Global Atomic (TSX-V: GLO) - Underground Development Starts with a Bang

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 and 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.

Last week, Global Atomic held a boarding meeting of SOMIDA. The company’s representatives spent 4-5 days at the project site. The mine crew is now fully staffed and work is progressing as intended. Last Saturday, the company had an opening blast ceremony that was attended by the Prime Minister, the Mines Minister, and the Governor of the Agadez region along with many other dignitaries. Notably, the Prime Minister flew into Agadez and took a 3-hour drive to the project site, which demonstrates the interest and support for the Dasa project. The company has received strong support from the Niger government. After years of exploration and development, the company is at a point where it has commenced underground development and the mine is going into production.

Cash Position

Global Atomic has funds coming in from its Befasa Silvermet project in Turkey. By next March-April, the company will issue a dividend. It also has warrants in place that are due next year in June. These warrants are expected to be exercised at $6, which could potentially drive the stock a bit higher before the expiry date. The company has $18M in current cash flow that will take it well into Q1, 2023. By the end of the year, the company intends to have a project financing package in place with the banks, the announcement could be made by the end of the year. Notably, the banks have already carried out their due diligence, and currently, the lawyers are working on the paperwork so that the deal can be announced.

Utility Contracts

Interestingly, the company has a backup of utilities that are interested in signing up. The company had had discussions with these utilities at the WNA (World Nuclear Association) conference in London. The utilities were looking to sign up as soon as the project got financed. The utility providers are no longer looking to source uranium from Russia. They are looking to diversify uranium supply and Global Atomic is one of the potential candidates the utilities would be interested in buying U3O8 from.

Utilities are looking to secure uranium supply from different sources across the globe. Niger is the 5th largest uranium producer in the world. In fact, France sourced 30% of its uranium from Niger. Following the shutdown of Orano’s COMINAK Mine in Niger, there is a big supply gap in the market that Global Atomic is looking to fill. The Dasa Uranium project is the highest-grade deposit in Niger, and in Africa. Global Atomic is now mining and going underground with its ramp to the ore body. This should instil a lot of confidence in utilities that are interested in buying.

The due diligence work for the banks was carried out by SLR Engineering and Hatch engineering. The company passed with flying colours. Both engineering firms recommended the company go ahead with the project. The company already has 2 utilities on board and once the project financing is announced, the others are expected to follow suit.

The company is happy with a 4.5Mlb project as opposed to 10Mlb. It has sufficient utilities in the queue that are looking to strike a deal. The company is currently looking to sell the amount that it can produce. Over time, if the market is favourable and the prices are good, the company is open to increasing its production capacity. It is carrying out engineering studies with the idea that the additional production could be put in a second line. In fact, the plant is being designed with future expansion in mind. Currently, the company is producing 1,000t/day or 4.5Mlbs/year. The company expects to have an adequate customer base.

It is important to note that Niger does not have any restrictions on selling uranium to China. While the banks won’t have a problem with this, they would prefer the company using equipment and materials on site to not be of Chinese origin. However, the company does not think that this will restrict its plans.

Interestingly, the 4.5Mlb yearly production is close to the combined production of all US uranium companies combined. The company’s current production costs are USD$20/lb, placing it into the lowest quartile of production on a global scale.

The Uranium Market

In 2007, the uranium price jumped to almost USD$140/lb, this was at a time when nuclear was out of vogue. The world has changed significantly since then and several countries are now on board with nuclear energy. SMRs (Small Modular Reactors) are making a big headway. Last week, Rolls-Royce made an announcement that it now has four sites in the UK for new SMR-type reactors.  Since the sector has seen a lack of investment over the last 10-15 years, the price could definitely blow through the last high. Global Atomic anticipates that the uranium prices may surpass the USD$140/lb price point.

Ongoing Operations and Future Targets

Following the closure of the COMINAK mine, the plant has been demolished and sealed. The roads are still there, including the highway between Agadez and Arlite. There is a power line coming from Sonichar that goes right through Global Atomic’s project site. The company has already had meetings to connect to the power grid. All the major infrastructure is already here, and the region also has good water availability. The company is currently focused on project financing and initiating the plant construction, which is underway.

The company has also been working on a direct shipping option with Orano, which is ongoing. Both parties are looking to agree on a final price, following which the plan will be put in motion. As soon as the company gets into the ore, it will start generating revenue. The company expects to get to the ore by 2023-end or early 2024, following which it can start shipping the material. Interestingly, the company is a year ahead of the plant commissioning. It could generate revenue in addition to the ongoing cash flow from the Turkey operations. This aspect is highly comforting for the banks as the company has multiple sources of revenue generation. The company is looking to keep borrowing from the banks at a minimum. Its cash flow can help sustain and progress the operation forward.

Global Atomic is looking to develop five levels underground, setting up stopes for mining, which is currently being worked on. The company is looking to have agreements in place before Christmas 2022. The actual documents are expected to be signed by the end of Q1, 2022 because the banks want the company to spend their equity dollars first before drawing down on the loan. The company has the funds to take the project through Q1, 2023. Global Atomic is looking forward to an improved uranium cycle. People are tired of investing in companies that never end up making money, and are looking to get back into the metals business where companies actually generate a profit and pay dividends.

To find out more, go to the Global Atomic website