Global Atomic Corp: Primed for Growth in the Next Uranium Bull Market?

Global Atomic Corp
  • TSX:GLO
  • Shares issued: 144M
  • Shares Fully Diluted: 160M
  • Share price CAD$0.49* (16.11.2019)
  • Fully Diluted Market Cap CAD$78.4M* (USD$59.4M)

Global Atomic Corp (GLO) was formed in 2017 when Silvermet Inc. (owner of Turkey’s Zinc operations) and Global Atomic Fuels Corporation (Private Uranium company) merged. (1)

GLO has two divisions. Base metal division which owns 49% of a Zinc recycling plant in Turkey and Uranium division that explores and develops Uranium assets in Niger.

Uranium Development Underpinned by Cash Flow From Zinc Production

Global Atomic Q42019 Corporate Presentation

It is the only Uranium junior with positive cash flow and net income.

It has a large and high grade multi decade asset (DASA) in Niger. “Largest High-Grade Uranium Sandstone Deposit Globally.”

It has a large insider ownership with the CEO Stephen Roman owning >8% of the company. He has also been actively purchasing more shares from the open markets (2):

Stephen Roman also has a track record in Uranium mining and he sold a Gold company (Gold Eagle) to Goldcorp in 2008 for $1.5B. (33)

These are the things you want to see in a company. Great assets, great management with large ownership, insider buying and better yet, GLO looks cheap even just based on the Zinc operations.

So let’s take a deeper dive.

Zinc operations

GLO owns 49% share of Befesa Silvermet Turkey (BST) which owns a Zinc recycling plant (Iskenderun) in Turkey. 51% of BST is owned by a Spanish company, Befasa. Befasa was purposefully brought in as an operational JV partner. It’s a large Steel dust recycling operator and knows this business extremely well.

Steel mills produce Electric Arc Furnace Dust (EAFD) which contains a Zinc. Steel mills have to recycle this material. BST collects the EAFD, recovers zinc from it and produces a high-grade zinc concentrate which is sold to smelters.

Befasa Company Presentation November 2019

BST had a capacity of 65kt (equals roughly to 30Mlbs Zinc pa.). In 2019 the plant had an upgrade and was re-opened in early November 2019 with a capacity of 110kt (c. 60Mlbs Zinc pa.). This was done on time and in budget.

OPEX for the pre-upgrade plant was about $0.45/lbs and after this upgrade, based on what S. Roman (11) and Merlin Marr-Johnson have said in their interviews, OPEX will fall to around $0.37 – $0.4/lbs range.

BST has been a profitable operation for almost 10 years now. It’s a great cash flowing business with an extremely low break-even. Not taking 2019 into account, BST is a lean and profitable operation with high margins and low overhead.

In 2018 BST made a net profit of CAD$21.4M. GLO’s share of these profits was 49% CAD$10.5M. GLO received c. CAD$7M in dividends. (3)

CAPEX for this upgrade was $26M. It was financed using debt ($2M from Turkish bank and $20M from Befasa (Libor +4%)) and part of the cash flow generated in 2018.

“The Befesa funding is expected to be repaid out of operating cash flows or refinanced during 2020/21.” (4)

So GLO’s share of the Debt is $10.8M and interest payment will be around $0.65M in 2020.

If BST doesn’t refinance (which I doubt) GLO has to pony up c. $6M in both 2020 and 2021 to be able to pay down its debt.

BST, luckily, is a cash machine. Even in with a 90% utilization and $0.8/lbs Zinc price it can take care of the debt.

Zinc price $/lbs $0,6 $0,8 $1,0 $1,2 $1,4
Capacity utilization 90% 90% 90% 90% 90%
Mlbs of Zinc 54 54 54 54 54
OPEX 0,39 0,39 0,39 0,39 0,39
Smelter 3% 3% 3% 3% 3%
           
Revenue $32,4 $43,2 $54,0 $64,8 $75,6
Cost of Sales $21,1 $21,1 $21,1 $21,1 $21,1
Smelter $1,0 $1,3 $1,6 $1,9 $2,3
EBITDA $10,4 $20,8 $31,3 $41,8 $52,3
SG&A $2,0 $2,0 $2,0 $2,0 $2,0
Depreciation $1,5 $1,5 $1,5 $1,5 $1,5
Tax $2,1 $5,2 $8,3 $11,5 $14,6
Net Income $4,8 $12,1 $19,5 $26,8 $34,1
GLO’s share of NI $2,4 $5,9 $9,5 $13,1 $16,7
           
OCF $6,3 $13,6 $21,0 $28,3 $35,6
GLO’s share of OCF $3,1 $6,7 $10,3 $13,9 $17,5

In the short term there are some important risks. BST collects the EAFD from 7 (soon 8) local steel mills. Because the 8th mill isn’t in production yet, BST will not reach 100% capacity in 2020. There just aren’t enough EAFD. If any of these steel mills close, BST will not be able to have enough feed stock to operate in full capacity.

As a base metal Zinc has a history of falling off the cliff when a recession hits. This combined with closures (or production cutbacks) of any of the local Steel mills would mean lower revenue and lower capacity utilization and could affect GLO’s ability to pay down its debt.

Nevertheless, I think that BST is a great asset. I think that a $1/lbs long-term price for Zinc is a conservative number. With that price BST can pay close to $10M pa in dividends to GLO. If they can refinance and pay the debt down in 5-years, GLO can expect to receive a dividend of $7-$10M from BST pa from 2021 (when the 2020 dividend is due) onwards. There will be no dividends in 2020.

DASA and Niger

In short Niger has had a long history as a Uranium producer. It was a French colony and from the 70’s the French have been operating in Niger mining Uranium. Uranium is >70% of Niger’s export proceeds and an important source of foreign currencies. (5)

Niger has a fast-permitting schedule of just 6 months. It also has a problem as Orano is closing its Cominak mine in Niger. And so both Uranium juniors GoviEx and GLO seem to be getting the message of “get to production ASAP” from Niger’s government.

GLO owns 100% of DASA. DASA is a large and high-grade deposit. It is also open to multiple directions and GLO’s management believes that with more drilling they can show it’s a >300Mlbs resource. (6)

Global Atomic Q42019 Corporate Presentation

Depending on the interview GLO’s management might talk about 210Mlbs or 150Mlbs asset. Needless to say, either way DASA is large. By changing the cut-off grade companies can make it really hard for investors to compare different assets to each other’s. So few examples of peers.

GoviEx’s Madaouela uses a cut-off grade of 400ppm and has c. 140Mlbs in MI&I. Average grade is around 1300ppm. (7)

Bannerman’s Etango project uses a cut-off grade of 55pp for its reserves of 130Mlbs and resources of 165Mlbs in M&I and 62.5Mlbs of Inferred. Average grade is around 190ppm. (8)

Besides DASA GLO owns:

  • Tin Negouran Deposit, 10Mlbs U3O8
  • Dajy Deposit, 17Mlbs U3O8
  • Isakanan Deposit, 34Mlbs U3O8 that has “Significant ISR potential” and is next to DASA.

There are currently no technical studies, so we cannot say if the deposits are economic.

GLO has said that it will begin a Feasibility Study (FS) on DASA imminently. But like me fixing my wife bike, this will likely mean in a few months. GLO has few options going forward.

It can try to summarise the Memorandum of Understanding (MOU) signed with Orano in 2017. According to the MOU, GLO can deliver it’s ore directly to Orano’s mill. Orano will pay GLO a spot price, times the amount of Uranium pounds in the rock delivered.

The good point about this is that based on GLOs low AISC, it can start operations fast and with small CAPEX ($35M). It can start creating cash flow and use this for example build its own mill.(9)

It can also build its own mill (probably in a 5Mlbs pa range) and start with an open pit and then go underground. With this strategy it will be mining its lowest-grade materials at the start but it can use this cash flow to finance the underground mine.

This is close to what their 2018 PEA studied. Initial CAPEX is $320M and Post-tax NPV goes up around $130M for every $5/lbs rise in Uranium price after 50$/lbs. (9)

After the PEA, GLO has grown its resources by a meaningful amount.

Lastly it can go underground, using semi-automatized mechanical underground mining. CAPEX would be a bit higher but it could start mining the best materials it has straight away and maximize the value of those first 3-tax free years. This would also probably end up meaning lower costs per pound in the long run.

But we have to wait to see what they will do. GLO has to make the decision before starting the FS process, as FS will study the option GLO chooses.

In a CruxInvestor interview, Roman said “in the next 10 years it’s going to be a very easily mined open pit, right from surface, low strip-ratio. No nasties in the Ore. I’d say our costs, we would be able to mine a pound, process it and put it in a drum for under $20/ lbs.” This is with their own stand-alone plant. (10)

This might be an indication on what they are planning.

Timeline-wise Feasibility Study will take 6-9 months. After that permitting will take another 6 months.

2019Q4 Corporate Presentation

Roman has mentioned in his interviews that they could be mining in early 2021. But it’s more reasonable to say that even if everything works perfectly, they need another 2-4 months to secure financing, 2-4 months to hire the right people and 3-6 months to do some pre-stripping/ stripping exercise

Then if they do decide to build their own mill, another 12-24 months to build it (this stage can coincide with pre-stripping). Hence if they go with the Orano MOU plan late 2021 is the earliest moment they would be mining and if they go with their own mill early 2023 seems reasonable.

GLO’s earnings potential

When the Feasibility is done and a company receives its permits, the Government of Niger gets a free 10% share of this newly formed mining entity (i.e. of DASA). It can also opt to purchase another 30% but this is in my opinion unlikely.

Niger has a corporate tax with a tax-free period of 3 years after mine starts operations. There’s also a sliding scale royalty of 5.5%-12% that is dependent on the profit margin. (9)

So taken those factors into account let’s just look at the PEA option.

AISC, Global Atomic Corp 2018 PEA

This is a simple ‘what-if’ model I built:

Stand alone
OPEX $29,15 * +10% as a contingency
Production Mlbs 5,25  
Uranium Price $40,00 $45,00 $50,00 $55,00 $60,00 $65,00
Revenue $210 $236 $263 $289 $315 $341
COGS $153 $153 $153 $153 $153 $153
Margin $57 $83 $109 $136 $162 $188
Margin in % 27,1% 35,2% 41,7% 47,0% 51,4% 55,2%
Royalty % 9% 9,0% 9,0% 9,0% 12,0% 12,0%
Royalty in $ $19 $21 $24 $26 $38 $41
EBITDA $38 $62 $86 $110 $124 $147
Depreciation $25 $25 $25 $25 $25 $25
Taxes in $ $3 $8 $14 $19 $23 $28
Net Profit $10 $28 $47 $65 $76 $94
GLO’s share of NP $9 $26 $42 $59 $69 $85
Sustaining CAPEX $11 $11 $11 $11 $11 $11
OCF GLO’s share $20 $35 $50 $65 $74 $88

Well that is just wonderful. It’s even better taken the tax-free years and the fact that the Government of Niger start to get it’s 10% only after the project has fully paid itself into account.

We can create a “ballpark” consolidated P&L by using the above as a basis and adding in the BST numbers. I also added $220M in debt, $8M in SG&A and a 100M new shares to dilute the EPS numbers. I use $1/lbs for Zinc with 90% capacity utilization. Average Uranium production is the same as in the previous spreadsheet i.e. 5.25Mlbs. The PEA uses LOM production of around 5.5Mlbs.

Consolidated P&L for Global Atomic
Uranium Price $40,00 $45,00 $50,00 $55,00 $60,00 $65,00
Revenue $215 $239 $263 $286 $310 $334
COGS $149 $149 $149 $149 $149 $149
Royalty $17 $21 $24 $26 $38 $41
SG&A $9 $9 $9 $9 $9 $9
EBITDA $41 $60 $81 $103 $114 $135
Debt $220,00          
Interest (8%) $18 $18 $18 $18 $18 $18
Depreciation $26 $26 $26 $26 $26 $26
Taxes 30% $0 $5 $11 $18 $21 $27
Net Income −$3 $12 $27 $41 $50 $64
OCF $23 $37 $52 $67 $75 $90
             
Shares (M) 250 *Added 100m to current share count
USD to CAD 1,32          
EPS in CAD$ −$0,014 $0,062 $0,140 $0,219 $0,262 $0,338
OCF per share C$ $0,122 $0,197 $0,276 $0,355 $0,398 $0,474

I know that looking at a hypothetical what-if-EPS model isn’t a “proper” way to do analysis but for me it is relevant. I want to know what the company could really make per share because I own shares. NPV models are, to me, more of a mutually accepted stupidity. We know that commodity prices are highly cyclical and that company level profitability doesn’t equal project level profitability.

But these scenarios are just a thought exercise to get a ballpark understanding of the potential earnings in different price environments. GLO shows extremely robust numbers.

Dilution, no dilution?

Dilution is the rule for pre-cash flow juniors. GLO is unique because it has cash flows. In his SmithWeekly interview (11) Stephen Roman said:

37:26 “I don’t think we need to ever actually come back to the market to develop the DASA project.

38:08 “We don’t really foresee having to issue more shares”.

Can it be?

Based on GLO’s Q3/19, they had CAD$5.2M in cash.

Their burn rate is around CAD$1.2-1.5M per Q. They need to finance a Feasibility Study in 20/H1 (CAD$3-5M).

They also, in their newest Presentation, brought up Isakanan deposit that has 34Mlbs of U3O8 and “Significant ISR potential”. I couldn’t find an older presentation with even a mention about Isakanan.

Isakanan is located in Adrar Emoles 4 exploration permit. To be able to hold exploration permits companies need to show that they aren’t merely sitting on them but actively exploring.

Global Atomic Corp Annual Report 2018

Based on GLO’s 2018 Annual Report GLO needs to spend USD$4M before 28th of January 2021 to keep Adrar Emoles 4. And this figure is just for Adrar Emoles 4, not Tin Negoran 1-4.

Seems logical to think that if a company starts to bring up an asset in their promotional materials they have the goal to hold it.

So in 19/Q4 we have a cash burn of CAD$1.5M. In 2020 c.CAD$10M and 21/Q1 another CAD$1.5M. That’s CAD$13M in total before spending the required CAD$5.3M to Adrar Emoles 4 (In fairness they will not lose 100% of the exploration permit area if they don’t spend the required sum but this is a meaningful discrepancy nevertheless).

Thing is there’s no dividends from BST for 2019. There can be some dividends for 2020 if they refinance the debt that is due for 2020 and 2021. But dividends for 2020 are paid in 21/H1.

So there will be a raise and a meaningful one in 19/Q4 or 20/Q1. They need, in my opinion, CAD$6-8M. This will mean around 12-16M new shares. I wouldn’t bet my farm that there wouldn’t be another raise in 2021.

The statements Roman has given are to me somewhat irresponsible and worrisome.

Another detail I want to point out from their 19/Q4 Corporate Presentation is this one:

This P/E of 2.5 on forward basis is simply false.

Management team and Stephen Roman

Stephen Roman is the son of the founder of Denison Mines. He’s to my knowledge the only Uranium junior CEO with a background of working in a mine as a miner. He has worked in multiple positions and made a long career in mining. He has built mines and sold them.

His compensation is a bit much taken the early stage of the company. George Flach is also extremely highly paid.

What is worth pointing out is that during these years Roman was a part-time CEO (and President and Chairman). He was also the CEO (and President and Chairman) of Harte Gold and was paid handsomely.

Here are the compensations Roman earned from Harte during the same period. And if you look at the names you will notice another familiar one. Rein Lehari works as the (part time) CFO for both GLO and Harte.

In fact GLO’s George Flach also works in Harte Gold as a Director. So does the VP and secretary of GLO, Timothy Campbell. He’s, you guessed it, the VP and secretary of Harte.

Until a few months ago GLO’s board members Richard Faucher and Fergus Kerr were also Board members in Harte Gold.

The reason why Faucher and Kerr “resigned” is because an activist investor ANR Investments B.V. came in and started a “ Plan To Bolster Management”. This plan also included Roman resigning the CEO post and he will soon resign from the post of the Chairman. (11)

I will also note that Messrs. Roman, Flach, Lehari and Campbell are also currently directors in Romex Mining.

These things in and by themselves aren’t necessarily red flags but they are a sign of a bad corporate governance. It’s also sign of bad governance that Roman seems to always be the CEO and Chairman at the same time.

Compensation Committee should always be an independent entity. Yet Messrs. Roman, Faucher and Rance are all part of the Committee. Derek Rance is not a director in Harte Gold but he was a director in Gold Eagle back in 2008 and hence close to Roman.

Global Atomic Corp Annual Report 2018

Good Corporate Governance is about checks and balances. It’s hard to see them in companies where Roman is involved.

This could be one of the reasons why it wasn’t a first time Roman “resigned” after an activist investor came in.

In 2010 Roman was the CEO, President and the Chairman of Belo Sun (then called Verena Minerals) when “Stan Bharti, through his private equity firm, Forbes & Manhattan, Inc., has agreed to subscribe for the majority of the private placement financing”. He also requisitioned a shareholder meeting where “Mr. Bharti will be appointed Chairman of the Board replacing Mr. Roman, Mr. Eaton will become President & CEO, replacing Mr. Roman”.

Also “Mr. Helio Diniz, based in Belo Horizonte, Brazil, will become VP, Exploration, replacing Mr. George Flach.” George Flach should ring a bell because he’s is currently Director in GLO, Harte and Romex. (13)

In 2009 S. Roman (Chairman) and Douglas Willock (President and CEO) founded Polar Star Mining Corp. The company had internal disagreements. On Jan 26th Willock requests for a special shareholder meeting to remove the current directors including Roman.

On 29th Polar Star formed a special committee which includes Messrs. Dellelce, Rance (board member of GLO and director of Gold Eagle) and Douglas Scharf (also director in Verena Minerals/ Belo Sun).

On 30th Polar Star terminates Willock from the posts of the President and CEO. (14)

On Mar 9th 2009 D. Willock launches an Information Circular where he calls

“I am accordingly providing to you a proxy circular and a form of proxy that I have prepared in connection with the April 17, 2009 shareholders’ meeting. At that meeting, I will nominate a new slate of highly qualified individuals for election to Polar Star’s board of directors. (15)

Willock send his proxy form (16) and Polar Star offered up their Proxy that was for Roman and the incumbent board (17).

Willock won and Roman and Rance lost their positions. (18)

I bring these up because I think it’s interesting to see this kind of actions happening around S. Roman. I think it’s also a bit concerning to see these same names connected with S. Roman, time and again and losing their positions with S. Roman.

And a Proxy fight has happened in Global Atomic too. Some owners of Silvermet felt that the merger was not beneficial and that there were conflicts of interest due to the fact that S. Roman was the CEO, President and the Chairman for both of the merged companies. Other directors like Mr. Campbell and Mr. Lehari were also directors in both of these companies.

The proxy fight ended up losing but some of the things I was able to dug out were also mentioned in the “Greyling Information Circular”. (19)

There’s three more specific cases I want to mention in S. Romans history.

A mine builder: Harte Gold

I already mentioned that there’s a “Plan To Bolster Management” ongoing in Harte Gold. Besides the bad Corporate Governance and the officers paying themselves multiple full salaries, Harte is also a sad example of a case where almost everything went wrong.

2019 is the first year of operations.

On November 1st Harte Gold Provides Third Quarter Update and Guidance for 2019 and it was bad. “full year 2019 guidance has been adjusted to 24,000 to 26,000 ounces at an AISC of US$2,000 to US$2,200 per ounce. Previous guidance was 39,200 ounces at an AISC of US$1,300 to US$1,350 per ounce.” (20) Production estimate cut by c. 40% and costs up by almost 60%.

Besides this Harte Gold did some “clever” financial engineering by announcing Feasibility Study after the mine was built. This means the FS doesn’t include initial CAPEX and the IRR and NPV numbers look better than they should. (21)

To make things worse, debts starting to come due. Harte Gold is between a rock and a hard place.

If things can be worse they usually are. And although Gold prices are up Harte has “successfully” capped a lot of that upside by using a hedging strategy that in the current environment is detrimental for the company.

I’m not impressed. I am – to say the least – concerned on the implications this might have for the shareholders of GLO.

Exall Energy and the Board that resigned

Exall Energy was an Oil E&P. Roman served as the Executive Chairman and a Director. Exall’s oil production was miniscule and falling.

Exall Energy, Annual Report 2014

This didn’t prevent the CEO Roger N. Dueck from saying in their 2014 Annual report that “Exall is positioned with a strong asset with light oil and good cash flow in distressing times.”.

Nor did the fact that Exall Energy had a negative equity of CAD$25M, liabilities of c. CAD$65M and it was losing money. (22)

Exall had maturities and interest payments coming due and it was tapped out. It was trying to arrange financing which, taken the situation it was in, was challenging.

On 9th of March Exall released a news release which said

“In addition, Exall notes that the next semi-annual interest payment under Exall’s outstanding $23 million convertible debenture is due on March 31, 2015, in the amount of $888,808.22. Absent closing of the Bond Transaction, and other financing arrangements, Exall will not have proceeds available to make this required interest payment.(23)

On 19th of March 2015 Exall released a Press Release of their 2014Q4 results and mentioned that:

on March 9 Viking Investments Group, Inc. (“Viking”) (OTC: VKIN) had advised Exall that given the current timing, it was considering dispensing with a bridge financing arrangement as a means to retire Exall’s existing facility with its current senior Canadian lender (the “Facility”) in full (24)

On 25th of March 2015 Exall went into receivership “the Court of Queen’s Bench of Alberta appointed MNP Ltd. (the Receiver) as receiver and manager over the assets, undertakings and properties of the Issuer in an order dated March 25, 2015 (the Receivership Order)” and put the company into a trading halt. (25)

On 26th of March 2015 Viking “Opts Not to Proceed With Opportunity Involving Exall Energy Corporation”. The company was unable to pay its debts. (26)

What makes this story interesting is not the fact that the company failed. Oil prices fell and Exall was not a unique in failing. But when the company went into receivership they didn’t inform the shareholders. “A publicly traded company has the responsibility to issue a news release when there’s a material change in its fortunes, such as going into receivership. “ (27)

To make things worse is that shortly before the announcement of going into receivership came the board stepped down.

Harte Gold where Roman was the CEO and Chairman made sure to mention in their 2018 Information Circular that:

“Stephen G. Roman was a former director and the former Executive Chairman of Exall Energy Corporation, having resigned prior to it entering into receivership on March 25, 2015.” (28)

While company was struggling between 2011 and 2014, Exall Energy’s directors and members of the executive committee received over $4.6M in compensation.

So to wrap up with Roman’s career history with the biggest win Roman has delivered, the sale of Gold Eagle to Goldcorp. It is boldly said in every interview and in every Bio of Roman. It’s the main attraction. The PDAC award in 2016 is also related to Gold Eagle because it was given for the Bruce Channel discovery that made Gold Eagle the success it became.

Global Atomic Corp Corporate website Bio (15.11.2019)

The Big Score: Gold Eagle 2002-2008

“The first big success I had was a discovery of a gold project in Northwestern Ontario called Gold Eagle. I sold Gold Eagle in late 2008 to Goldcorp for $1.5B” – Stephen Roman. (11)

Gold Eagle had been a producing Gold mine that had operated from 1934 to 1941. It’s located in the famous Ontario’s Red Lake district. After the mine closed the property had multiple owners, last in line Exall Resources (led by Roman).

Besides limited exploration nothing happened until “In November 2002 a 50/50 joint venture was entered into between Exall Resources Limited and Southern Star Resources Inc.”.

Some success was achieved in 2003 and 2004 but “in 2005 drilling east of the old Gold Eagle Mine intersected significant gold mineralization beneath the Bruce Channel”. (29)

In 2016 Roman (Exall Resources) received a PDAC Bill Dennis Award for Bruce Channel discovery with Robert Cudney (SSR) and John Whitton (Chief Geologist/ Project Manager). (30)

After the 2005 drilling season, financing more drilling became easy as the share prices soared.

In December of 2006, Exall Resources Limited and Southern Star Resources Inc. merged to create a new Gold Eagle Mines Ltd. (29)

This new company was led (President and the CEO) by Simon Lawrence. (31)

Roman and Cudney both continued as the Co-Chairmen of the company. (32)

Gold Eagle was a success. There’s no two ways about it. But how much of this success is truly attributable to Roman? It is almost impossible to piece the real picture out from public filings, but the facts are that it was a joint-venture and there were multiple key persons. The discovery hole was made when Roman was the CEO of Exall, but after 2006 the new company was led by Simon Lawrence and they drilled a lot, proving the size of the project.

When in 2008 Goldcorp made the buyout offer of $1.5B Roman was a Co-Chairman of the company with Robert Cudney. (33)

Gold Eagle was also a pure exploration play. I’m not trying to take anything away from the success but it truly was, until 2005, just a few explorers drilling away and hoping to hit big. And they did. In 2008 Gold Eagle had no technical feasibility studies, no mine, no permits.

The company was also lucky with their timing. Gold was trading at around $450/oz in 2005. In 2009 Gold had reached $900/oz range and was even courting the $1000/oz level. It was an excellent environment to make a discovery.

I can say, for a fact, that the way Gold Eagle story is told leaves purposefully an impression that Roman spearheaded the company from discovery to the sale and he was the most important individual. Based on my reading this doesn’t seem to reflect reality.

Summary of Global Atomic

Let’s start with the assets. I truly believe that GLO is uniquely positioned. It has a cash flow positive business BST. It has a large and high-grade asset in Niger, in a jurisdiction where, although they don’t have permits today, I don’t feel it is a meaningful risk.

BST gives them a lot of options when it comes to financing DASA. They can sell their 49% share of BST to Befasa or use it to secure loans more easily than other juniors. DASA has multiple option and each of them work pretty well on paper, even after adding some contingency. It is one of the few companies that can work even without an overshoot in Uranium prices. In a case of M&A I think that DASA would attract a price multiple times higher than the current market capitalization of the whole company.

But the Management is a concern. I think that multiple members of Board don’t add any value. I think they sit in the Board because they support Roman. I’d love to see them being replaced by independent Board members. I don’t think that Roman should be the CEO and Chairman at the same time. It is bad Corporate Governance. Neither do I think he should sit in the Compensation Committee.

There are things in his history that make me highly uncomfortable. But to give a balanced opinion I will say that Roman always has skin in the game. He’s almost always a large owner and purchases shares from the open markets. There are CEO’s who don’t own anything and pay themselves outsized salaries while the companies are standing still and living on raises. This is not the case with Roman. The red flags he raises are different in nature.

I think that he wants to make a lot of money with GLO and his main way to make that happen is by getting the share price higher.

He has also been a successful explorer with multiple meaningful discoveries under his belt including DASA. After everything I’ve said I fear that, he still might be one of the most capable mining CEO’s in the Uranium junior field. I hope that this sinks in.

There’s also a bright spot in management, namely the very intelligent and capable Merlin Marr-Johnson. I’d love to see Roman taking the backseat, offering advice as and when required, and let Merlin drive for a change.

So the main question here is if GLO is cheap enough for me to bite? I think it is. It’s not without risks, but I truly think that the assets GLO has are so much more valuable than its current market capitalization that it is a great way to position oneself for the Uranium bull market.


  1. https://www.globenewswire.com/news-release/2017/12/22/1270240/0/en/Silvermet-Inc-Announces-Merger-With-Global-Atomic-Fuels-Corporation-Completes-Share-Consolidation-Name-Change-and-Private-Placement.html, Silvermet and Global Atomic Fuels Merger 2017
  2. https://stockhouse.com/companies/insiders?symbol=t.glo, Insiders 15.11.2019
  3. Global Atomic Corp Annual Report 2018
  4. Global Atomic Corp 2019Q3 MD&A
  5. https://en.wikipedia.org/wiki/Economy_of_Niger#Mining_2, Wikipedia Economy of Niger
  6. https://www.youtube.com/watch?v=34HE70J7EIo, Global Atomic reports significant new mineral resource estimate for DASA project
  7. GoviEx Corporate Presentation 2019
  8. Bannerman Corporate Presentation 2018 & Etango 43-101 Technical Report
  9. NI 43-101 Technical Report, Preliminary Economic Assessment – November 16, 2018
  10. https://www.youtube.com/watch?v=nCdpKOBaLEE&t=368s, CruxInvestor interview: Global Atomic – Largest High-Grade Uranium Sandstone Deposit Globally
  11. https://www.youtube.com/watch?v=urrFRnVtQtM&t=1905s, Discussion with Stephen Roman, SmithWeekly interview, 16 April 2019
  12. https://www.hartegold.com//wp-content/uploads/2019/09/2019-15-28-August-2019-Corporate-Update.pdf, Harte Gold Accelerates Plan To Bolster Management and Provides Financing Update
  13. https://agoracom.com/ir/Verena/forums/discussion/topics/403597-new-board-and-management-appointments-and-significant-private-placement/messages/1333956, Verena Minerals Announces New Board and Management Appointments and Significant Private Placement
  14. https://www.pressreader.com/canada/national-post-latest-edition/20090217/282136402310381, Frosty times at Polar Star
  15. https://www.sedar.com/GetFile.do?lang=EN&docClass=29&issuerNo=00025710&issuerType=03&projectNo=01384994&docId=2368225, Polar Star Information Circular, 9 Mar 2009
  16. (https://www.sedar.com/GetFile.do?lang=EN&docClass=13&issuerNo=00025710&issuerType=03&projectNo=01729895&docId=2864854, Polar Star D. Willock Proxy
  17. https://www.sedar.com/GetFile.do?lang=EN&docClass=13&issuerNo=00025710&issuerType=03&projectNo=01390800&docId=2376984, Polar Star S. Roman Proxy
  18. https://www.sedar.com/GetFile.do?lang=EN&docClass=8&issuerNo=00025710&issuerType=03&projectNo=01406263&docId=2398252, PolarStar Newsletter 20th April 2009
  19. https://ml.globenewswire.com/Resource/Download/9049a84b-6e6b-4660-a6db-8db891c94333, Greyling Proxy
  20. https://www.hartegold.com/uncategorized/harte-gold-provides-third-quarter-update-and-guidance-for-2019, Harte Gold Provides Third Quarter Update and Guidance for 2019
  21. https://www.globenewswire.com/news-release/2019/04/08/1798902/0/en/Harte-Gold-Announces-Positive-Feasibility-Study-For-The-Sugar-Zone-Mine.html, Harte Gold Announces Positive Feasibility Study For The Sugar Zone Mine
  22. Exall Energy, Annual Report 2014
  23. https://www.sedar.com/GetFile.do?lang=EN&docClass=8&issuerNo=00024975&issuerType=03&projectNo=02317541&docId=3690409, Exall 9th of March News Release
  24. https://www.sedar.com/GetFile.do?lang=EN&docClass=8&issuerNo=00024975&issuerType=03&projectNo=02321277&docId=3695925, 19th of March 2015 Exall released a Press Release of their 2014Q4 results
  25. https://www.albertasecurities.com/-/media/ASC-Documents-part-1/Notices-Decisions-Orders-Rulings/Issuers/2018/11/20150330-Exall-Energy-Corporation.ashx, 25th of March Exall goes into receivership
  26. https://www.globenewswire.com/news-release/2015/03/26/1237117/0/en/Viking-Investments-Group-Inc-Opts-Not-to-Proceed-With-Opportunity-Involving-Exall-Energy-Corporation.html, 26th of March 2015 Viking “Opts Not to Proceed With Opportunity Involving Exall Energy Corporation”
  27. https://www.cbc.ca/news/business/exall-energy-goes-into-receivership-doesn-t-tell-shareholders-1.3016889, Exall Goes into receivership, doesn’t tell shareholders
  28. https://www.hartegold.com//wp-content/uploads/2017/06/Harte-Gold-Notice-and-Information-Circular.pdf, Harte Gold 2018 Information Circular
  29. 2007 Annual Report Gold Eagle Mines
  30. https://republicofmining.com/2016/03/12/2016-pdac-bill-dennis-award-winners-bruce-channel-discovery-team-robert-cudney-stephen-roman-and-john-whitton/, 2016 PDAC Bill Dennis Award Winners
  31. https://www.sedar.com/GetFile.do?lang=EN&docClass=8&issuerNo=00008102&issuerType=03&projectNo=01034450&docId=1863352, Southern Star Resources Inc News Release 21 Dec 2006
  32. https://www.sedar.com/GetFile.do?lang=EN&docClass=1&issuerNo=00024756&issuerType=03&projectNo=01230151&docId=2148820, Gold Eagle 2007 ANNUAL INFORMATION FORM
  33. https://www.northernontariobusiness.com/industry-news/mining/gold-eagle-strikes-it-rich-with-goldcorp-acquisition-365112, Gold Eagle strikes it rich with Goldcorp acquisition

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