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Stronger Uranium and Zinc Prices Improve Outlook
- The Company issued its
Dasa Project , Phase 1, Feasibility Study ("Feasibility Study"), based on multiple trade-off studies and pilot plant campaigns. - The Feasibility Study reported a maiden reserve for the
Dasa Project of 4.1 million tonnes grading 5,267 ppm for a total of 47.2 million pounds U3O8. - The Feasibility Study resulted in an initial, Phase 1, 12-year mine schedule at a production throughput of 1,000 tonnes per day to produce 45.4 million pounds U3O8.
- The Study estimates cash costs, including royalties and all
Niger off-site costs, ofUS$18.91 /lb U3O8 and an all-in sustaining cost ofUS$21.93 /lb U3O8. - Initial capital expenditures are estimated to be
US$208 million . - Based on a U3O8 price of
US$35 /lb, the after-tax NPV discounted at 8%, isUS$157 million for an after-tax IRR of 22.7%. The Feasibility Study sensitivity analysis shows that at a U3O8 price ofUS$50 /lb the after-tax IRR rises to 44.6% and atUS$60 the after-tax IRR would be 57.2% for Phase 1 only. - In Q4 2021, the Company began an infill drill program to upgrade Inferred Resources on strike of the Phase 1
Flank Zone to Indicated Resources in order to begin incorporation of additional Phase 2 resources into an updated mine plan. - With the mining permit, final Feasibility Study results and Board approval, the Company determined that effective
December 30, 2021 , the technical feasibility and commercial viability of theDasa Project were sufficient to support its development decision. - The development decision resulted in a transfer of
$45.2 million previously capitalized expenditures from "exploration and evaluation assets" to "mineral property assets" on the Company's balance sheet. - The Company engaged
HCF International Advisers Limited as its financial advisors for project financing and, by the end of 2021, a short list of interested project lenders had been identified. - The Company engaged
Fuel Link Limited as its uranium marketing agent and yellowcake offtake discussions have been initiated with utilities. - The Company began a drill program in Q4 2021 at the Isakanan deposit on the Adrar Emoles 4 permit to recover core for in-situ leach testing.
- The Turkish Zinc Joint Venture ("BST" or the "Turkish JV") plant processed over 70,000 tonnes EAFD in 2021.
- The Company's share of the Turkish JV EBITDA was
$11.3 million in 2021 ($5.6 million in 2020), an increase of 102%. - The zinc contained in concentrate shipments in 2021 was 34.8 million pounds and the average realized price was
US$1.36 /lb. - Available funds were used to secure adequate supplies of critical materials in case of unforeseen supply disruptions and the planned final payment on the Befesa loan was deferred to Q2 2022.
- The non-recourse Turkish JV debt owing to Befesa was
US$4.65 million at the end of 2021 (Global Atomic share –US$2.28 million ). - The revolving credit facility of the Turkish JV had been paid down to
US$7.8 million at the end of 2021 from US8.2 million. - The cash balance of the Turkish JV was
US$2.8 million at the end of 2021.
- Global Atomic continues to receive approximately
$1 million in management fees and sales commissions annually from the Turkish JV, helping to offset corporate overhead costs. - The Company completed a Bought Deal private placement of 6,250,000 Units on
March 16 th at a price of$2.00 per Unit for gross proceeds of$12,500,000 . Each Unit comprised one common share and one-half warrant exercisable at$3.00 per common share over an 18-month period. - The Company completed a Bought Deal private placement of 8,750,000 Units on
December 7 th at a price of$4.00 per Unit for gross proceeds of$35,000,000 . Each Unit comprised one common share and one-half warrant exercisable at$6.00 per common share over an 18-month period. - In May, the Company announced the appointment of Mr.
Dean R. Chambers P.Eng ., ICD.D to the Board of Directors and Pierre Hardouin MBA, CPA, CMA joined the Company in September as Vice President Finance. - Cash balance at
December 31, 2021 , was$34.2 million .
- 140,000 warrants outstanding at
December 31, 2021 were exercised for proceeds of$420,000 . - In the year to date period Global Atomic granted 1,082,000 options to directors, officers and employees of the Company Stock options are exercisable at
$3.40 to$4.54 for a period of five years.
Uranium is continuing to move higher and is currently trading near
"The outlook for the Company continues to improve. Higher zinc prices during 2021 helped double EBITDA from our Turkish Zinc JV over the prior year and zinc prices continue to rise in 2022. At the
- The Company expects to finalize the incorporation of its
Niger mining company in Q2 2022. - The Company began the boxcut excavation in February and expects this to be complete in April.
- Surface infrastructure to support mine development activities is under construction.
- Based on an updated mine plan and budget schedule, timing of mining will coincide with mill completion in Q4, 2024. Ore stockpiling will be kept to a minimum by matching the ore development schedule with the mill completion, unless an agreement to transport development ore to
Orano Mining is reached. - Mining equipment has begun to arrive on site and at the
Port of Cotonou inBenin . Assembly and commissioning will occur over the summer months and CMAC-Thyssen (CMAC) will begin training programs in Q3, 2022. - The Company has engaged engineering consultants to complete Value Engineering studies for the mill construction, due by the end of March.
- An EPCM (Engineering, Procurement, and Construction Management) contract is expected to be awarded in Q2 2022.
- Detailed engineering will be initiated immediately following the EPCM contract award to support the start of the processing plant construction in Q1 2023.
- Project financing is expected by the end of the year to support construction of the processing plant.
- The
Dasa drilling program has been successful in both indicating an expansion of the resources and upgrading Inferred Resources to Indicated Resources. - On completion of the
Dasa drill program currently scheduled for June, and the receipt of assays, the current Mineral Resource Estimate ("MRE") will be updated. - Following the MRE update, a revised mine plan will be developed and the reserve statement updated; it is expected that this will result in an increase in Phase 1 ore reserves and lower operating costs.
- The Company is continuing discussions with
Orano Mining relating to direct shipping of development ore to theSomair Mine located 105 kilometers north of theDasa Project . - The Isakanan drill program was completed in February and core samples have been shipped to
Canada to test for in-situ leach potential.
- The Turkish zinc plant continues to operate at target operating efficiencies.
- Various factors have influenced the zinc price in the current year, which has traded above
US$1.60 per pound throughout the year-to-date period. - Repayment of the remaining Befesa loan is expected to occur in Q2 2022.
- Turkish JV dividend payments will resume following repayment of the Befesa loan.
The following table summarizes comparative results of operations of the Company:
Year ended | |||
(all amounts in C$) | 2021 | 2020 | |
Revenues | $ 957,723 | $ 707,552 | |
General and administration | 9,156,217 | 3,397,564 | |
Share of equity loss (earnings) | (4,112,819) | 1,012,580 | |
Other income | (68,001) | 16,787 | |
Finance expense | 19,882 | 4,371 | |
Foreign exchange loss (gain) | 108,197 | (86,044) | |
Net income (loss) | $ (4,145,753) | $ (3,637,706) | |
Other comprehensive income (loss) | $ (9,086,937) | $ (1,490,473) | |
Comprehensive income (loss) | $ (13,232,690) | $ (5,128,179) | |
Basic and diluted net loss per share | ( | ( | |
Basic and diluted weighted-average | 162,371,970 | 149,403,862 | |
As at | |||
2021 | 2020 | ||
Cash | $ 34,179,449 | $ 2,448,235 | |
Property, plant and equipment | 46,175,097 | 72,721 | |
Exploration & evaluation assets | 681,989 | 37,812,477 | |
Investment in joint venture | 8,981,986 | 11,497,351 | |
Other assets | 3,581,512 | 1,210,303 | |
Total assets | $ 93,600,033 | $ 53,041,087 | |
Total liabilities | $ 2,895,756 | $ 1,231,149 | |
Shareholders' equity | $ 90,704,277 | $ 51,809,938 |
The consolidated financial statements reflect the equity method of accounting for Global Atomic's interest in the Turkish JV. The Company's share of net earnings and net assets are disclosed in the notes to the financial statements.
Revenues include management fees and sales commissions received from the joint venture. These are based on joint venture revenues generated and zinc concentrate tonnes sold. Revenues in 2021 have increased with the increased zinc prices and higher sales in the Turkish Zinc JV.
General and administration costs at the corporate level include general office and management expenses, stock option awards, costs related to maintaining a public listing, professional fees, audit, legal, accounting, tax and consultants' costs, insurance, travel and other miscellaneous office expenses. Stock option expenses, professional fees and salaries have increased in 2021 compared with 2020 due to growth required to support
Share of net earnings from joint venture represents Global Atomic's equity share of net earnings from the Turkish Zinc JV. The significant growth in 2021 EBITDA of the Turkish Zinc JV has resulted in positive equity income compared to a loss in 2020.
Following completion of the Preliminary Economic Assessment of the
The Feasibility Study was completed at a detailed level of design and engineering to enable an appropriate level of confidence to be applied to the economic viability and outcomes of the project. As a result of the Feasibility Study, the following Mineral Reserves were estimated.
Mineral Reserve Category | RoM (tonnes) | U308 (ppm) | U308 (t) | U308 (Million lbs) |
Proven Mineral Reserve | - | - | - | |
Probable Mineral Reserve | 4,066,390 | 5,267 | 21,417 | 47.217 |
The mining inventory included in the Feasibility Study included a minor amount of Inferred Resources. In Q4 2021, the Company began an infill drilling program to convert the Inferred Resources to Indicated Resources. To date, this drilling program has been very successful and has identified additional resources in these areas as well. The drilling campaign will likely be completed at the end of Q2 2022. Once the assays have been received, the MRE will be updated to reflect both the additional resources and changes in resource categorization.
The expectation is that there will be a significant conversion of Inferred to Indicated Resources. Once the MRE has been updated, the Company will also update its mine plan. The updated mine plan will also result in an update to the reserve estimate, and is expected to be completed before year end.
The Phase 1 Feasibility Study on the
Summary Project Metrics @ | ||
Project Economics (USD) | ||
After-tax NPV (8% discount rate) | US$M | |
After-tax IRR | % | 22.7% |
Undiscounted after-tax cash flow (net of capex) | US$M | |
After-tax payback period | Years | 3 |
Unit Operating Costs | ||
LOM average cash cost(1) | $/lb U3O8 | |
AISC(2) | $/lb U3O8 | |
Production Profile | ||
Years | 12 | |
Total tonnes of mineralized material processed | M Tonnes | 4.25 |
Mill processing rate | Tonnes/day | 1,000 |
ppm | 5,184 | |
Overall Mill Recovery (2) | % | 93.4% |
Total Lbs U3O8 processed | Mlbs | 48.6 |
Total Lbs U3O8 recovered | Mlbs | 45.4 |
Average annual Lbs U3O8 production (3) | Mlbs | 3.5 |
Peak annual Lbs U3O8 production | Mlbs | 6.0 |
(1) | Cash costs include all mining, processing, site G&A, and royalty costs, as well as |
(2) | Ramp up of the mill is assumed to take 12 months, during which recoveries increase. Once stable production levels have been achieved at the end of this 12 months, the recovery rate stabilizes at 94.15%. |
(3) | Annual production averages 4.8 million lbs/annum during the first 7 years when the high grade Zone 1 is being mined. |
The economic analysis for the Study was done via a discounted cash flow ("DCF") model based on the mining inventory from the Feasibility Study Phase 1 mine plan and a price of
Economic sensitivity with varying uranium prices (USD) | ||||
Uranium price (per pound) | ||||
Before-tax NPV @ 8% | ||||
After-tax NPV @ 8% | ||||
After-tax IRR | 22.7% | 30.6% | 44.6% | 57.2% |
The plant is designed with a capacity of 1,000 tonnes per day (t/d) or 365,000 tonnes per annum (t/a). The plant layout has been optimised to enable the addition of more processing lines in the future.
The Company is in the process of incorporating a
The Company has entered into an agreement with
The boxcut has been blasted and all preparations should be complete in April. Surface infrastructure is under construction and will continue to be installed throughout the summer. All equipment and supplies should arrive at site by the end of the summer to be ready to start the portal and ramp development thereafter. Although well-funded, the Company has decided to conserve cash and will begin the underground mine development in Q4 2022 rather than in
Upon completion of the Feasibility Study, the Company has embarked on certain Value Engineering studies to improve on the Feasibility Study processing plant design details. Such studies will be completed by the end of March and an EPCM provider will be selected in Q2 2022. Following the appointment of an EPCM provider, detailed engineering will get underway and surface groundwork preparation will begin in Q4 of this year followed by remaining civils work and construction beginning in 2023. The Company's plan is to commission the processing plant in Q4 2024 so that yellowcake can be produced at the beginning of 2025.
In 2021, the Company engaged
Interest in long-term contracting among fuel buyers has been increasing, particularly in view of the Ukrainian situation. The Company expects to receive and respond to a number of requests for proposals from fuel buyers over the coming months.
On
With the discovery of the
Further potential exists along strike of the Isakanan prospect on the adjacent Adrar Emoles 4 Exploration Permit. Historical drilling on the Isakanan prospect outlined a non-compliant resource. A drill program was initiated at Isakanan in
The Company's Turkish EAFD business operates through a joint venture, known as
BST owns and operates an EAFD processing plant in Iskenderun,
Global Atomic holds a 49% interest in the Turkish JV and, as such, the investment is accounted for using the equity basis of accounting. Under this basis of accounting, the Company's share of the BST's earnings is shown as a single line in its Consolidated Statements of Income (Loss).
The following table summarizes comparative operational metrics of the Iskenderun facility.
Year ended | |||
2021 | 2020 | ||
100% | 100% | ||
Exchange rate (C$/TL, average) | 6.90 | 5.24 | |
Exchange rate (US$/C$, average) | 1.25 | 1.34 | |
Exchange rate (C$/TL, period-end) | 10.54 | 5.84 | |
Exchange rate (US$/C$, period-end) | 1.27 | 1.27 | |
Average zinc price (US$/lb) | 1.36 | 1.03 | |
EAFD processed (DMT) | 70,538 | 68,841 | |
Production (DMT) | 23,973 | 25,594 | |
Shipments (DMT) | 23,553 | 26,600 | |
Shipments (zinc content '000 lbs) | 34,810 | 40,665 |
The average zinc price in 2021 was
A general recovery in the steel industry began in Q3 2020 and has continued into 2021. For the year ended
The impact of the Ukrainian war on global steel markets is uncertain, however as exports from
Turkish steel production increased by 13% in 2021 compared with 2020. Expanding consumer loans and infrastructure projects have helped to drive steel demand. As well,
In
The following table summarizes comparative results for 2021 and 2020 of the Turkish Zinc JV at 100%.
Year ended | |||
2021 | 2020 | ||
100% | 100% | ||
Net sales revenues | $ 43,579,784 | $ 33,330,563 | |
Cost of sales | 21,815,111 | 23,537,347 | |
Foreign exchange gain | 1,266,467 | 1,609,936 | |
EBITDA(1) | $ 23,031,140 | $ 11,403,152 | |
Management fees & sales commissions | 1,930,846 | 1,560,743 | |
Depreciation | 2,744,568 | 3,183,605 | |
Interest expense | 885,297 | 1,754,562 | |
Foreign exchange loss on debt and cash | 4,966,353 | 6,933,343 | |
Other expense | 25 | 14,690 | |
Gain on property disposition | 13,870 | 64,040 | |
Tax expense | 4,124,413 | 86,738 | |
Net income (loss) | $ 8,393,508 | $ (2,066,489) | |
Global Atomic's equity share | $ 4,112,819 | $ (1,012,580) | |
Global Atomic's share of EBITDA | $ 11,285,259 | $ 5,587,544 |
(1) | EBITDA is a non-IFRS measure, does not have a standardized meaning prescribed by IFRS and may not be comparable to similar terms and measures presented by other issuers. EBITDA comprises earnings before income taxes, interest expense (income), foreign exchange loss (gain) on debt and bank, depreciation, management fees, sales commissions, losses (gains) on sale of property, plant and equipment. |
The Turkish Zinc JV realized significant growth in revenues in 2021 compared to 2020, benefiting from higher zinc prices and reduced treatment charges in 2021. EBITDA increased to
The cash balance of the Turkish Zinc JV was
Total debt was reduced to
The Befesa loan is expected to be paid off in Q2 2022. Once it has been repaid, dividend payments to the Company will resume.
The scientific and technical disclosures in this news release have been reviewed and approved by
The Company's Uranium Division includes four deposits with the flagship project being the large, high-grade
Global Atomics' Base Metals Division holds a 49% interest in the
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 the use of 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.
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