Global Atomic (TSX-V: GLO) - CAD$100M (Over Subscribed) and Building Plant

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 Befasa Silvermet zinc concentrate production facility in Turkey.

Matt Gordon caught up 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. 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 PDAC (Prospectors & Developers Association of Canada).

Company Overview

Global Atomic is a mineral exploration company founded in 1994. It is headquartered in Toronto, Canada. The company's flagship asset is the Dasa uranium project in the Republic of 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.

Two days ago, Turkey faced a massive earthquake that had an intensity of 7.8 on the Richter scale. The devastating natural calamity caused a lot of damage in the country. Global Atomic’s plant did not suffer any major damage apart from slight roof damage on one of the buildings. Fortunately, at the time of the earthquake, the plant was under a maintenance shutdown and as a result, there were fewer people on-site. It is important to note that the new plant has been constructed to the highest design standards, which also accounts for potential earthquakes to further improve safety.

The company has a share in the Befasa Silvermet zinc concentrate facility in Turkey. Due to the earthquake, the local steel mills are likely affected, however, the extent of the damage caused remains undetermined at this point in time. The company is glad that its employees are safe and that the plant did not suffer any major damage.

Cash Position

In January 2023, Global Atomic announced details on the size and pricing of its overnight marketed public offering. It has entered into an underwriting agreement with Red Cloud Securities Inc. and Cormark Securities Inc. for the sale of about 28M units of the company at a price of CAD$3.50 per unit, bringing the total gross proceeds to CAD$100M. Each unit will comprise one common company share and one-half of a common share purchase warrant. The warrant can be exercised for one common share at a CAD$4.40 price per warrant share at any time for a period of 36 months. The raise will close on 14th February 2023.

Interestingly, the offering was oversold and the company had to cut people back. Based on this, the company anticipates that people have started to realize that the uranium market is bouncing back and is here to stay. Across the world, the construction of nuclear reactors and SMRs (Small Modular Reactors) is on the rise. Nuclear power offers clean energy that can help remove the dependence on polluting energy sources such as coal.

The company had originally intended to carry out a 60-40 debt-equity deal in order to raise between $50M-$60M. As a result of the market response, it was able to raise CAD$100M or about $75M. The company had also looked at other capital raise options such as taking on another mezzanine-type debt piece, however, it turned out to be overly complicated with the inter-creditor agreements. It had a lot of inbounds from interested funds that were looking to participate. It is important to note that the company does not need additional capital in order to build the project. It is now fully financed. The company has plans to announce the debt component by the end of the quarter and have all the paperwork done by the end of the second quarter.

An increase in nuclear energy adaptation across the world as a clean source of reliable power has reinvigorated interest in the market. In recent times, there have been sizable financings such as Yellowcake PLC and the SPUT (Sprott Uranium Physical Trust) which is targeted toward buying physical uranium supply from the market. The uranium spot market price has been steady at $50/lb for quite some time and has been gradually moving above $50/lb. The company anticipates that the uranium price will reach a point where it starts to move higher. The funds anticipate that a price spike is expected in the near future.

Ongoing Operations

Global Atomic is on schedule with completing the plant by the end of 2024 and starting the revenue stream in 2025. The company is looking to start the initial earthworks on site by Q2, 2023. Initially, the company will focus on the crusher area of the plant where excavation will be carried out and the cement will be poured. The construction process is expected to continue over the next 18-20 months. The work on the mine is proceeding as expected and ramping up is underway. The company expects to gain access to the ore within the next 5 months. Before the end of 2023, the company could potentially start shipping material up the road, which generate some early cashflow in 2024.

In January, the company’s CEO was with the final banking team in Niger. He is visiting the site on a monthly basis. The company is working on the little bits and pieces on the term sheets and the final negotiations are underway. The debt financiers and consultants have made multiple visits to the Niger sites in recent months. The company anticipates that this development would be beneficial for all involved parties.

Global Atomic has received a Letter of Interest from EDC (Export Development Canada), confirming the latter’s interest in working with the company to finance the Dasa Uranium Project. EDC has indicated potential participation in a greenfield mining project of up to $75M. The company has announced that an American bank will also be participating. The company is pleased that the Dasa Uranium Project is being financed from North America.

American banks have shown interest in Niger investments. For instance, $500M is being spent to upgrade the infrastructure from Kotanu to Niamey. Niger has a significant American and French presence, making it a highly-investible jurisdiction. In recent times, a lot of Canadian, American, and British politicians have promoted stronger financial ties with Niger.

In the near future, Global Atomic is expecting a big delegation from the Mines Ministry coming to the PDAC. At the conference, all the mining companies that are operating and investing in Niger will hold presentations. In addition to completing the debt component and project build, the company has raised equity. It is looking to continue spending equity before drawing down on debt. The company is looking to build the entire mine, start plant construction, initiate cash flow generation from the mine, and continue construction, after which the finished product will be shipped to utilities.

Indaba is an African mining conference where investors and suppliers meet with companies. Global Atomic is expecting to meet with potential suppliers for the operations. A number of trades people have also shown interest in supporting the company’s project.

Once the debt component is announced, the company will start discussions with utilities. This is because the utilities want the whole project to be put together from a financial purview before entering negotiations and signing additional contracts.

The Uranium Market

Global Atomic anticipates that uranium prices will start moving upward similar to 2007, 2010, and 2011 levels, which was before the Fukushima nuclear incident. However, this time around, the interest in nuclear energy and uranium is higher than ever before. As a power source, nuclear energy currently meets 10% of the world’s requirements. In order to increase the power sourced from nuclear energy to 20%-30%, there needs to be a substantial increase in uranium supply to meet the increase in demand. For the past 10 years, there hasn’t been an investment in the uranium market, except for a few projects that have continued to advance. The jump in uranium prices will fair positively for the market.

The Dasa Uranium Project is a large-scale asset featuring high-grade uranium. The asset is the largest, highest-grade uranium deposit in Africa. The cost of production is at the bottom quartile. Uranium is a strategic metal that is needed to generate clean nuclear power. While the Athabasca Basin is also known for its uranium deposits, permitting can be a major challenge. In fact, some projects can take up to 30 years to obtain permits.

Global Atomic’s deposit features high-grade uranium and offers good margins. The company carried out a Feasibility Study at $35/lb, which was already quite profitable. The current $50/lb uranium prices go to the bottom line in the form of dividends, and better share prices that can be paid to the shareholders. The company anticipates that it will enter production before many Athabasca projects are permitted.

To find out more, go to the Global Atomic website