All monetary amounts are in U.S. dollars,
unless otherwise indicated.
TORONTO, March 5,
2024 /CNW/ - Global Atomic Corporation ("Global
Atomic" or the "Company") (TSX: GLO) (OTCQX: GLATF) (FRANKFURT:
G12) announced today the results of the updated Dasa Project
Feasibility Study (the "2024 Study") replacing the previous Phase 1
Feasibility Study ("Phase 1 Study").
The 2024 Study has extended the Dasa Mine Life from 12 to 23
years, Mineral Reserves have increased by 50% to 73 million pounds
U3O8, and uranium production from Dasa has
increased by 55% to 68.1 million pounds.
Highlights
Table1 below compares the metrics of the 2024 Study to the Phase
1 Study:
|
Phase 1
Study
2026-2037
|
2024
Study
2026-2037
|
2024
Study
2026-2049
|
Mine plan
(years)
|
12
|
12
|
23
|
Uranium price
($/lb)
|
$35
|
$75
|
$75
|
Average mill feed grade
(ppm)
|
5,267
|
5,103
|
4,113
|
Uranium production
(Mlb)
|
44.1
|
44.1
|
68.1
|
Average cash cost
before royalty ($/lb)
|
$15.72
|
$20.35
|
$25.62
|
Average cash
cost1 ($/lb)
|
$19.02
|
$25.38
|
$30.73
|
Average
AISC2 ($/lb)
|
$22.13
|
$31.49
|
$35.70
|
Internal After-tax Rate
of Return ("IRR")
|
22.3 %
|
|
38.4 %
|
After-tax Net Present
Value ("NPV8") ($ million)
|
$147
|
$917
|
Pay-back
(years)3
|
3.25
|
2.5
|
1.
|
Cash cost per pound
represents mining, processing, onsite and offsite general and
administrative costs, selling expenses and royalties, divided by
recovered U3O8.
|
2.
|
All-in sustaining
cost per pound of uranium represents mining, processing, site and
offsite general and administrative costs, royalties and sustaining
capital expenditures including rehabilitation provision, divided by
recovered U3O8.
|
3.
|
Pay-back is based on
total cost, including amounts already paid.
|
Stephen G. Roman, President and
CEO commented, "The 2024 Study has identified significant
improvements in the Dasa Project from the Phase 1 Feasibility Study
including a 50% increase in Mineable Reserves and a near doubling
of the mine life. The payback period estimated in the 2024
Study is expected to be 2.5 years, including recovery of amounts
already spent."
"With several layers of contingency built into the 2024
Study, we believe that the estimated returns are conservative
providing numerous opportunities to add value. For example, there
are 51.4 million pounds of Inferred Resources grading at 5,243 ppm
in the Dasa deposit that could be converted to the Indicated
category and brought into the mine plan. We expect to have full
project financing in place soon and are on track for plant
construction to commence in the second half of 2024 and plant
commissioning to occur at the end of 2025."
The Dasa Project is defined in three Phases, with the Phase 1
comprising the shallow high-grade Fank
Zone, Phase 2 comprising several ore bearing zones at lower
depths and the Phase 3 surface mineralization that could be mined
as an open pit. See figure 1 below.
Figure 1 above outlines the ore body based on the 2019 Mineral
Resource Estimate ("MRE").
The 16,000-meter drill program conducted during 2021/22 resulted
in significant resource conversion from Inferred to Indicated. The
previous 2019 MRE had been based on both an open pit and
underground mine, while the current MRE is based solely on an
underground mine. The MRE was revised in a news release dated
May 23, 2023.
Figure 2 below shows the resource categories delineated by the
2023 MRE, which includes results of the 16,000 metres of drilling,
most of which was infill and at a 1,500-ppm cutoff grade increased
Indicated Resources by 50% from the 2019 MRE.
In figure 2 above, Inferred Resources are delineated in yellow
and represent 51.4 million pounds which will be
targeted in future drilling programs with the intention of
converting these to Indicated Resources and converted to
Mineral Reserves in the next feasibility study. The Dasa ore body
also remains open down dip and along strike. The Company has
delineated three other deposits in Niger which could eventually feed the Dasa
processing plant.
The new MRE was calculated by AMC Consultants, ("AMC"), of
Perth, Western Australia.
Table 2: Dasa Mineral Resources as at May 12, 2023
Category
|
Tonnes
Mt
|
eU3O8
ppm
|
Contained
Uranium
Mlb
|
Indicated
|
10.09
|
4,913
|
109.3
|
Inferred
|
4.45
|
5,243
|
51.4
|
1.
Mineral Resources are based on CIM definitions.
|
2.
Assumes all resources to be mined from a ramp access,
underground mine.
|
3. A
cut-off grade of 1,480 ppm eU3O8 has been
applied for underground resources.
|
4 . A bulk
density of 2.36t/m3 has been applied for all model
cells.
|
The 2024 Study has estimated the current reserves for
the Dasa Project to be:
Table 3: Dasa Mineral Reserves as at February 28, 2024.
Category
|
Tonnes
Mt
|
U3O8
ppm
|
Contained
Uranium
Mlb
|
Probable
Reserves
|
8.04
|
4,113
|
73.0
|
1. Mineral Reserves
are based on CIM definitions.
2. Assumes all
resources to be mined from a ramp access, underground
mine.
3. A cut-off grade
of 1,500 ppm U3O8 ppm has been applied for
the Mine Plan.
|
Economics
The 2024 Study was completed by METC Engineering Pty Ltd.
("METC"), who also completed the Phase 1 Study.
The economic analysis for the 2024 Study was done with a
discounted cash flow ("DCF") model based on a uranium price of
$75 per pound
U3O8. Sensitivity analysis was applied
at intervals from $60 per pound to
$105 per pound, as shown in Table 4
below.
Table 4. Economic
sensitivity with varying uranium prices (USD)
|
Uranium price (per
pound)
|
$60/lb
|
$75/lb
|
$90/lb
|
$105/lb
|
Before-tax
NPV8
|
$656 M
|
$1,122 M
|
$1,572 M
|
$2,022 M
|
After-tax
NPV8
|
$551 M
|
$917 M
|
$1,269 M
|
$1,621 M
|
After-tax
IRR
|
27.9 %
|
38.4 %
|
47.1 %
|
55.1 %
|
The DCF includes the current tax regime and royalty requirements
in Niger. Net present value ("NPV") figures are calculated
using a range of discount rates as shown in Table 5. The discount
rate used for the base-case analysis is 8% ("NPV8"). NPV
is based on discounting to commissioning date, January 1, 2026, less undiscounted remaining
capital costs.
Table 5. Economic
sensitivity with varying discount rates using base-case uranium
price of $75 per pound (USD)
|
Discount rate
(%)
|
6 %
|
8 %
|
10 %
|
12 %
|
Before-tax
NPV
|
$1,323 M
|
$1,122 M
|
$960 M
|
$828 M
|
After-tax
NPV
|
$1,073 M
|
$917 M
|
$791 M
|
$687 M
|
Processing
The process plant has been designed for a throughput of 1,200
tonnes per day. Long lead equipment has been purchased with
delivery expected late summer through the fall of 2024. In view of
the on-site construction schedule, cold commissioning is expected
to be complete in Q4 2025 and hot commissioning beginning in early
2026. Procurement and construction of supporting
infrastructure is underway. The processing plant recovery is
forecast to be 94.15% in steady state.
Additional Project
Costs
In the Phase 1 Study, development and commissioning of the mine
and processing plant were projected over 16 and 19 months,
respectively, with costs integrated into the ongoing capital. The
2024 Study revises this timeline, extending mine development from
2022 through the end of 2025, a total of 48 months, to align with
the processing plant's commissioning schedule. This adjustment
results in more comprehensive development work and, consequently,
an increase in cumulative costs, including a rise in owners' and
indirect expenses due to the extended development phase.
Some of the key capital cost increases are due to the
following:
- Extended support for site and Niamey staff over 48 months, a $22 million increase.
- Prolonged mine development period contributing an additional
$36 million.
- Enhanced EPCM and project team expenses due to increased
complexity and extended duration, for an extra $12 million.
- Shift from a power purchase agreement to a grid connection
with Dasa having its own power station, adding $20 million in upfront capital.
- A larger mine camp increases costs by $8
million.
- Additional site support buildings necessary for an extended
mine life, adding $21 million.
Contingencies
The 2024 Feasibility Study incorporates a range of contingencies
to address potential risks and uncertainties. These provisions
ensure the project's resilience and flexibility, safeguarding
against unforeseen events and enabling adaptive responses to market
fluctuations and operational challenges. By proactively integrating
these measures, the study underscores our commitment to project
viability and stakeholder confidence.
Contingency
|
Undiscounted
Amount
(USD
millions)
|
|
|
Additional transport
time for mill equipment
|
$2.3
|
Use of average 23 year
power cost in first 5 years
|
$3.1
|
Mobilization &
start-up costs for international construction
contractors
|
$3.5
|
Reagent transport cost
using Lome rather than Cotonou
|
$15.3
|
Mill and infrastructure
capital cost contingency
|
$28.7
|
Mine development cost
contingency
|
$33.6
|
Mill availability
contingency
|
$65.7
|
Mining dilution
contingency
|
$80.0
|
Total
|
$232.2
|
- Due to slower transport via the port of Lomé in
Togo through Burkina Faso, project timelines have been
extended by 1.5 months. Utilizing the Cotonou route will eliminate
additional site and Niamey costs
and advance the Project delivery timelines.
- Power costs are carried at an average cost of $0.26/kwh over the production period. As power
requirements ramp up over the first 5 years, the power source mix
of grid connection and our own power station should result in lower
costs.
- Local contractors have been identified for site development and
construction. The 2024 Study assumes international construction
contractors for all site work which would result in higher
costs.
- Reagent costs for the mill are assumed to be transported
through the Togo – Burkina Faso rather than the traditional route
via the port of Cotonou in Benin.
- Initial capital costs include a general contingency provision
of 12% for the mill and infrastructure.
- A 15% contingency has been included for all mine development
and capital costs.
- The mill has been designed for 1,200 tonnes per day throughput,
however cash flows for the 2014 Study are based on 1,000 tonnes per
day. If plant availability is 92%, similar to the experience of
other Niger uranium mills, fixed
costs for the mill and infrastructure will be reduced.
- Mine dilution has been increased to 10% in the 2024 Study
compared to 5% in the Phase 1 Study. The additional tonnes are
therefore processed at cost of $210/tonne.
Value
Opportunities
Global Atomic is poised to enhance the Dasa Project's value
through strategic infill drilling targeting the 51.4 million pounds
of high-grade Inferred Resources. This initiative, set to commence
in Q3 2024 from both underground and surface positions, aims to
elevate mineable grades post-2038 and extend the mine's operational
life beyond 2048. Additionally, exploration drilling will seek to
expand the deposit further, leveraging its open at depth and on -
strike potential.
Power costs account for 28% of cash costs, up from 22% in the
Phase 1 Study. Cash costs during the first 12 years have increased
from $15.72/lb to $20.34/lb. The cost of a kilowatt of power has
increased by 50% since the Phase 1 Study, accounting for
$2.12/lb of the increase in cash
costs during this period. Once operational, a potential investment
in solar and battery storage or other power generation alternatives
will be assessed to reduce power costs.
Once Dasa has achieved commercial production of
U3O8, the Company will conduct a third-party
review of the plant processes to optimize operating rate and plant
efficiency that would result in higher production volume and lower
costs.
Based on growing global demand for uranium, Global Atomic is
planning to complete a pre-liminary feasibility study in the early
years of the mine plan for a plant expansion to 2,000 tonnes per
day and incorporate additional drilling results.
The mine is already designed for higher production.
Additional capital requirements are expected to be minimal
and primarily used to expand the mining fleet and increase mill
throughput. The current mine plan is based on
throughput of 1,000 tonnes per day, the plant has been designed to
handle up to 1,200 tonnes per day, with most equipment sized by 20%
more than this. At 92% availability, throughput could be increased
to 1,325 tonnes per day with minimal additional investment.
Technical Report
A NI 43-101 compliant technical report related to the 2024 Study
will be filed on SEDAR and posted to the Company website
(www.globalatomiccorp.com) within 45-days of today's news
release.
QP Statement
The scientific and technical disclosures in this news release
have been reviewed and approved by Andrew
Pooley and John
Edwards. Andrew Pooley
is the Chairman of Bara Consulting. He has obtained a
B.Eng (Hons) in Mining Engineering
from Nottingham University in the UK and has over 29 years of
experience in the mining industry. He is a Fellow of the South
African Institute of Mining and Metallurgy John Edwards is a
Professional Metallurgist and is the Chief Metallurgist at METC
Engineering (Pty) Ltd. having graduated with a BSc Hons in Mineral
Processing Technology in 1985 from Camborne School of Mines, UK. He
is a Fellow of the South African Institute of Mining and Metallurgy
with over 35 years of experience as a metallurgist.
Off-take
Agreements
Global Atomic has finalized a Letter of Intent ("LOI") for
the sale of uranium from the Company's Dasa Project in the Republic
of Niger to a strategic
Europe-based nuclear power
utility. The LOI is subject to the successful conclusion of a
purchase-sale contract, which the Company will now progress.
The LOI represents the supply of 260,000 pounds
U3O8 over a three-year delivery window
beginning in 2026 and is characterized as representing "starter
volume". This is the fourth such agreement signed by the
Company and brings the Company's total current committed volume up
to 9.5 million pounds U3O8, representing
revenue of up to US$770 million at
current market levels.
This LOI is priced close to current term market prices
escalating each year, reflecting the Company's continued strategy
of layering in sales contracts in support of Tier 1 global
utilities at volumes sufficient to underwrite debt financing,
thereby limiting equity dilution as the Dasa operation moves into
production.
Niger Update
On February 24, 2024, Niger's neighboring ECOWAS nations lifted the
sanctions imposed on Niger
subsequent to the July 2023 change in
government, including re-opening Niger's historic primary trade route to ocean
shipping channels through the port of Cotonou in Benin.
During the sanction period, Global Atomic continued to open up
underground ore access and development of mine infrastructure, as
well as site preparation for the processing plant. Supplies
for these activities used an alternate shipping route through
Togo and Burkina
Faso.
The Government of Niger places
great value on the local, regional and national economic potential
of the Dasa Mine through their 20% ownership, corporate taxes and
mining royalties, and more importantly the creation of hundreds of
jobs and many business opportunities for local suppliers to help
build and maintain the Dasa Mine.
The Government sees the Dasa Mine as playing a significant role
in revitalizing the central Agadez region of Niger. Recent
changes in the Niger Government's cabinet, have split the Mining
portfolio away from the Petroleum and Energy portfolios, thus
enabling improved access to the Mines Minister.
Project Financing
Update
Financing for the construction of the processing plant continues
to advance as the Company anticipates that the 60% debt portion of
the project financing is expected to be satisfied in Q2 2024 in the
form a debt facility from Export Development Canada and a US
development bank.
The 40% equity portion of the financing cost will be partially
satisfied by the $73.4 million
invested to date in the Dasa Project by Global Atomic and cash on
hand. Any remaining equity required may be raised in
the form of pre-payments on future uranium sales agreements, which
would be put in place following banks' board approval of the debt
facility. The current estimate for capital required by Dasa
to commence production is as follows:
|
Initial Capital Cost
(USD millions)
|
|
Total
|
Spent
|
Remainder
|
|
|
|
|
Mining
|
$90.4
|
$31.5
|
$58.8
|
Process
plant
|
88.0
|
2.7
|
85.3
|
Infrastructure
|
79.3
|
11.1
|
68.2
|
Owners costs
|
69.9
|
21.9
|
48.0
|
|
327.6
|
67.2
|
260.4
|
|
|
|
|
Contingency
|
36.7
|
|
36.7
|
Working
capital
|
27.8
|
|
27.8
|
Capital cost in
Feasibility Study
|
$392.0
|
$67.2
|
$324.8
|
|
|
|
|
Corporate cost
allocation (50%)
|
7.6
|
4.0
|
3.6
|
Financing
costs
|
25.0
|
2.3
|
22.7
|
Capital cost for
project financing
|
$424.6
|
$73.4
|
$351.2
|
|
|
|
|
Bank funding
(60%)
|
$254.8
|
$0.0
|
$254.8
|
Equity (40%)
|
169.8
|
73.4
|
96.4
|
|
$424.6
|
$73.4
|
$351.2
|
About Global
Atomic
Global Atomic Corporation (https://www.globalatomiccorp.com) is
a publicly listed company that provides a unique combination of
high-grade uranium mine development and cash-flowing zinc
concentrate production.
The Company's Uranium Division has identified three additional
deposits in Niger additional to
the large, high-grade Dasa Project, discovered in 2010 by Global
Atomic geologists through grassroots field exploration. With the
issuance of the Dasa Mining Permit and an Environmental Compliance
Certificate by the Republic of Niger, the Dasa Project is fully permitted for
commercial production. Mine excavation began in Q1 2022, and
commissioning of the processing plant is expected at the end of
2025/ beginning 2026.
Global Atomic's Base Metals Division holds a 49% interest in the
Befesa Silvermet Turkey, S.L. (BST) Joint Venture, which operates a
modern zinc production plant, located in Iskenderun, Türkiye. The
plant recovers zinc from Electric Arc Furnace Dust (EAFD) to
produce a high-grade zinc oxide concentrate which is sold to zinc
smelters around the world. The Company's joint venture partner,
Befesa Zinc S.A.U. (Befesa) holds a 51% interest in and is the
operator of the BST Joint Venture. Befesa is a market leader in
EAFD recycling, with approximately 50% of the European EAFD market
and facilities located throughout Europe, Asia
and the United States of
America.
The information in this release may contain forward-looking
information under applicable securities laws. Forward-looking
information includes, but is not limited to, statements with
respect to completion of any financings; Global Atomics'
development potential and timetable of its operations, development
and exploration assets; Global Atomics' ability to raise additional
funds necessary; the future price of uranium; the estimation of
mineral reserves and resources; conclusions of economic evaluation;
the realization of mineral reserve estimates; the timing and amount
of estimated future production, development and exploration; cost
of future activities; capital and operating expenditures; success
of exploration activities; mining or processing issues; currency
exchange rates; government regulation of mining operations; and
environmental and permitting risks. Generally,
forward-looking statements can be identified by forward-looking
terminology such as "plans", "is expected", "estimates", variations
of such words and phrases or statements that certain actions,
events or results "could", "would", "might", "will be taken", "will
begin", "will include", "are expected", "occur" or "be
achieved". All information contained in this news release,
other than statements of current or historical fact, is
forward-looking information. Statements of
forward-looking information are subject to known and unknown risks,
uncertainties and other factors that may cause the actual results,
level of activity, performance or achievements of Global Atomic to
be materially different from those expressed or implied by such
forward-looking statements, including but not limited to those
risks described in the annual information form of Global Atomic and
in its public documents filed on SEDAR from time to time.
Forward-looking statements are based on the opinions and
estimates of management at the date such statements are made.
Although management of Global Atomic has attempted to identify
important factors that could cause actual results to be materially
different from those forward-looking statements, there may be other
factors that cause results not to be as anticipated, estimated or
intended. There can be no assurance that such statements will
prove to be accurate, as actual results and future events could
differ materially from those anticipated in such statements.
Accordingly, readers should not place undue reliance upon
forward-looking statements. Global Atomic does not undertake
to update any forward-looking statements, except in accordance with
applicable securities law. Readers should also review the
risks and uncertainties sections of Global Atomics' annual and
interim MD&As.
The Toronto Stock Exchange has not reviewed and does not accept
responsibility for the adequacy and accuracy of this news
release.
SOURCE Global Atomic Corporation