Global Atomic (GLO) - Uranium Category of One Investment

Global Atomic is the most promising uranium juniors on the planet. Why do I say that?

The recent optimised PEA released for the flagship Dasa Uranium Project featured numbers that make it a genuine contender to be the next new uranium producer online. That is a huge advantage when it comes to funding. Let me explain.

The optimised PEA was created around the idea of mining a higher-grade flank zone in Phase 1 of production at the company's Dasa project in Niger, delivering transformative economics, even at a uranium price of just US$35/lb:

1. AISC: just US$18.39/lb. Absolutely world-class.
2. Cash Cost: just US$16.72/lb. Again, world-class.
3. CAPEX: a reasonable US$203M, including a 20% contingency. Global Atomic should have no difficulty getting financed, especially compared to eye-watering CAPEXes for most uranium juniors.
4. After-Tax NPV8: US$211M
5. After-Tax IRR: 26.6%.

So, depending on the cost of its financing, Global Atomic can expect to be aiming for a base case of US$30-US$35/lbs. Most uranium companies are looking for a price of +US$50 to be incentivised to get into production. If the price of uranium goes to US$50, the NPV8 leaps to US$485M with a 46.3% IRR.

Matthew Gordon talks to Stephen Roman, 18th July 2020

Also, remember Global Atomic's Turkish zinc project will be providing US$5M-US$10M pa (zinc price-dependent) from March 2023 once the new plant debt has been paid down. The company currently receives monthly management fees and sales commissions that effectively cover a lot of the G&A. This revenue stream gives the company optionality on how it chooses to finance the US$200M CAPEX. With a production target of 4.5-5Mlbs pa, its Dasa project is a meaningful Tier-2 producer.

If the uranium price leaps to the bare minimum uranium majors are demanding, US$50/lb, the numbers become even more remarkable.

1. After-tax NPV8: US$485M
2. After-tax IRR: 46.3% IRR
3. Phase 1 Life-Of-Mine: 12 years, mining 48Mlbs U3O8 at 5,396ppm.
4. Average Annual Steady-State Uranium Production: 4.4Mlbs U3O8. This is perhaps the most impressive figure of all. With this volume of production, Global Atomic can become a meaningful second-tier player!

The company recently closed a non-brokered private placement of 5,538,335 Units at a price of C$0.60 for gross proceeds of C$3,323,000. Roman intends to allocate most of this as working capital to the treasury. Even though Global Atomic can make money at the current depressed uranium price, nobody is getting their CAPEX financed at c. US$35/lb U3O8.

After completing the raise, Global Atomic had c. C$6.5M in the treasury. The capital is being used to complete the company's environmental impact study and all of the feasibility work necessary for the company's development plan and its mining permit application. The remainder of the balance will be used for some geotechnical drilling along with the final engineering and design for the mine and plant.

What about Global Atomic's zinc JV with Turkish company Befesa Silvermet at the Iskenderun zinc processing facility? COVID-19 has not been kind to the zinc price, with the price falling from US$1.10/lb to US$0.85/lb, now hovering at around US$1. Global Atomic has told the market that it should now expect a 2-year payout because of weaker zinc prices. Iskenderun will eventually provide cash flow to help finance Dasa.

The lines of credit with the Turkish banks are positive, and Global Atomic's general working capital requirements are assisted as a consequence. It has been operating there since 2009, and the banks have a good relationship with Roman.

Looking towards the rest of 2020, the company will be very busy. It has recently put out RFPs with various groups from different locations that are interested in constructing the Dasa mine and mill. The in-country team capability has also been enhanced, and once the mining permit is in Roman's hands, Global Atomic will be moving forward very quickly. He expects to receive it by the end of Q1/21. The presidential election in Niger could delay matters, but by getting its permit sent in by August before campaigning starts in the fall, Global Atomic should have no real issues.

What did you make of Stephen Roman and Global Atomic?

Company Website: https://www.globalatomiccorp.com/