Global Atomic Announces Q3 2023 Results, Provides Update on Uranium & Zinc Businesses

• Global Atomic has $23.5 million in cash at quarter end.
• Key business objectives are completing engineering and procurement contracts, updating the feasibility study and mine plan, and targeting commissioning of the Dasa uranium plant by end of 2025.
• Global Atomic's uranium business was impacted by political unrest in Niger, border closures and delays in project financing. Underground development is paused but they plan to resume soon.
• The company signed new offtake agreements totaling 8 million pounds of uranium through 2026. This provides revenue visibility.

About Global Atomic Corporation

Global Atomic Corporation is a Toronto-based company focused on developing its flagship Dasa uranium project in the Republic of Niger, while also operating a cash flowing zinc concentrate business in Türkiye.

The company’s main focus is advancing its Dasa uranium project in Niger to production. Dasa will be the only largescale uranium mine under development globally, and has been fully permitted by the government of Niger. The uranium operations provide significant long-term growth potential as nuclear power demand is forecast to grow substantially in the years ahead.

Global Atomic holds a 49% interest in a joint venture called Befesa Silvermet Türkiye that operates an electric arc furnace dust (“EAFD”) recycling plant in Türkiye. This facility processes EAFD containing 25% to 30% zinc to produce a zinc concentrate sold to smelters. The zinc operations generate near-term cash flow for Global Atomic.

What Happened in Q3 2023?

A transitional government is now in place in Niger after a coup in July 2023. The government owns 20% of the Dasa uranium mining project and has expressed support for its development, given the expected economic benefits for Niger. However, the coup initially put U.S. development bank financing on hold pending a return to democratic elections. The U.S. has now authorized the banks to re-engage with the company to finalize funding.

Operations at the Dasa mine have been impacted by the continued closure of the border with Benin. The company has established an alternate supply route and underground development will resume once supply reliability improves.

The company is revising Dasa's mine plan and feasibility study based on an increased mineral resource estimate. This is expected to significantly boost mineable reserves and improve project economics. Dasa is positioned as one of the few new uranium mines under development globally, amid limited supply growth in the sector.

The company's existing yellowcake off-take agreements remain in place. The Dasa deposit is said to be the highest-grade uranium deposit in Africa. Overall, the transitional government has expressed support for the strategic project, but border closures and geopolitical uncertainty have created some operational challenges.

Political Unrest in Niger Creates Headwinds for Dasa Project

In July 2023, the military in Niger initiated a change in government and placed the president under house arrest. This resulted in condemnations and threats of intervention from the international community.

Several neighboring countries closed land and air borders with Niger in response. Critically, the border with Benin was closed. This disrupted normal supply routes from the port of Cotonou through Benin to Niger.

As a result, Global Atomic suspended underground development activities at Dasa in August after supplies were depleted. An alternate logistics route through Togo and Burkina Faso has since been established. Underground development is set to resume once supply chains are restored.

The political unrest also impacted critical project financing negotiations. Global Atomic has been in discussions with lenders including Export Development Canada and a U.S. development bank to fund construction of the Dasa mine and processing plant.

However, after the U.S. declared the military rule a coup d’etat in October, Global Atomic indicated the lenders had put financing discussions on temporary hold. Encouragingly, the company has since been advised that the U.S. government expressed support for the Dasa Project, and lenders have re-engaged on financing it.

Executing Offtake Deals Crucial to Funding Dasa Development

Global Atomic has been highly focused on securing yellowcake offtake agreements with nuclear utilities to underpin financing and development of the Dasa Project.

In Q3, the company announced a non-binding letter of intent to supply up to 3.5 million pounds of uranium to a utility. This followed two binding sales agreements finalized earlier in 2023 totaling 4.5 million pounds.

Altogether, Global Atomic now has offtake agreements totaling 8 million pounds through 2026, worth over $500 million in potential revenue based on current uranium prices.

These deals are crucial, as they provide cash flow visibility and leverage to higher uranium prices needed to repay project loans. Offtake amounts in the first five years of Dasa production will support debt repayment.

Dasa Uniquely Positioned to be the Next Large-Scale Uranium Mine

In May 2023, Global Atomic announced a new mineral resource estimate for the Dasa Project. This incorporated extensive drilling results that have significantly increased indicated resources and geological understanding.

Global Atomic believes Dasa now represents one of the world’s premier uranium deposits. The indicated resource has grown 50% using a 1,500 ppm cutoff, and the deposit could effectively support a doubling of initial planned production levels.

An updated feasibility study and mine plan are in progress. However, Dasa already stands alone as the only major new conventional uranium mine put forward by a Western company at a time of severe supply shortages.

Kazatomprom, the world’s largest producer, has cut guidance and will operate below capacity. Several mines have closed in recent years. Uranium demand is meanwhile forecast to rise substantially driven by nuclear reactor construction programs.

Dasa can help fill a growing supply deficit as utilities look to shore up long term fuel requirements. Global Atomic is well positioned with a high grade, fully permitted project located in a stable mining jurisdiction.

Company Targets Commissioning Dasa Plant in Late 2025

Despite recent headwinds, Global Atomic now expects the commissioning of the processing plant at Dasa in 2025, assuming the financing is available when required.

In the quarter, the company achieved several noteworthy de-risking milestones for the project:

• Completed basic engineering designs for the processing plant
• Advanced procurement contracts, particularly for long lead time equipment
• Completed over 600 meters of underground development to access the uranium ore body

Looking ahead, Global Atomic laid out key steps required to meet its production target:

• Completing remaining mine development to provide sufficient ore supply when the plant is ready
• Finalizing equipment purchases for the processing plant and mine
• Constructing and commissioning the plant by the end of 2025

The company conservatively estimates it requires $250 to $275 million in additional financing to complete Dasa's construction. Global Atomic reported having $23.5 million in cash at quarter end, providing runway over the near-term.

Project economics should ultimately support financing based on Dasa’s low costs and its unique position as the world’s only major uranium mine in the development pipeline.

Zinc Operations Cash Flow Outlook Improving in 2024

Global Atomic holds a 49% interest in the Befesa Silvermet Türkiye joint venture that operates an EAFD recycling plant in Türkiye.

The Turkish JV zinc plant resumed operations in Q3 2023 after temporary closure following major earthquakes earlier this year. It processed over 21,000 tonnes of electric arc furnace dust (EAFD) in the quarter. However, with 4.1 million pounds of zinc concentrate shipped and average LME zinc prices at $1.10/lb, the JV posted an EBITDA loss of $1.9 million for Global Atomic's share.

While the JV's revolving credit facility stands at $11.8 million, with Global Atomic's share at $5.8 million, its quarter-end cash balance was $1.5 million. It is expected the plant will operate at capacity through year-end 2023. Profitability is projected to return in 2024 as EAFD and coking coal costs normalize after supply chain disruptions. The earthquakes clearly impacted operations and profitability, but the JV is now back online, albeit with a depleted cash position, and is targeting improved performance next year.

The zinc business provides important diversification and cash flow to help offset Dasa Project expenditures until uranium revenues come online.

Investment Thesis for Global Atomic

Global Atomic offers a unique investment opportunity to gain exposure to both near-term zinc cash flows and significant long-term uranium upside. The key highlights supporting an investment case include:

• Dasa set to become one of the world's top tier uranium mines based on size, grade and low costs once in production. The project is fully permitted.
• Uranium demand has robust long-term growth driven by nuclear reactor construction as countries seek zero-emission baseload electricity.
• Offtake deals provide financing support and sales at prices likely well below longer-term market levels. There are few new large mines coming online.
• Global Atomic is mitigating Niger political risks and targeting commissioning of the Dasa plant in 2025, with first uranium deliveries in 2026.
• Zinc operations in Türkiye will rebound to generate near-term cash flow and provide commodity diversification.
• The company has a strong balance sheet to fund operations with $23.5 million in cash and no debt.

Global Atomic provides investors a rare opportunity to gain leverage to the compelling uranium market fundamentals. Dasa is poised to be one of the few new large-scale uranium mines coming online just as demand is set to inflect higher. The zinc business meanwhile generates cash today, although not without some volatility. Patient investors could benefit from owning a part of both assets.