Global Atomic (GLO) - World Nuclear Association (WNA) Fireside Chat

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 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.

Global Atomic’s representatives visited the WNA (World Nuclear Association) conference in London, England. At the conference, there was a lot of talk about switching to low-carbon energy sources and nuclear energy permeating various aspects of energy generation.

The WNA is a forum that is attended by a lot of industry personnel, including the utilities, equipment suppliers, developers, and more. The developers discuss collaboration opportunities that can lead to cost and time savings.

A large number of utilities have shown keen interest in Global Atomic’s project. Over the last 2.5-3 years, in-person meetings were suspended due to covid-related restrictions. This is the first time after years when people are meeting face to face. The utilities are being cautious in exploring different options in order to secure nuclear fuel to meet their requirements. They are looking at all the projects and categorising the ones that are expected to come online in the next few years.

SMR Reactors

At the WNA conference, there were several declarations by the DoE (Department of Energy) regarding the need for aggressive nuclear reactor fleet expansion in the US. The move towards nuclear energy is happening at a global level. Several companies have proposed SMRs (Small Modular Reactor) for this expansion. Rolls Royce has completed an architecturally designed factory in the UK to develop multiple SMRs. The factory model of developing SMR helps the company in keeping costs down.

According to Global Atomic, people need to be educated and trained in order to fabricate SMRs, as not a lot of people have been in the industry for a number of years. While the US government is looking to double the size of its fleet, the Chinese government is also looking to build an additional 45 reactors. This development is expected to cost around $400Bn. The countries are now looking to secure a uranium supply to ensure that the reactors have an ongoing supply in order to generate power.

At the conference, there were proposals for 400MW-480MW SMRs. The development of these reactors will lead to new jobs, training, cleaner power generation, and smaller carbon footprints. Since the reactors are designed and built in a factory, they require less capital and can be easily replicated.

According to a large study, fairly new coal plants with modern infrastructure can be modified by replacing the coal-fired boiler with a nuclear reactor. This helps keep the overall costs down. In fact, there are already sites that have been relegated to a power plant. As a result, the permitting process is expected to be significantly faster. However, community acceptance would still be needed. Communities need to be educated on the benefits of small reactors such as efficiency, reduction in pollution, and creation of job opportunities.

Ongoing Operations

Stephen Roman, CEO, Global Atomic recently visited Niger, signing all the required agreements to incorporate SOMIDA (Société, Minière Dasa), its local operating company. He also met with the President, the Prime Minister, and the Mines Minister who were invited for a tour of the company’s office facilities. Notably, the company has modern, up-to-date office facilities in Niamey.

At the project site, the company has completed the box cut. It has successfully moved out 42 trucks in convoy up to the project site with its brand new mining camp. The mining camp is currently under construction in Turkey and is expected to be completed in the next 2 months. The company has hired a mining contractor that is scheduled to arrive by mid-September in order to initiate training programs. Additionally, the company has also scheduled simulators for all the new mining equipment. The company has a hired core team of people managers that are running the operations on-site and in Niamey.

Interestingly, the company put out a job request last week that was open to all. It received 1200 applications in a single day. This demonstrates that a lot of people want to be involved with Global Atomic. The company has plans to start training and apprenticeship programs. It has well-defined goals and an integrated plan to ramp up the operations. By November 2022, the company is looking to have an on-site workforce of 150 people. The company has already planned an opening celebration on November 2, 2022.

The Utilities Market

According to Global Atomic, the utilities continue to remain conservative. The company recently signed a deal for its first off-take agreement with a US utility. It also has a number of RFPs (Request for Proposal) that have been submitted by other utilities.

Some of the utilities are waiting for the company to clear a few more milestones such as project financing. The company is currently working with its banking syndicate to carry out the due diligence. For this process, lawyers and engineers have been hired. In order to carry out the technical due diligence, there’s a large group that will be travelling to Niger. The company anticipates that it will get the green light on the debt component by early November.

Following this, an increasing number of utilities are expected to start signing deals. By this time, the company’s direct shipping option to Orano Mining is expected to be completed as well. The two companies are currently negotiating the finances of the arrangement. As soon as the negotiations are done and the development commences, Global Atomic will begin shipping. This would give the company the option to start generating an early cash flow, which can be utilised for mill construction financing.

Cash Position

Global Atomic has about 9M upcoming warrants that are due in September. The warrants will bring in additional funds, ensuring that the operations are running at full speed through Q1, 2023. By March-April, the company will also get dividends from its operation in Turkey. In June, the company will have a 20M warrant exercised at $6 a share. All these funds will be put into the mine development which will go against the company’s equity component for the mill financing.

The company is interested in issuing equity. It has 2-3 interested groups that are open to providing a 2-3 year bridge facility. In case a gap needs to be filled, this bridge will keep the banks happy. As a result, the company will not need to issue equity. The company is looking at a subordinated loan that would be paid back from the generated cash flow. The company has struck a 100,000t a year deal for a 5-year period. It has the flexibility to accelerate the timeline and complete the supply within 3 years. At a $50/pound pricing, the company has the potential to generate about $250M in free cash flow. These funds could effectively finance the whole plant without undertaking any debt.

Global Atomic is focused on pushing the project forward and meeting major milestones. This would allow additional deals to take place. The utilities are still quite conservative but have started coming to the table. The company anticipates that the utilities will all pin in at the same time. The uranium pricing is expected to move higher with time. While Cameco or Kazatomprom might bring in new production, the demand for uranium will continue to grow. As per the company, the current uranium market isn’t cyclical in nature. The current conditions indicate a long-term market that has had significant changes since the last cycle in 2007. Back in 2007, there wasn’t a lot of concern about carbon emissions. As a result, there was a lot of excess uranium supply. Given the current inclination towards greener energy sources, an excess supply is highly unlikely. To reduce pollution and meet global warming goals, more reactors will need to be built. The only way to generate energy with minimal carbon output is to use nuclear reactors.

To find out more, go to the Global Atomic website