Global Atomic (GLO) - Buying Opportunity, It's Never a Straight Line

Global Atomic Corp. is a Canadian resource company advancing the large, high-grade Dasa uranium deposit in the Republic of Niger. The company benefits from the dividend stream generated by its share in the Befesa Silvermet zinc concentrate production facility in Turkey. 

We met with Stephen Roman, CEO, Chairman, and President, Global Atomic. Stephen has over 4 decades of experience in successfully identifying, financing, developing, and commencing production at multiple mining and gas projects throughout his career. He previously served as the Founder, Co-Chairman, and Director at Gold Eagle Mines Ltd. He has also worked as a Policy Advisor to the Canadian Minister of National Defense. In 2016, he received the Bill Dennis Award for Canadian Mineral Discovery from the prestigious Prospectors & Developers Association of Canada (PDAC). 

Company Overview

Global Atomic is a mineral exploration company founded in 1994. The company is headquartered in Toronto, Canada. The company's flagship product is the Dasa project in Niger, a high-grade, low-cost uranium project with a PEA (Pre-Economic Assessment). The company also produces zinc concentrate from recycled steel dust in Turkey. The company is listed on the Toronto Stock Exchange (TSX-V: GLO), and the OTC markets (OTCQX: GLATF). Global Atomic was among the top 25 companies in the OTC markets in 2020. 

Developments in the Uranium Market

The uranium equities market has seen a healthy run during the spring season, the market price moved from $26 to $32. This was also a direct result of the global interest in net zero-carbon energy production. In August, there has been a fall in the utilities market, primarily uranium due to the holiday season. 

The Sprott Physical Uranium Trust recently announced a financing round to raise $300M to purchase uranium supply from the market. This has resulted in a positive force in the market. This equates to the purchase of a 10Mlbs uranium supply, comparable to a 2-year production supply for Global Atomic's Dasa asset. Global Atomic's shareholders also have stakes in Sprott, which may lead to potential purchasing deals in the future.

Recent Announcements

The company recently posted its Q2 results and made announcements surrounding an exploration program. They are currently focused on a sizable drill program in the coming weeks which features exploration along the Flank Zone strike length. This program has the potential to increase the life of their phase 1 resource by 12 years. 

The Flank Zone consists of 20% of the overall deposits. The company is looking to move into a higher measured and indicated category. The next plan of action is concluding the Feasibility Study that will help showcase their new mineral resource estimate and economics for the Dasa project. The planned feasibility study is focused on Global Atomic's standalone plant and mine. 

The Flank Zone is an economic starter mine and the company is looking to collectively establish the scale of operations and supply potential for the Dasa project. 

The MOU with Orano Group

Global Atomic has a working relationship with Orano Group to process the Dasa supply at their Somaïr plant. They have already carried out metallurgical test work and material blending of the supply along with the plant output. 

Global Atomic's MOU (Memorandum of Understanding) with Orano provides an opportunity for the company to ship development ore to the Somaïr plant, this would lead to cash generation and further de-risking of the mine while simultaneously assisting with the company's financing prospects. 

The company is currently looking to start moving material by Q1, 2022 along with ramping up the underground site. They are looking to ship material to Orano by the end of 2022 or early 2023. The company is currently analyzing the economics between selling processed uranium through a tolling agreement and directly selling the supply material while the mine is under development. 

The Somaïr plant is located 100km from the Dasa site and features a high-grade supply. Based on the initial cost analysis, the company has the potential to ship up to 500,000t to Orano. As per the signed MOU, the company will ship a minimum 100,000t supply on a yearly basis. 

Global Atomic is looking to mobilize its project and start generating cash flow from the Dasa project. As there's a debt component to the operation, the company has prioritized mining at their site by Q1,2022. Once production starts, the company will put together a financing package from banks which is expected to conclude by Q2, Q3, 2022. Meanwhile, the MOU with Orano will allow the company to ship material and generate cash flow for plant construction. 

The Befesa Silvermet Zinc Concentrate Production Facility

Global Atomic's Befesa Silvermet zinc concentrate production facility in Turkey is currently generating the majority of the cash flow at a 70% operating capacity. They are looking to pay off the site loan in 2021. The current zinc prices have further improved the company's profit margins. In October, there's a big steel plant coming into operation near the company's Befesa facility in Turkey. This provides an opportunity to increase the plant's processing capacity to 80%-90% further improving the profitability of the project. 

The Demand for Uranium

As per a recently published report by Morgan Stanley, uranium is expected to become the most in-demand metal in the coming decade. As companies around the world continue to build reactors, there's a significant jump in the demand for uranium as a fuel. The China National Nuclear Corporation and China Guangdong along with Russian and French companies have operations in Niger, to generate an ongoing uranium supply. 

Global Atomic is looking to be a prime supplier in the uranium market. The rising interest in uranium presents an opportunity for making significant profits and providing shareholder value. 

Global Atomic has the largest, highest-grade uranium deposit in Africa. The company has a current market cap of $400M. The mine life is indicated at 50 years with a lifetime supply of 250Mlbs - 300Mlbs high-grade uranium. The company is open to considering turnkey agreements as their asset can reap strong profits even when the market is low. 

Listing Considerations

The company already has strong exposure to 46 US states through their OTC market listing. The company does not plan on an NYSE or NASDAQ listing in the near future. This is because the regulatory requirements for the listing along with supporting costs will act as a burden for the company's management and accounting teams in its current position. 

Targets 2021 and Beyond

The company is looking to publish the results of its exploration program and gain clarity on the government's participation in the operation. They have a feasibility study planned for October 2021. They are also open to potential offtake agreements with multiple utilities in the coming years. 

The processing plant in Turkey that was built by the company in 2019 will be paid out this year, which will result in higher profitability. This in turn will accelerate the development of the Dasa Project, which is a company-building asset with a strong potential for cash generation.

To find out more, go to the Global Atomic Website