks good, they’ll enhance it a little bit, and they’ll flip it out to somebody. We don’t do that. We actually like to build projects. This kind of discovery is a once in a lifetime discovery. It’s the largest, highest-grade uranium deposit found in Africa in 50-years. It’s a company-building asset. What we want to do for ourselves, and all our shareholders is to prove it up and put it into production and be a significant producer in the world.
Matthew Gordon: Okay, I think obviously as the contracting starts- as your conversations start to firm up as it were, it’ll give you some line of sight in terms of timing. I appreciate the update today. I guess we’ll hear more from you before Christmas. It sounds like there are a few things that are just starting to come together before then, so stay in touch, let us know how you get on, okay?
Stephen Roman: We sure will, Matt. I appreciate the interview today, and obviously keeping our crux group updated with our developments, I think that the key points here are the project is moving ahead at a very rapid pace, and we’re breaking ground in January. This is not something that we’re just promoting, it’s something that we’re actually building.