Global Atomic (TSE: GLO) – The Sensible Choice For Uranium Investment

The Global Atomic Corporation company logo.
Global Atomic Corp.
  • TSE: GLO
  • Shares Outstanding: 145M
  • Share price C$0.54 (20.04.2020)
  • Market Cap: C$79M

I recently wrote an article regarding Energy Fuels (NYSE: UUUU), America’s premier producer of uranium and a potential producer of vanadium. The company has just entered the rare earth elements processing space in what looks like a really smart deal.

Green uranium reacting in a glass vial with a uranium symbol and a nuclear symbol next to it

I mentioned in my Energy Fuels article that one crucial element for uranium companies is commodity diversification. It helps mitigate risk by taking away a reliance on the performance of the uranium market and gives companies options. Energy Fuels has diversity in the form of offering toll milling at its White Mesa Mill, in addition to environmental clean-up operations, vanadium and rare earth element ventures, and 17 fully-licensed feed streams.

Towards the start of that article, I mentioned I would be covering Global Atomic in the future. Crux Investor recently conducted an interview with the Chairman, President & CEO of Global Atomic Corp. (TSE: GLO), Stephen Roman, so now seems as good a time as any.

Global Atomic might not have its own mill, but its JV with Turkish metals specialist, Befesa Silvermet SAU, has allowed the company to create a unique combination of uranium development and cash flowing zinc concentrate production. Global Atomic has a 49% stake in the Iskenderun zinc concentrate production facility. The facility saw its processing capacity doubled last Summer through an upgrade and expansion from 65,000t to 110,000t of electric arc furnace dust. It was completed on time and on budget. It was commissioned in Q4/20.

This commodity diversification positions the company much more strongly than most of its uranium peers. It’s a 40 to 50-year annuity stream of cash that will ward off dilution for shareholders. The zinc price has taken a little hit recently (c. US$0.85/lb), but how do operations look? Roman explained that specific protocols have been employed to keep operations running as normal: an impressive feat, especially when uranium giants like Cameco are struggling to do the same. Iskenderun is still operating at full capacity.

Global Atomic had originally indicated it would take a 12-month payback for its share of the production facility from cashflows from the business, before cash contributions from sales would start flowing into Global coffers. Roman explains that a depressed zinc price has caused this timescale to double. In terms of dividend fees, Global Atomic still receives management fees and sales commissions, and this contributes to Global Atomic’s G&A. However, that once-a-year dividend payment will now start 12-months later than expected in 2022. Even the best-run companies can suffer in difficult market conditions, but Global Atomic has a second project of value in Niger.

Dasa – An Exceptional Asset

If a company has a world-class asset, it’s always going to find itself in a strong position. If you combine Global Atomic’s Niger-located Dasa Uranium Project with its high-quality management team, it could form a winning recipe for uranium investors.

Dasa Longitudinal Projection

Roman explained the plan for Dasa’s development moving forward. In the original PEA, released in October 2018, Dasa looked like a strong Resource. It had an AISC of US$28.51/lb U3O8, an initial CAPEX of US$320M, including US$141M for an on-site mill (US$467M with sustaining capital and reclamation). The Resource was also already high-grade: 69Mlbs U3O8 recovered at an average grade of 2,380 ppm U3O8 over a 15-year mine life, with an integrated on-site mill (the “DASA Standalone Scenario”) initially operating at 2,500tpd and ramping up to 3,000tpd.

However, these figures have been blown out of the water with the latest optimised PEA for Dasa.

  1. The AISC is now just US$18.39/lb. This is a truly world-class figure.
  2. The cash cost is an astonishing US$16.72/lb.
  3. Initial capital cost (CAPEX) has fallen to US$203M, including 20% contingency.
  4. Based on this PEA and $35/lbs uranium price, the Dasa project will have an after-tax NPV8 of US$211 million and an after-tax IRR of 26.6%. However, the NPV8 leaps to $485M with a 46.3% IRR if the uranium price goes to US$50/lbs, a price major uranium players are demanding as a minimum.
  5. The Dasa Project will have a Phase 1 Project mine life of 12-years, mining 48Mlbs U3O8 at 5,396ppm.
  6. Lastly, and perhaps most eye-catching, based on this PEA, Global Atomic will have an average annual steady-state uranium production of 4.4Mlbs U3O8. With this level of production, Global Atomic can become a meaningful second-tier player.

This optimised PEA has been well received by the market, with Global Atomic’s share price rising from C$0.27 to as high as C$0.71. It seems to be settling in or near that for now.

The PEA is based on the company’s plans to mine a higher grade flank zone in Phase 1 at their Dasa project in Niger. These economics are transformative. Roman had been indicating at the end of 2019 the numbers would surprise people, and he seems to have delivered. Moreover, we haven’t even got to the best part yet.

More Good News

As I mentioned in my most recent uranium article, covering Energy Fuels, when uranium does experience price discovery, it will happen quickly.

Exploration companies who are still messing around with preliminary drill programs are extremely likely to miss this cycle. So will high-CAPEX (US$1B+) uranium juniors, and so will developers who don’t have the appropriate licences and infrastructure in place.

The ready-to-go/existing producers are the companies investors will likely want to focus on. From these companies, it comes down to those with good infrastructure and appropriate financing in place who will be ready when the market moves. These are the companies that will be ready to secure supply contracts with utility companies. Those that are late to the party will be left outside in the cold.

Not only is Global Atomic an excellent uranium proposition in its own right, it also has a production timescale that would make most uranium companies weep. Global Atomic should be one of the fastest uranium companies to get in to low-cost production with a fundable CAPEX requirement. Roman stated in our interview that Global Atomic could be in production by the end of 2022. This means Global Atomic will be able to supply U3O8 into this contract cycle and start relationships with utilities for long-term contracts while most other uranium companies are still seeking financing.

A Category of One?

All in all, the investment proposition Global Atomic is presenting looks extremely exciting.

Cashed-up, high-grade, large-scale, low-cost, high-margin uranium production conducted by an experienced management team, reinforced by cash flow from zinc operations and delivered on an accelerated timescale. It seems like everything investors could be hoping for, at a time when the supply-demand fundamentals are hotting up market sentiment. The timing could just be on their side.

Then again, all investments are a risk, but Global Atomic appears to have de-risked everything it is in control of.

The only area we would perhaps like a little more clarity on is the cash flow situation at Iskenderun. When exactly will all of the cash start flowing and what is the financing strategy until this is the case? All things considered, we’re really happy Roman took the time to sit down with us. We expect uranium investors to read between the lines as the uranium market continues along what looks like a path of long-awaited resurrection.

While you’re here, if Global Atomic is a company that takes your interest, why not read one of our recent uranium articles, or watch our latest uranium interview?

Company Website:

If you see something in this article that you agree with, or even disagree with, please let us know in the comments below.

Any advice contained in this website is general advice only and has been prepared without considering your objectives, financial situations or needs. You should not rely on any advice and / or information contained in this website or via any digital Crux Investor communications. Before making any investment decision we recommend that you consider whether it is appropriate for your situation and seek appropriate financial, taxation and legal advice.

The Global Atomic Corporation company logo.

Global Atomic (TSE: GLO) – World-Class Uranium Economics Can’t Be Ignored

The Global Atomic Corporation company logo.
Global Atomic Corp.
  • TSE: GLO
  • Shares Outstanding: 145M
  • Share price C$0.54 (20.04.2020)
  • Market Cap: C$79M

We recently conducted an interview with Stephen Roman. He’s the Chairman, President & CEO of Global Atomic Corp. (TSE: GLO).

Global Atomic is one of our favourite uranium stories: exciting, world-class uranium economics driven by secure zinc-powered cash flow, courtesy of a Turkish JV with Befesa Silvermet.

If Global Atomic is a company that takes your interest, why not read one of our recent uranium articles, or watch our latest uranium interview?

Global Atomic has a uranium mining AISC of just US$18.39 and a cash cost of US$16.72: these are elite economics in anyone’s book.

The key to the success of Global Atomic will be the speed at which Roman believes they can get into production. He says by end of 2022. Could Global Atomic hit the uranium up-cycle at the right time?

We Discuss:

  1. Flight of the Swans: Market Situation, Interpretation of Announcements, Opinions on Utilities and Price
  2. Supply and the Market: How Will the Juniors Survive? What Qualities Will They Have
  3. Befesa Silvermet Zinc Project: An Update. Zinc Payback Timeline Discussed
  4. PEA Announcement: Reviewing Results
  5. Business Model: Why Get into Production Early?
  6. Strength of the PEA and Getting Permitted
  7. Raising Money and Limiting Dilution: Telling a Compelling Story, Raising Money and Limiting Dilution
  8. Timeline of Events: Getting into Production, PFS, DFS, etc.
  9. Market’s Reaction to Global Atomic and PEA Announcement

Company Website:

If you see something in this article that you agree with, or even disagree with, please let us know in the comments below.

Any advice contained in this website is general advice only and has been prepared without considering your objectives, financial situations or needs. You should not rely on any advice and / or information contained in this website or via any digital Crux Investor communications. Before making any investment decision we recommend that you consider whether it is appropriate for your situation and seek appropriate financial, taxation and legal advice.

The Global Atomic Corporation company logo.

Global Atomic (TSE: GLO) – Two can make a wish come true, yeah (Transcript)

The Global Atomic Corporation company logo.
Global Atomic Corporation
  • TSX: GLO
  • Shares Outstanding: 145M
  • Share price CA$0.51 (17.04.2020)
  • Market Cap: CA$75M

Interview with Stephen Roman, Chairman, President & CEO of Global Atomic Corp. (TSE: GLO) .

Roman calls us to update about the announcement of their PEA results. They plan to mine a higher grade flank zone in Phase 1 at their Dasa project in Niger, which is what this PEA relates to. The results are impressive for many reasons.

Firstly the economics an AISC of just $18.39. That is world-class. And a cash cost of just $16.72. Also world-class. The number which caught our eye though was the steady-state production of 4.4Mlbs. Global Atomic becomes a meaningful second-tier player at that level. At $35 per pound, the NPV8 is $211M with an IRR of 26.6%. However if the price of uranium goes to $50 (where most producers and developers expect and need it to go), the NPV8 leaps to $485M with a 46.3% IRR.

That in itself is a good company. But remember this is Phase 1 of the much larger, albeit lower grade, Dasa ore body.

The key to this is the speed at which Roman believes they can get into production. He says by end of 2022. What that means is they can get in to supplying U308 in to this contract cycle and start relationships with utilities for long-term contracts while other are still seeking financing. We discuss the winners and losers and the realities of the time lines involved.

We also discuss their Turkish zinc JV which gives them a 40-50 year annuity stream of cash. This could be used to finance the capex requirement for Dasa.

Interesting times ahead. Let’s see if this experienced uranium team can deliver. We fully expect it to quietly go about its business. This one is leading from the front.

We Discussed:

  1. Flight of the Swans: Market Situation, Interpretation of Announcements, Opinions on Utilities and Price
  2. Supply and the Market: How Will the Juniors Survive? What Qualities Will They Have
  3. Befesa Silvermet Zinc Project: An Update. Zinc Payback Timeline Discussed
  4. PEA Announcement: Reviewing Results
  5. Business Model: Why Get into Production Early?
  6. Strength of the PEA and Getting Permitted
  7. Raising Money and Limiting Dilution: Telling a Compelling Story, Raising Money and Limiting Dilution
  8. Timeline of Events: Getting into Production, PFS, DFS, etc.
  9. Market’s Reaction to Global Atomic and PEA Announcement

CLICK HERE to watch the full interview.

Matthew Gordon: Stephen, how are you, sir?

Stephen Roman:  I’m fine. Matthew, how are you doing?

Matthew Gordon: Not bad. Locked up at home.

Stephen Roman: I’m in snowy Toronto. We just had a blizzard here this morning. I understand the weather is a little better in London?

Matthew Gordon: You are kidding? It’s sunny. It’s all sunny here. It’s 20-degrees, which, I mean, I don’t want to talk to an Australian right now; they’ve been telling me it’s 35 degrees, you know. No one needs to have that conversation. But anyway, so you’re holed up safely at home. Keeping busy. You’ve got a press release out today about your PEA, and I do want to talk to you about that in a minute, but first I need to get your take on what is going on in the marketplace. The last 2 or 3-weeks have been a bit crazy. You’ve had  Cigar Lake shutting out for a little while. You have got the Kazakhs doing the same thing for potentially three months. You’ve got Rossing shutting down. You’ve got Husab production affected, Australia still seems to be marching on. What’s your take on all of this?

Stephen Roman: It’s a strange world out there, Matthew, with this virus floating around. And of course you know, a lot of these mines like Rossing, low-grade, high-cost, Cigar Lake similarly. I mean, all of these mines, I guess because of COVID-19, have now shut down. That’s taken a huge chunk out of the Uranium supply chain. I would, you know, if I was a utility, I think I’d be getting nervous about now on where they’re going to start getting supplies because their long-term contracts are coming due in the next year or two, and they’ve got to be out there looking at who can fulfil the next 10-year supply stream for them. You know, it’s obviously moved the Uranium price up quite significantly here over the last couple of weeks. And you know, some of these mines are going to take a bit of time to restart. So, you know, I think the Uranium side is getting a bit of a boost here and hopefully it’s not short-lived. I think we’d like to see it moving ahead. You know, to where it should be.

Matthew Gordon: Well, you’ve got a part of the audience who are saying that this is the ‘white swan’, this is the catalyst for change. You can’t remove that amount of pounds out of the marketplace without it obviously affecting the demand side. You’ve obviously been there, done it before; you have built Uranium, mined, got into production; you know what it’s about. I’m intrigued as to what you think the utility guys are actually thinking right now because the other thing going on in the background is obviously that the gas prices are being affected by the war with Russia. The war between Russia and the Saudis with regards to pricing and output. Are you having conversations with any utility guys at the moment? Have you got a, can you give us a sense of how they’re going to be judging this situation?

Stephen Roman: You know what? The last interaction I had with a number of utilities was at a Uranium conference in Nashville in the Fall, and this was obviously before Covid-19. And the general consensus at the Nashville conference was that they have to start getting back into the market. So that’s a very positive sign to me that they are definitely thinking about it, and I think with all these closures now that’s going to push them over the edge that they’re going to have to start scrambling to find supply. So you know, I think it’s good for the whole sector.

Matthew Gordon: So do you therefore think the price is, we’ve heard a bit of, you know, sort of 2-weeks ago, we were at USD$27, we are at just over USD$30, nearly.

Stephen Roman: Well, you know, I think Cameco and Kazatomprom: the two big players, they would probably like to keep the price below USD$40 per lb to keep many others from getting into the market. So, you know, I think if it moves into the USD$35 to USD$40 range, you’re going to see a bit more supply coming in. But probably not before that.

Matthew Gordon: Well, I do want to talk about your PEA because there’s some quite attractive numbers in there which you must be pleased about, but we’ll talk about that in a second. To that point, how does supply come into the market? If you’ve got a bunch of young pretenders as it were, you know, juniors who have got an asset, not necessarily a great asset, but, and not necessarily the cash to be able to do too much about it, but it is Uranium, so, you know, people are getting excited about what that could mean. Do you think that all these, all Uranium juniors currently in the marketplace are going to survive because of this price recovery, which people are expecting? Or do you think that it’s going to move in small increments, i.e. the lowest cost producers who can create a margin for themselves whilst the price recovers are going to be able to step up to the plate first? And what indeed does that mean for the people who need USD$50, USD$60, USD70 ?

Stephen Roman: That’s quite a question.

Matthew Gordon: It’s a long one, right?  Are there going to be winners and losers is what I’m asking?

Stephen Roman: There’s some tremendous Uranium projects in the Athabasca basin. They have an issue with permitting timelines and capex so I don’t know how much money would be available to build a project that potentially is not going to be permitted for 10-years. So, you know, I think what people have to look at right now is who can actually come into production in the next two to three years that could actually start supplying the utilities when their contracts run out in two years. The big high-grade projects won’t be there. There’s some smaller producers, some institute leaching in the United States, you know, that’s 1Moz, 2Moz a year – it’s small scale. So, you know, I think aside from Cameco turning on production at USD$35 to USD$40 per lb, Kazatomprom doing the same thing, the new projects, there’s going to be very few that actually make it in this cycle.

Matthew Gordon: Okay. So in this cycle, see what intrigues me and what, we talk a lot, right? What intrigues me about you guys, and I think from what I have read, people appreciate your business model, the business model being that you’ve also got a Zinc revenue stream component with your Turkish JV Befesa. Now, that’s going to help because it means you’re not going to dilute shareholders continually. There’s that ongoing stream income stream there. Now you’ve, you have made a couple of statements recently with regards to that, because obviously Zinc prices have been hit a little bit. So you’re putting out a timeline there somewhat, can you just tell us about what’s going on in Turkey first of all? Are they still working? Are they still able to operate?

Stephen Roman: Yes, good question. Turkey is still working. Of course the government has imposed some protocols that everyone is following. And you know, where we are in Iskandar, it seems to be a virus-free at this point in time, but we are using very specific protocols to keep people away from each other. The plant of course is brand new, so it was just commissioned in Q4 last year, 2019. So, you know, it’s a highly automated plant, so you actually don’t need a lot of people there and you know, so it’s still running at capacity currently.

Matthew Gordon: Okay. So, but in terms of the statements you’ve made, you said that there was a sort of 12-month payback period, but with obviously where Zinc prices have been, you know, a little bit lower than they have been. That’s going to take a little bit longer. Can you give us some idea of the timeline there?

Stephen Roman: Yes. So when we started the plan the Zinc price was between USD$1 and USD$1.10. As a result of the current market conditions, it went down to USD$0.85c per lb, so what we’re telling people now, rather than have a one-year payback of our capital, we’re talking about two years at this point, So you know, the dividend stream is coming from there. We get a monthly management fees and sales commissions that effectively cover a lot of our G&A in the company. But the big dividends that are typically awarded once a year after the AGM they would start later than we expected.

Matthew Gordon: But that has got a long annuity stream of cash for you?

Stephen Roman: Well, I mean, the plant will be running for the next 50 years I would suspect, it’s a brand new plant, so.

Matthew Gordon: I’ll put that down as a yes. Yes. Okay. Right. So that’s the sort of interesting part of the business model, but let’s come to maybe your PEA, because I think that will allow me to understand better where you’re positioning yourself in the market because there’s some clues there. You’re talking about getting in earlier into the cycle than some. So why don’t you give us the big numbers on the PEA? Tell us what you announced this morning.

Stephen Roman: Well, this morning we announced a phase one mining project at our flagship DASA project in Niger. This is a 250Mlbs deposit. And over 2019, we did a lot of trade off studies on how it should be mined; open pit, underground combination start-up underground and open pit or a vice versa. At any rate, what we’ve been able to achieve here, and with money actually there was provided from our Turkish operation, we did a big round of drilling and we defined an area we call the flank zone, which is a high-grade section of the deposit that comes close to surface. And so what we’ve laid out here in this PEA is a ramp access underground mine that is basically mining above 5,300 PPM, or 0.5% Uranium. And if you notice in the press release that the majority of the pounds, there are about 30Mlbs of the 48Mlbs we’ll be mining out of this flank zone is running at over 1% Uranium. So the average grade is about 5,300 PPM, which you know, for an African Uranium project is outstanding. It puts us more in the Athabasca style deposit. And that obviously then doesn’t require a lot of tons to make a lot of pounds. So we’ve engineered a thousand ton a day operation that’s going to produce about 4.4Mlbs a year of yellow cake that has an All in Sustaining Cost, of course, below USD$20 per lb. Our cash costs are about USD$16 per lb.

Matthew Gordon: I mean, that’s the remarkable number there; being able to produce at less than USD$20.  I know you have said it before, but I’m not sure the market believed it and now you’re saying that that is achievable. And, I mean the other thing that stands out is the, I mean we knew this was a big Resource, you know, the available pounds here in terms of, I presume, phase II is huge, but this project on its own at USD$35 is showing, you’re indicating here what? 26% IRR at USD$35?

Stephen Roman: Yes, that’s after tax.

Matthew Gordon: So yes, that’s a nice number – you must be happy. Were you expecting it?

Stephen Roman: Well, you know, I think when we started working on the model of the flank zone as an underground high-grade operation, the numbers started coming in because the resource there is so good and it leads you into the lower sections of the deposit where there is also a lot of good high-grade material. But of course it needs to have more drilling, which you would do during your mining process. As it says in the press release, we’ll use this phase I to actually produce Uranium quickly, but also to develop the rest of the deposit.

Matthew Gordon: Okay. And the thing that interests me is, again, the business model: there’s some people who say, well, do it all in one go because there’s a much bigger resource and you know, therefore it’s going to be much more attractive to big players, et cetera. So why are you doing it this way? Why get into production early? I assume to hit this cycle? What you were saying five minutes ago?

Stephen Roman: Well, Matthew, you know, at the end of the day we’re a mining company; we like building mines. I think with Uranium, you know, and obviously you can mine this at a much larger scale. It’s going to take more capex, like we came out with our 2018 PEA that showed a USD$300M capex doing twice as much production on a much larger scale. But, you know, the grade was lower, the capex was higher, and for a junior mining company it was just too much. The other thing to consider in the Uranium business is you don’t want to come out there with an 8 to 10Mlbs a year project because where are you going to sell it? So what do we want to do? And we think the sweet spot is, you know, between 4 and 5Mlbs is just exactly where we came in. It’s a marketable amount of Uranium, you know two or three utilities could take that up every year and you don’t have a huge issue moving your product.

Matthew Gordon: Okay. Because I’m looking at 4M to 5Mlbs a year compared to like the US producers and I have spoken to both of them; they’re talking about a 1M to 2Mlbs. So you are a meaningful, could be a meaningful producer within a short timeframe to fit into a cycle where you think utilities are going to be needing to, you know, definitely going to be needing to fill up their inventory levels because where else is it going to come from? So I just wanted to know, have you had conversations with utilities? Do you know that this plan works better than getting out there and producing a much bigger project, which may be more attractive to Chinese investors for instance, because we’ve heard all models here. So why, what was the data that you had to say, now let’s go small, let’s do it now and let’s hit this cycle. And, you know, be, I guess what you’re trying to say is at least we will be in control.

Stephen Roman: That’s right. This is something that we can do with our capability and our financial horsepower. If we’re talking about projects that are into the hundreds of Millions you know, it’s something that we would not be able to do. So I think just like many mines in days of old, they would start with a smaller scale operation and, and grow the business out of cashflow. We can do the same thing. I mean there’s nothing stopping us from producing more if the demand is there.

Matthew Gordon: Okay. But let me talk to you a bit before we get too excited, because it’s quite easy in the current climate to get excited about Uranium. You know, the two yellow commodities are getting quite exciting at the moment. So you have to excuse me. But you’ve done a PEA, it’s just a PEA, right? It’s not a PFS.

Stephen Roman: Well actually, we’ve done the PEA to a PFS level. So this will form the core of our technical material that’s going to be submitted to the government for our mining permit. So what we’re planning on doing now is we’re finishing our hydrogeological work around the mine as well as our environmental impact statement. These are necessary to achieve our mining permit. So really the final bits, which would be some more geotechnical drilling and final engineering, we can do that subsequent to getting our mining permit. So the idea is to submit all of this material now as a final technical report to the government by the summer, by June, July with our application for a mining permit.

Matthew Gordon: And what does that allow you to do? Because I am going to ask in a second about money, because you’re going to need to raise money at some point, but what does having the mining permit allow you to do? Why are you focused on that?

Stephen Roman: I think it’s a huge catalyst for our operation because once you have your mining permit, you are unrestricted; so you can raise money and you know, there will be much more interest from utilities, potentially off-take agreements and various other financial instruments that we could use. With the Turkish operation, we could even have a sort of a bond issue that you know, basic coupon that’s supported for instance, by our Turkish cashflow. So we want to keep dilution to a minimum. We probably will raise a little bit of money, but timing-wise, for me, the best time to do that would be subsequent to achieving our mining permit.

Matthew Gordon: Right. Okay. And how much are we talking about here?

Stephen Roman: Oh, between CAD$5M and CAD$10M.

Matthew Gordon: Okay.

Stephen Roman: Yes, that’s not a huge amount. And you know, if the Uranium price continues to move, and the share prices move up, people will finally recognise this project because, you know, funny enough, a lot of people have not heard about Global Atomic, and I see a Uranium publications coming out. I just got one this morning talking about every company, and global Atomics, is not, there. Why aren’t people seeing this project? To me, we just have to pound the pavement a little bit and get people aware of it because it is very significant. I mean, we signed a deal with Orano mining, the French government in July of 2017. And the reason they did that is because they want to have an assured supply and augment their feed source for their Somair operation north of us. They did extensive due diligence on this project, and we weren’t as far ahead as we are now. So you know, this I think, is a very significant project in the Uranium space, but particularly in Niger where they derive most of their revenue stream from Uranium, and they view this project as like the next phase for development in the country.

Matthew Gordon: Okay. So if I may finish off, can you give me that timeline, you talked about getting into production this cycle, but what are you aiming for? Because okay, you’ve done a PEA to PFS standard, but you have still got to get a PFS. You’ve got to do your Feasibility, you’ve got to do the numbers on the PFS. What’s that timeline look like?

Stephen Roman: Oh, that should be finished during 2021. So that, you know, I mean it would be nice to actually start moving dirt towards the end of 2021 or early 2022.

Matthew Gordon: Okay. And by moving dirt, you literally mean, because you’re going underground here, you’re moving dirt, transporting it up the road for processing. Is that what’s happening?

Stephen Roman: Well actually, what I’m meaning is that you would start prepping this site and developing your portal, moving a camp in there to actually start developing the whole infrastructure. So we’re right on the power grid. We’ve got proposals in from solar hybrid suppliers that’ll sell us power under a power purchase agreement to keep our power costs low. But you know, Orano gets their power from a coal-fired plant down the road, which happens to be right in line with us.

Matthew Gordon: Okay. So the question is, when do you think you start taking U3O8 and selling it? When are you producing?

Stephen Roman: Oh, I would say you know, if all goes well and COVID-19 doesn’t keep everybody shut down for the next year, that by 2022, we’d be selling Uranium.

Matthew Gordon: Fantastic. You might. So, okay. So things are going great guns, you’re out there pounding the streets, telling the story. What’s the feedback been so far?

Stephen Roman: Well, aside from people being quite amazed by the project and the numbers coming out of it you know, a lot of people need to learn about it. So this has sort of woken up a few people.

Matthew Gordon: Yes, I think so. Well, it’s exciting times. It’s exciting times, Stephen. I think a lot of the generalists seem to be waking up to Uranium again, which is fantastic news. They’ll need educating, because again, it’s, you know, it’s been quite, it’s taken us a long time to learn about the ins and outs of it. It’s quite an opaque market. But I think it’s nice to sort of see them at least asking the questions again. Well, best of luck to you. Thanks very much for giving us an update on the PEA and the announcement. Stay in touch and let us know how things are progressing.

Stephen Roman:: We will definitely stay in touch and you’ll be getting our news as it’s coming out.

Matthew Gordon: Good, man, sir. Thank you very much.

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If you see something in this article that you agree with, or even disagree with, please let us know in the comments below.

Any advice contained in this website is general advice only and has been prepared without considering your objectives, financial situations or needs. You should not rely on any advice and / or information contained in this website or via any digital Crux Investor communications. Before making any investment decision we recommend that you consider whether it is appropriate for your situation and seek appropriate financial, taxation and legal advice.

The Global Atomic Corporation company logo.

I <3 geology, I <3 Ecuador

A photo of some colourful wooly hats.

In June 1991 I was unlocking my bicycle after my last first-year exam in geology at the University of Manchester when a bubbling surge of happiness stopped me in my tracks and made me look up and smile and just take it all in. I couldn’t believe that I had gone through my life until then without knowing what I had been taught in my first year of geology. It had opened my mind to new concepts of time and space, fascinating processes of rock and mineral formation, and also of how geology had influenced human activity through millennia. It had been a revelation, hard work, and a lot of fun. For me, the study of the science of the earth had shone a light onto politics, economics, the environment, climate change and of course the role of mineral deposits in the development of man. As I stood there, bicycle lock in hand, I thought how amazing the world was, and how much I loved this subject that I had come across by chance when I had mistakenly started an engineering degree.

Twenty-nine years later I am happy to say that my love of geology is still there. While the digital age thunders on, with apps and memes, full of ideas on a high-tech future, full of concerns about sustainability and climate change, geology is as relevant as ever and it still captures my imagination. As it was in my revelatory moment back in Manchester, so it seems to me that many of the key issues of the age are met in the exploration and development of mineral deposits. Is this too gushing¸ a case of hyperbole?  I argue that it is not an exaggeration, and that a look at the extraordinary events in Ecuador will help you share my appreciation.

The Ecuador national flag

Ecuador has it all. All of the issues, all of the challenges, all of the opportunities and all of the natural resources it might need to make a transformation. And I see this on a daily basis as I am a director of Salazar Resources, a proudly Ecuadorian Gold-Copper exploration and development company.

Ecuador is a traditionally socialist country that until recently had economic policies that deterred foreign direct investment in the mining sector. In 2007 the country trumpeted its eco-tourism and promoted a green economy, which was all well and good, apart from the fact that the country soon ran out of money. And in a dollarized economy (since 2000), printing is not an option which just leaves borrowing, inward investment or foreign export earning as potential sources of US dollars. In 2008, Ecuador borrowed $6.5 billion from China, with repayments partially based in Ecuadorian oil and terms negotiated at times of historic high oil prices.  While the oil price was strong, everything seemed fine, but commodity prices are cyclical and the cycle turns as inexorably as the arrival of taxes and death. Oil prices to 2014 had covered up the multiple sins of an inefficient public sector, large macroeconomic imbalances, and limited private investment, but eventually the oil price fell. As the new oil price reality bit, and growth opportunities in Ecuador (oil, agriculture, tourism) were remarkable by their absence, the government reassessed its attitude towards mining.

Maybe the 2008 moratorium on all mining was overkill? Maybe a subsequent imposition of a 70% windfall tax and mechanisms for 50% national ownership were deterrents on investment? Maybe the rampant illegal mining sector that paid no taxes and was completely unregulated in areas of environmental monitoring safety or any degree of social governance, should be brought under control? Maybe it would be better to have foreign direct investment to build a regulated, responsible mining industry that employs thousands, grows domestic economic capacity, pays royalties and taxes and earns hard currency? Maybe the mining sector in Ecuador should be nurtured not shunned? Maybe the remarkable geological endowment should be used to help build a better nation for the people?

An ineluctable truth emerged. Ecuador needed a modern mining industry to pay for its social and infrastructure agenda.  There were no other options, no other cards to play. And so reform was embraced.  Consultants helped create a plan for the Ecuadorian mining industry that led to bidding rounds by metal and by region, and critically the development of a new mining code.  The government introduced similar conditions to other countries, including incentives such as a fiscal stability agreement, VAT reimbursements and investment recovery before taxes kicked in. The results were astonishing.

A photo of copper-gold ore.
Copper-gold ore

Geology is apolitical, and copper-gold mineralisation doesn’t necessarily stop at a political border. Ecuador straddles some of the most prolific copper-gold geology on the planet and since the dawn of modern mineral prospecting it has experienced negligible systematic exploration. Almost uniquely for a peaceful country there are still walk-up large-scale high-grade deposits sitting at surface. When the government signalled it was serious about developing a modern mining industry, the world’s resources companies responded.

Almost overnight, Ecuador became a global mining investment destination. Foreign direct investment (“FDI”) surged to more than $250 million per year in 2017, with a projected $1 billion per year for the next four years. Over 200 new mining concessions were granted in 2017, accompanied by investment commitments of nearly $500 million of exploration expenditure in the first four. Since 2018, twenty-eight internationally renowned mining companies have established entities in Ecuador to pursue investment opportunities. Not only that but in 2019 two billion-dollar investments were completed, and the country now has two well-regulated, carefully monitored mines, employing thousands of local people, and generating vital foreign exchange earnings by producing copper at Mirador, and gold at Fruta del Norte.

Unsurprisingly there has been a backlash to this level of activity. A prominent anti-mining activist Carlos Perez has changed his name to Yaku Perez (Yaku is the Quechua word for water) and is vehemently opposed to foreign investment in the Ecuadorian mining industry, even though he turns a blind eye to the devastatingly destructive illegal mining in the country. Yaku regularly calls for referenda on the future of mining projects in Ecuador and he will continue to delay and obstruct the industry where he can as he persists in his argument that Ecuador should be pro-water and anti-mining. Incidentally, most professionals in the mining industry are supporters of clean water, responsible employment, wealth creation, the sustainable supply of vital raw materials and are not supporters of water pollution, environmental degradation, dangerous working conditions, tax evasion and all of the problems associated with illegal mining.

Another factor is that the population of Ecuador is split between those wanting jobs and those experiencing a very human resistance to change. What does a large mine entail? Will dastardly miners raze mountains, and bury villages under toxic waste? Some fear the rapid introduction of a new industry; others have the luxury of working closely with some of the many in-country professionals and learning first-hand about the industry. Suddenly the Chamber of Mines in Ecuador went from a clubby outfit to needing to assist the government and a population learn about the role and importance of a well-regulated mining industry in society.

Predictably, some of the mining companies gamed the system. Companies bid to spend $250 million on a single exploration licence (a ludicrously large amount) over four years, only to load the vast majority of the spend into Year 4 and then make it conditional on material success in the under-funded years 1-3. Companies committed to investing multiples of their market capitalisation in early-stage exploration within a 4-year period. Stuff and nonsense perhaps, but given that it seems easier to find a near-surface deposit in Ecuador then other parts of the world, many companies were enable by the vagueness of the new mining code to put placeholders on title in the rush.

Stunned by the whirlwind of real and promised FDI, protest referenda, the arrival of most of the major mining companies, and by the general pace of events, the government closed the Mining Cadastre in 2018. The commitment to a modern mining industry is as strong as it has ever been, supported by public pronouncements, progressive changes to process and structure within the mining ministry, and of course, the stark reality of ongoing national budget deficits. But it was a case of too much too quickly. The cadastre is still closed as the government is redesigning the mineral title permitting process to make the exploration expenditure more accountable, transparent and digital. No new licences have been issued for eighteen months and although in that time wrinkles in environmental permitting and water use permitting have been ironed out, there has been a knock-on delay in exploration activity. It does mean, however, that those companies that already have a licence portfolio are at an advantage over new entrants looking to build a presence in-country.

Which brings me full circle, to that moment when I was standing outside the exam hall in Manchester so long ago. The study of the science of the earth continues to shine a light onto politics, economics, the environment, climate change and of course the role of mineral deposits in the development of man. I am just as excited and fascinated by the interdisciplinary nature of my subject as I was as an undergraduate, and each of those competing and complimentary aspects are manifest in the gloriously complex reality of the mining industry today in Ecuador.

Companies, such as Salazar Resources, that already have mineral title to explore have a wonderful opportunity to continue the discovery journey (discovery of an economic resource is always much more of a process than a single moment in time). Community relations and environmental stewardship are critically important, and those enterprises that can bring its local and regional population along the discovery journey with them will succeed where companies that fail to engage, encourage, and educate its neighbours will face protest and delay. The government understands the vital developmental and economic role that a responsible mining industry offers and it is working as fast as it can to create the framework for that industry to grow, and yet it is weighed down by the responsibility of having to make decisions now that will have long-lasting effects. It is no exaggeration to say that the fate of the nation depends on it. The officers and directors of companies that I know are genuinely excited about the positive transformation that a single well run mine can make to individuals, families, a community, a region, and the contribution that it makes to nation-building in a relatively small economy. And within it all there are the pure geologists among us, thrilled at the prospect of being part of a team that will make the next big discovery and bring vital commodities for our future needs to market.

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If you see something in this article that you agree with, or even disagree with, please let us know in the comments below.

A photo of some colourful wooly hats.

Global Atomic Right Of Reply

On the 21st November 2019, Mikko Leivo posted an article analysing Global Atomic as investment case to the Crux Investor Opinion platform. After seven or eight densely argued pages, the article eventually concluded that Global Atomic, in Mikko’s opinion, was a good investment proposition. But not before he had given the executive suite a thorough roasting on the way through. The excoriating prose left us as a management team reeling and wondering how to respond, despite the article being an overall endorsement of Global Atomic.

I don’t want to get into a he-said, she-said back and forth with Mikko but I would like to share some personal views about my involvement with the company and with the team.

I first met Stephen Roman in October 1997 when I was a neophyte mining analyst at HSBC, after a stint as an exploration geologist for Rio Tinto and mint-fresh graduated with an MSc in Mineral Deposit Evaluation from Imperial College. He doesn’t remember that particular meeting, but fourteen years later when Global Atomic Fuels Corporation walked into the offices of Blakeney Management in 2011 where I was the Africa and the Middle East resources portfolio manager, I was able to place him. And with Stephen Roman was George Flach. George and Stephen had, at this point already been working together in Niger for five years – Stephen as overall boss running the financing of the private uranium exploration company and George as the geological brains trust finding pounds in the ground. The list of deposit discoveries was impressive, Tin Negouran, Dajy, Isakanan, and of course the flagship asset, Dasa. Convincing as Stephen and George were, as good as the geology was, I didn’t recommend to the investment committee at Blakeney Management that we should invest in Global Atomic. 

On a regular basis over the following five years I saw George and Stephen. I tracked how they were managing in a post-Fukushima uranium environment, I saw them lay their bodies on the line as they both got serious bouts of malaria in-country, and I noted how they went for extended periods, years, taking equity not cash for salary. Although I didn’t invest at any stage during that period I was impressed by their dedication, their resilience and courage, and their general comportment. Here were genuine men in an industry that is notorious for its flaky fakers. And like many companies in lean times overhead costs were shared with other companies operating from one stable.

There were, however, three key reasons why Global Atomic Fuels Corporation did not elicit an investment recommendation from me in the period from 2011 to 2015.

Firstly, the high grade portion of the deposit was deep in the graben* which rendered the start-up economics challenging. Secondly, the uranium market was in over-supply and I couldn’t predict the turning point with confidence. Thirdly, Global Atomic was a private exploration company without cash-flow and anyone who has been part of the mining sector since 2011 knows how hard it was to finance any project, especially private exploration projects.

When I next looked at Global Atomic in 2018 I was gobsmacked by the transformation that Stephen and George had achieved in the company. The three key reasons for not investing had been addressed, and in spectacular fashion to boot.

Stephen had recognised the importance of a financing lifeline for Global Atomic and had recommended to the shareholders of both Global Atomic and TSX-V quoted Silvermet that a merger should take place. Remember that there was a considerable common shareholder base as Stephen had a loyal following after the success of Gold Eagle, and those investors had invested in both Silvermet and into Global Atomic. With the merger Global Atomic has fledged into a publicly listed development company with cash-flow. The vision and the gumption to complete this transaction is of immense value to the shareholders of Global Atomic and it was delivered by Stephen and George.

The previously moribund uranium market was finally showing signs of life with genuine demand growth and a genuine supply response to the low prices, pushing the market towards an ongoing deficit position. Ok this may be a purely external factor and nothing to do with management, but keeping a project alive during a painfully slow turnaround in metal prices separates dedicatees from dilettantes. 

A further key point was that the first dividend cheque from the Turkish recycling business was C$7M, and with that windfall capital George led the discovery of the Flank Zone. The Flank Zone is a body of mineralisation linking the high grade resource in the graben with the shallow low grade surface resources, in a spectacular discrete mineral occurrence containing about forty million pounds of uranium at a grade of around half a percent U3O8. This discovery absolutely transformed the economics of the Dasa deposit and is a play-opener to the strategic large-scale resources at depth in the graben. The Flank Zone discovery is of immense value to all shareholders of Global Atomic and it was delivered by Stephen and George.

Icing on the cake was provided in the form of the 2017 MOU with Orano (ex-Areva) which took Stephen and George four years to negotiate. The MOU is a wide-ranging arrangement that covers technical and logistical cooperation in-country as well as providing the option for Global Atomic to truck ore to Orano operations at Arlit. A genuine development option that may save the capital of having to build a stand-alone plant is of immense value to all shareholders of Global Atomic and it was delivered by Stephen and George.

What I hope this narrative shows is that the current strengths and assets of the Company are the result of years of work and dedication by good people. Part of my pitch to Stephen and George back in 2018 was that I recognised the transformation in the Company that they had achieved and that I wanted to be a part of the ongoing growth and evolution of Global Atomic, and I wanted to be part of the management team. Stephen and George and the rest of the team in Toronto have positioned Global Atomic to be a leading player in the anticipated uranium equities upturn. As a team we would be proud to provide the fuel for a low-carbon energy source to assist our beleaguered planet, and as a team we are very proud that the Company is in such good shape to make good on that aim.

If, on reading this article, you have any questions about our plans or our people, I would be glad to talk to you, so please get in contact with me at +44 20 7389 5023.

Merlin Marr-Johnson
Exec Vice President

 *Graben – an elongated block of rock lying between two faults and displaced downwards relative to the blocks on either side, as in a rift valley

Global Atomic (TSX: GLO) – The Perfect Storm

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Global Atomic Corporation
  • TSX: GLO
  • Shares Outstanding: 145.44M
  • Share price CA$0.48 (12.02.2020)
  • Market Cap: CA$69.81M

A few weeks ago, we wrote an article about the three crucial elements required for any successful uranium mining company. The article received some great feedback, so we felt it would be valuable to explore the uranium conundrum. Today we will be inspecting Global Atomic Corporation’s ability to weather the forces at work. A TSX-listed company, (TSX: GLO) owns the largest ‘high-grade’ uranium sandstone deposit outside the Athabasca Basin.

A Company Overview

GLO is a junior uranium mining company with cash flow from its JV in an aluminium slag and steel dust recycling business in Turkey.

It provides ‘a unique combination of uranium development and cash flowing zinc concentrate production.’ GLO’s Chairman, President and CEO is Stephen Roman, who was recently interviewed by Crux Investor at the WNA Symposium. Roman is the Former senior officer and Director of Denison Mines, formerly one of the “biggest producers in the world.” He has notable accomplishments such as the 2016 PDAC ‘Bill Dennis Award’ Prospector of the Year winner, and the discovery of Gold Eagle, sold to Goldcorp for $1.5Bn.

It’s worth noting that when Roman first mooted the idea of merging the Turkish asset with the uranium business, the market reaction was negative. In today’s depressed Uranium market, investors are thankful he did, as it has de-risked this investment considerably. Intelligent foresight or luck? Like all successes in mining, probably a bit of both. Roman is quick to give credit to his team though. We think it gives Global Atomic an advantage over most of its true peers in the Uranium category. We will get into some numbers later in this article.

So, let’s talk about some of the variables first:


GLO has the basis of a solid foundation of revenue from the fourth most consumed metal in the world.

Zinc prices are down at the moment, but even at these prices the JV has paid for the build of a large plant that doubles output. They produce zinc concentrate. The positive cashflow, once the debt is paid down, starts to flow to Global Atomic in 2021. Zinc production is predominantly used for construction: the frames of buildings, bridges, roofing, stairs, and piping. It is also used to coat iron/steel to prevent rust. A secondary use of zinc is in bronze and brass alloys, with a variety of applications ranging from batteries to fertilisers.

The price of zinc currently stands at c.$2,540/ton, an oddly low price for a material with remarkably low stockpiles on the London Metals Exchange, down from 1.2 million tonnes in 2015 to just 60,000 tonnes now (2008 market crash levels). Zinc is currently in a 134,000-tonne deficit according to the International Lead and Zinc Study Group (IZLSG).


Considering the current uranium market, GLO is performing admirably.

With a market cap of CAD$70M, the share price has risen steadily this year, from CAD$0.35 to a peak of CAD$0.55, before settling in around the CAD$0.50 This is close to a five-year high: an intriguing and surprising achievement. Many of its peers have seen falls of 30-40% as the macro story takes longer than expected to manifest itself in contract purchasing. These healthy finances are likely aided by the forecasted zinc recycling cash flow. If they were a pure uranium play, they would be in much deeper waters right now. In addition, GLO is the only Uranium junior with positive cash flow and net income: CAD$4,679,268 for the nine months ending September 30th 2019 and CAD$5,648,589 for the same period last year.

Energy Fuels have employed a similar strategy with their vanadium. It is clear that companies with a diverse portfolio are usually more investable than those with a single asset, or indeed a single jurisdiction.

An Experienced Management Team

CEO, Stephen Roman, has extensive uranium mining experience and a strong track record in business.

He sold a large gold company (Gold Eagle) to Goldcorp in 2008 for US$1.5B. Roman’s general mining experience is assuring, but his uranium experience as the former senior officer and director of Denison Mines Limited is crucial. As mentioned in a previous article, uranium is a commodity that requires a unique set of skills and poses an enigmatic set of challenges. Roman’s large ownership figure of >8% is certainly an encouraging indicator. Roman has been actively purchasing additional shares from the open market.

Encouraging Stuff From CEO Stephen G. Roman

The remainder of the management team, especially the in-country team, is equally experienced with uranium. There is sufficient presence of uranium specialists alongside mining experts to render GLO’s management team a force to be reckoned with.

A Good Asset

GLO’s base metal division owns 49% of Befesa Silvermet Turkey (BST), which owns a zinc recycling plant in Turkey called Iskenderun. The other 51% is owned by Spanish company, Befesa, which has extensive experience in this field. In 2019, the plant experienced a within-budget and on-time upgrade and was re-opened in early November 2019 with a capacity of 110kt (c. 60Mlbs Zinc pa.).

BST has been a profitable operation for approximately 10 years. It provides excellent cash flow to GLO and has a low break-even. BST is a streamlined, efficient operation with high margins and a low overhead. Despite zinc prices being erratic and low at present, BST remains a strong asset.

However, while BST is cash flowing, it is not cash-positive at present. The JV still needs to pay-off the new plant, which it will do in 2020. The CAPEX for BST’s upgrade was CAD$26M. It was financed via 2018 cash flow, and debt (CAD$2M from Turkish bank and CAD$20M from Befasa (Libor +4%)). Investors should be aware GLO needs to utilise BST’s cash flow to pay off the debt: c. CAD$6M in both 2020 and 2021.

GLO also owns the largest high-grade uranium sandstone deposit globally, the Dajy Area Surface Anomaly (DASA Deposit) in Niger.

Niger is a good mining constituency with a fast-permitting schedule of just 6 months. In terms of DASA, GLO has 100% ownership. DASA is a large and high-grade deposit, open to multiple directions and GLO have claimed that with more drilling they can demonstrate it is a >300Mlbs uranium resource.

Besides the flagship DASA deposit, GLO owns:

  1. Tin Negouran Deposit, 10Mlbs U3O8
  2. Dajy Deposit, 17Mlbs U3O8
  3. Isakanan Deposit, 34Mlbs U3O8.

A feasibility study is due to begin on DASA imminently, but just how imminently remains to be seen. The current stagnancy of uranium prices may be somewhat demotivating, but like Energy Fuels, albeit for different reasons, GLO has no urgent need for uranium prices to rise. They can bide their time and play the long game because of the zinc cashflow.

The key aspect of the DASA asset to be aware of is its grade. GLO released further assay results in April:

DASA Assay Results (April 2019)

DASA’s grade and size is unique and gives GLO a definitive edge over its rivals. While Energy Fuels’ mill was a possible gamechanger for the American uranium producer, the economic availability of DASA, the amicability of Niger as a uranium mining constituency, and the MOU signed with Orano related to ore sales and strategic development means GLO isn’t significantly hampered by lacking ownership of its own mill.

Sufficient Cash

GLO is currently sitting on c. CAD$5M in cash and cash equivalents, down from CAD$7.7M in December 2018. The company’s finances are in reasonable order.

This is hands down one of the better uranium projects (if we can call it that) that we have looked at. The zinc in Turkey delivers free cashflow in spades. The debt for the new plant is going to be paid off this year, but still delivers c. CAD$1-$2M of cash to Global Atomic, and, thereafter, free cash of potentially between CAD$12M-$14M per year, like an annuity stream for the foreseeable future, depending on zinc price and internal charging structures. That is a lot of cash. Mr. Roman must be feeling pretty good about his decision right now.


What is more exciting is what this cash does for the company. It allows the company to potentially deliver a large-scale Uranium project without dilution to shareholders. Clearly, this depends on the decisions made by the management team as to how they develop DASA. Cash from the zinc would allow them to develop the higher-grade flank zone, and start producing and selling uranium into market by 2024. This assumes the truck and toll initially and do not have a large capital outlay to build their own plant, without diluting shareholders on the CAPEX.  So, a few assumptions made by us, but eminently possible.

In our opinion, what GLO should do before then is a small injection of cash of CAD$6M-$12M (depending on their plans), to do the FS on the flank zone, to do the engineering and cover 24mths of G&A (the zinc revenues will be paid annually in arrears). As a shareholder, we’d accept this as it would release the value of DASA quicker and possibly time the Uranium market beautifully. This scenario is obviously idealistic, but, based on the data available, very, very deliverable.

Roman has previously stated that they could produce in the high-USD$20 range. Even if we load this up and get to USD$40, Global Atomic is going to be much more attractive than most of its peers when it comes to discussions on financing CAPEX. Clearly, going to market and raising a large CAPEX budget will be doable, and would probably deliver a slightly better IRR than our potential model, but will take longer to get to revenue. So, of course, we like our model best.

What do you want the company to do? What do you think?

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If you see something in this article that you agree with, or even disagree with, please let us know in the comments below.

Any advice contained in this website is general advice only and has been prepared without considering your objectives, financial situations or needs. You should not rely on any advice and / or information contained in this website or via any digital Crux Investor communications. Before making any investment decision we recommend that you consider whether it is appropriate for your situation and seek appropriate financial, taxation and legal advice.

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Global Atomic Corporation (TSX: GLO) – The Largest High-Grade Uranium Sandstone Deposit on a Global Scale (Transcript)

Global Atomic started in 2005 and focused on Niger, which is one the best performing regions for Uranium outside Kazakhstan and Canada. By 2007 they had tied up 6 assets and have developed 4 of them before settling on their main asset. The Uranium development has been supported by their share of a Zinc producer in Turkey. Last year they rebuilt the plant to almost double the production. This has been highly attractive and has allowed Global Atomic to grow the Uranium business whilst others have struggled.

They have a highly experienced Uranium management team who has produced and sold Uranium in to the market. We think this is critical to the success of any junior Uranium company. Not many junior companies can claim to be end to end and that is why so many fell over in the last cycle.

Stephen Roman tells us about doing business in Niger. The area that they operate in has been a producing Uranium for over 50 years. They have done 140,000m of drilling so have good picture of what the deposit looks like. Stephen talks about the grades and size of deposit which is the largest high-grade sandstone deposit in the world. 250Mlbs at today’s price of $25 is c.$6Bn. Stephen talks about the economics of how much it will cost to get it out of the ground.

Interview highlights:

  • Overview of The Company
  • The Turkish Asset
  • The Management Team, Their Experience and Roles
  • Running a Business in Niger: Government, Obstacles and Advantages
  • Getting into Production: What Do They Have? What Does The Timing Look Like? What’s Their Strategy?
  • Why Should You Invest in Global Atomic?

Click here to watch the interview.

Matthew Gordon: So you going tell us about the Global Atomic story. Why don’t you give us the 1 minute summary and we’ll pick it up from there.

Stephen Roman: Global Atomic started with an ex-partner at Denison Mines, Clifford Frame, back in 2005. And we were out basically looking for Uranium around the world. Our background with Denison Mines, of course, one of the biggest producers in the world was started by my father, as a matter of fact. So we got that going. And at the time we wanted to look in Niger because Niger is a producer, it didn’t have a lot of international investment. It had been tied up by the French for many years. My associate, George Flach, who I’ve worked with for many years, was in Niger at the time working on a Gold project. And I called George and I said is there any Uranium potential properties that we could start doing exploration on? And he said, ‘yes, you should come over. The government is just opening up the the doors for foreign investors’. So we went over in 2005 and by 2007, we put together a nice package of six really high profile properties, started our exploration program. So since then, we’ve developed four Uranium deposits there with one major discovery called Dasa that we discovered in 2010.

Matthew Gordon: So we’re going to get into that in a minute. But you’ve also got operations in Turkey.

Stephen Roman: Turkey, yes that’s another company Clifford and I started in 2005 at the same time to actually look for base metals around the world. And we ended up in Turkey on a primary Zinc deposit. And then the crash of 2008 happened, financial crisis. So we didn’t want to leave the country empty handed. So we found a shutdown plant in a place called the Iskenderun right on the coast of the Mediterranean. And it had been processing electric arc furnace dust. So waste from steel mills. And so we bought that plant and refurbished it, got it going again by the end of 2009. And it’s been making money ever since.

Matthew Gordon: It has been making money. And I think that’s one of the attractive features that investors of Global Atomic are looking at. Is the fact that this thing is quite a simple process in many ways. And having looked at the economics, it’s quite profitable.

Stephen Roman: It’s very profitable.

Matthew Gordon: Talk about some of the numbers that because I think it has a big impact.

Stephen Roman: Last year our EBITDA was $13M, and we have currently at 49% share, we’ve turned it into a joint venture. So because that wasn’t our primary business operating a plant like this, it’s a 56m long kiln that’s like a cement plant. You put the waste in there with some feedstock, coking coal, et cetera. And you volatize the Zinc that’s left in the waste and then you condense it and you make a very high grade Zinc concentrate. Running at 70%. Our biggest customers are NyrStar and Glencore. So we ship right out of our own port facility in Turkey that we have with the steel mills there and ship this concentrate to Europe.

Matthew Gordon: So the presumably the 51% shareholder is local?

Stephen Roman: No, the 51% shareholder is the world’s biggest company in this space. It’s a company called the Befesa Zinc. They trade on the Frankfurt Stock Exchange. So we brought them in. They were always interested to get into Turkey. And the fact that we were already there operating and we actually accelerated their plans to get in the country. And they didn’t have to do stand alone that would have taken five years. So they came in and they paid us to buy into the project. And we agreed to make them operator. And so now we have a very, very good joint venture with them.

Matthew Gordon: And what’s that throwing off for you?

Stephen Roman: In total our share was $13M. So out of $49M. So let’s say $26M-$27M total EBITDA last year. Now what we’ve done in 2019 is we shut the old plant down. We completely demolished it and we built a completely new plant, that’s now running. So within 6 months, we tore down an old plant, built a new plant. And so this is now doubling our capacity from 30Mlbs a year of Zinc to 60Mlbs a year of Zinc production.

Matthew Gordon: When does that pay back?

Stephen Roman: That pays out in about eight months.

Matthew Gordon: And then it’ll be free cashflow after that?

Stephen Roman: That’s right.

Matthew Gordon: What sort of quantum are we talking about in terms of the free cash flow component for you?

Stephen Roman: That’s 60Mlbs at $1 per pound, that USD$60M a year. Your costs are going to be in the 30%-40% range. The rest is free cash flow.

Matthew Gordon: And net contribution… So you’re not running or operating that business. It’s something that you started, you monetise and someone else is operating. Sounds smart to me. It’s throwing off cash. What are you gonna do with that cash?

Stephen Roman: Well, so what we did. That was in a company called Silvermet. Started by myself. Global Atomic was a private company. So between George Flach and myself, we raised about $60M from this company. And we really use that to develop the big Dasa project. So what we needed is, of course, liquidity for our shareholders. So we decided since nobody really cared about a small Zinc recycler, we would merge the two companies. So about a year ago, we merged them and gave everybody liquidity. We gave the Silvermet shareholders a big asset in our Dasa project, and gave the Global Atomic shareholders liquidity on now the Toronto’s senior board, Toronto Stock Exchange. But also the cash flow from that Zinc can help us develop the large Uranium asset.

Matthew Gordon: So I think that’s well understood. And that’s when you even took on free cash flow position there is obviously a lot more around. Can we talk about Global Atomic? I want to get into the detail of it. It’s in the Uranium space in Niger, which is a very well known space for Uranium.

Stephen Roman: One of the largest producers.

Matthew Gordon: Absolutely. And high grade for Africa. Let’s talk about the team. Because I’m a strong believer and strong advocate that the team needs to know what they’re doing. Be able to talk about what they are doing, be able to deliver that. Who’s on the team? Who have you brought on board?

Stephen Roman: George and I really got things going. George is a professional geologist, has been working in West Africa since the 80s. We started working together in Ghana on a Gold project that Denison and I had in 1985 called Bogasu. The fact that I my roots are with Denison Mines, I had a lot of talent from there that actually came and joined us. So now one of our prime consultants is a mining engineer, Royal School of Mines named Fergus Kerr. He was running all Denison’s operations in Elliot Lake.

Matthew Gordon: So he’s got Uranium experience?

Stephen Roman: Big time.

Matthew Gordon: So he was the guy you brought in.

Stephen Roman: And we brought in another guy named Dr. Peter Wallenberg. He was the head of Areva’s Uranium department in North America. So Peter is a geologist and he was credited with the discovery of a number of uranium deposits. One of the big ones is in the Northwest Territories and Canada. So he is also on our team working with us. Then we have people in Africa that have been there working with us and with George, some senior Uranium geologists that are part of our team in country. And then we have our CFO, Rein Lehari ex- PriceWaterhouseCoopers (PWC), that has been involved in the mining business for a long time. And finally, the last gentleman I can name here as part of our team is is Merlin Marr-Johnson. He’s a geologist. He’s worked with many companies, mineral companies, exploration companies, and he’ll be our London liaison. And helping us with our feasibility process and management who aren’t based in London.

Matthew Gordon: And who of that team actually manages the in country relationships?

Stephen Roman: George Flach is our VP of Exploration. He’s also a Vice Chairman of the company. But he spends a lot of time in Africa. He lives in Africa. And so he manages that. Merlin is now helping him with that whole aspect as well. And so what we’ve done as a foundation with a couple of individuals, of course Clifford Frame was a mining engineer and he was the President of Denison Mines. We put together a real core team. And as we move along and complete feasibility study, we add to that team as we go forward.

Matthew Gordon: I need to kind of point out to people here is the importance of what you just said, because I would say mining is tough. Uranium mining, that’s a whole other ball game.  If you haven’t done it before, it’s a case of you don’t know what you don’t know. Because not only has it got all the mining risks associated with it, it’s also got all that geo-political risk to it, regulation around it, safety etc… And so you need to been through that to understand what you’re getting into. So if you’re making investments, you need to consider if you think this team understands what it’s doing. So that’s a big deal. You’ve deliberately gone about putting a very well versed and experienced Uranium team together.

Stephen Roman: Absolutely. I started working underground as a miner at Denison at 19. So I’ve been in the Uranium business most of my life. Denison was the biggest Uranium producer in the world from Elliot Lake. My father built the town there and we employed thousands of people. Our big customers were initially the Japanese, various utilities there. TEPCO was one of our biggest customers. I was involved with the price negotiation, sales on Uranium, mining Uranium, exploring for Uranium. So we’ve been in this business a long time. And then the big contract we made was with Ontario Hydro, for 126Mlbs. It was one of the biggest contracts for Uranium ever in the world.

Matthew Gordon: That’s amazing. So what I’m hearing is that you put a lot of store by having the right team of people who’ve been there from exploration and actually selling product and market. I would argue from what I’ve been hearing over the past few days, in the past few months in speaking to Uranium companies. Getting out of the ground is difficult. But that’s where that’s where the difficulty actually gets even harder from there. Getting it into market, on time, buying cycles. Understanding logistics and physically moving Uranium around the world and getting it to where it needs to be and all of the cost issues, because you don’t necessarily get paid the second it comes out of the ground. Managing that is quite complex. So it sounds like you’ve got a team and that’s what they’re doing. But let’s let’s get into the project itself, because I want to understand your impression of Niger. Doing business there. How are you gonna go about doing it? What are the barriers? What are the things that you’re seeing that you’re dealing with to be able to do business in the Niger? Tell us about the country first?

Stephen Roman: As I mentioned before, we’ve been working in West Africa since the mid 80s. And we’ve got a lot of experience in all the West African countries. Niger is primarily desert. So from a point of view of logistics, it’s quite easy to get around. We happen to be located in an area called the Tim Mersoi Basin, which is like the Athabasca Basin in Canada. It’s got good infrastructure. So that’s that’s a good thing. Well, highways, power lines, towns. There’s there’s the main core production for New Year comes from the Tim Mersoi based. And so around all mining formerly called Areva started mining there in about 1970. So the two mines that they, Cominak, and Somair have been running that long, our deposit is located just about 100 kilometers south of those two mines. Then we have another mine operated by CNNC, the Chinese National Nuclear Corporation bought one hundred kilometers to the southwest of us. So we’re in an area that’s very well known for uranium mining. We we’ve particularly zeroed in on that area because obviously good geology and the fact that we did have interest.

Matthew Gordon: So why haven’t the French picked up this land package.

Stephen Roman: Well, the French owned all of this land. But because of what happened in 2005 with the government effectively telling the French, ‘listen, we’re not going to allow you to own the entire basin’,.

Matthew Gordon: And just sit on it.

Stephen Roman: And sit on and land bank it? So we want other companies in here. We want other companies spending money, developing projects. So we’re gonna leave you with eight concessions and we’re gonna divvy up the rest to people that are interested. So that’s what we picked up our six.

Matthew Gordon: If I look at the Athabasca, it based on the stories we’ve heard, there are some great stories and amazing stories. High-grade, fantastic, but some very deep assets. That adds to costs. Can you describe the base in here and where you sit on that and why you’re saying it’s a great place to be?

Stephen Roman: We we went to an area that had previous work done on it by the Japanese. We developed as a surface deposit.

Matthew Gordon: Meaning he inherited data from them?

Stephen Roman: The areas that we picked up were known to host uranium. So there had been limited amount of work. There were outcrops. There were drill holes. There was data available. So we went through all of this data and we picked the areas specifically that were exciting. When we went into follow up on some of them, we found deposits that could be exploited. So we did a lot of drilling on one of our concessions. But it was it was a typical lower-grade African surface uranium project. We were looking for something bigger. We’re an elephant country here. So we followed our nose. We did a lot of prospecting on surface, hand Geiger counters walking across the ground and beside one of our other projects called Dajy, about a mile away. We found a blowout. It means that from down below. Something has percolated up a crack. It’s left a blob on surface. And that blob in surface. The Geiger counters went crazy. So we took this material, brought it to Canada, assayed it. It was running at 30% uranium. So we said holy smoke. This is this is something unseen in Africa. We need to start working around this area. So we laid out a drill program. And we outlined a lot of lower-grade material like a halo around this blowout. And it was going down to about 20m or 30m and it was a reasonable amount of uranium, but the grades weren’t there. So we said, where is this coming from? In Niger, they had a preconceived notion that when you got to a volcanic to horizon in your drilling called the event formation, they stopped drilling because they said there’s nothing below it.

Matthew Gordon: So what sort of level are we talking about?

Stephen Roman: That was probably 50 or 60 metres down. So we said, there’s gotta be more to this story. So we said, ‘we’re going to forget about what all the local geologists think and what the preconceived notions are, where we’re going to drill through this Abinky’. And when we drilled through this Abinky, we hit the mother lode. So this a Abinky had created an impervious cap. It’s on top of it a mudstone. So a down faulted block, covered the mudstone and Abinky. It totally sealed this deposit from the surface, except for that little chute.

Matthew Gordon: So you’re able to paint that picture of what was looking like underground quite easily as a result.

Stephen Roman: Yes. So we’ve done about 140,000m of drilling. We did the shallow drilling, but we also drilled right down to about 700m. So that whole graben. And now what we discovered, it’s got a large deposit sitting under that Abinky formation. That is spectacular. So far we’ve drilled off about 250Mlbs. We’ve got grades in it running over 20% uranium. We’ve got large areas that are running at 1% to 4% uranium. But overall it’s just a spectacular deposit.

Matthew Gordon: It’s more significant than most other Uranium deposits in Africa.

Stephen Roman: This is right out of Peter Wallenberg’s mouth. It’s the largest, highest-grade sandstone hosted Uranium deposit in the world. This is this is quite a statement. And he said that at a PDC talk where he had the room full of people and very technical people.

Matthew Gordon: Let’s qualify that. Because we’re trying to educate our audience about uranium and which investments to look for and why they should look at certain companies, not others. So most people understand the Athabasca. Very, very high grade deposits there. You’ve got Australia, you’ve got Kazakhstan, you’ve got Africa. They’re all slightly different deposits with their own attributes and their own negatives to in a sense some people are pro-mining and some aren’t. And some are not necessarily free trading, as it were. But what exactly do you think you got here in Niger? It’s one of the better regions for African uranium mining. But what do you think you’ve got if you got a numbers that you can share?

Stephen Roman: Just to give you a bit of a numbers on our project. So we have currently about 250Mlbs in the Dasa deposit. If you take it at the current metal price about $25 a pound. That’s about $6.5Bn metal value sitting there at the moment. So that’s a big number.

Matthew Gordon: There’s a big chunk $6Bn-ish number which is great. But 1, you need to be able to a mine economically.

Stephen Roman: That’s right.

Matthew Gordon: And 2, I think the obviously the whole market is hoping that the uranium price recovers. And then you’ve got to work out what you can get out of the ground for at the point you just want to go back into market. So all of the usual mining rules apply there. But that’s a big number is still a big number you’ve got pounds in the ground.

Stephen Roman: Yes, absolutely. And, it all boils down to economics. So I think the Dasa stands out in that regard, because the mineralized material comes right to the surface. We can start mining right from the surface open pit.

Matthew Gordon: Keeps the costs down.

Stephen Roman: Keeps their costs down.

Matthew Gordon: But at some point you can opt to go underground aren’t you.

Stephen Roman: Well, I would say eventually as the deposit goes deeper, you have to make that decision from an economic point of view. Many cases you’ve mine an open pit down to 300m and then you go in with a ramp from the pit and you continue mining down to 600m-800m. Chuquicamata the big copper project in Chile, they’ve mined that thing down to 800m to 900m. It’s a massive pit. So these things are capable but that’s something that will happen 30yrs or 40yrs from now. So for the next 10 years, it’s going to be a very easily mined open pit, right from surface, low strip ratio. We’ve done all the metallurgical test work on the material, the uranium leaches with typical sulfuric acid leaching. There’s no nasties in the ore. So it should be a very low-cost producer. Kazakhstan currently has the lowest production costs with in-situ leaching. I would say that our costs typically we would be able to mine a pound a process and put it in a drum for under $20 a pound. That would be a typical open pit with a stand alone plant. A plant would be in the $300M range. So we’ve been looking obviously at that option as a base case, but we were looking at other options of actually starting with a heap leach operation, which could significantly lower your costs because your CapEx would be much lower, your production costs would be lower processing. So we’ve estimated for an initial heap leach operation, very low strip ratio, we’d be in the $10 to $15 a pound range. I think even at $25, we can show a very healthy profit from initial operations. The mine wouldn’t actually get into production. We’re doing the feasibility over the next 12 months and then applying for our mining permit. We should have that by the end of next year, early 2021. So this could be a very profitable initial start up operation with a low CapEx number.

Matthew Gordon: And a contribution coming from Turkey.

Stephen Roman: That’s correct. The turkey aspect. And people ask like, why did we do that? With that very solid cash flow coming out of Turkey, it gives you many financing options. We don’t have to dilute the shareholders. We can we can do some sort of a note that’s backed by that cash flow from Turkey to actually build a mine.

Matthew Gordon: You can leave leverage? That becomes very interesting. Well, in a non-diluteory sense. So let’s come back to Niger. There’s a study going on?

Stephen Roman: Yes.

Matthew Gordon: So what type of study is this?

Stephen Roman: It’s a feasibility study. That will be the one that we would present to the government in order to get our mining licence.

Matthew Gordon: There are a few of the players in and around you. I note you have had conversations with them.

Stephen Roman: Well actually we’ve signed an MOU, a memorandum of understanding. with Orano mining. So we did that in July 2017.

Matthew Gordon: For what?

Stephen Roman: So the idea there was that we would be jointly studying the ideas of potentially shipping ore to their plants in Arlit. So they have the Colinak mine, the Somair mine both up there. The idea was that by us shipping ore it could of course get us started very quickly without a plant. And it would augment the supply of ore that they have at their operations so they could extend the life of those operations.

Matthew Gordon: So that you signed an MOU to be able to access and share information which allows you to make an assessment as to whether you want to do that or not at all. All the economics need to be decided as part of a feasibility study. That’s interesting. So that whole tolling relationship, given the amount of pounds you’ve got on the ground. Getting into early cash flow, I guess is the bit that interests you. You just got to work out and see if that makes sense for you.

Stephen Roman: Exactly.

Matthew Gordon: Because the CapEx for building plant…your own plant would be quite large plant.

Stephen Roman: A heap leach wouldn’t be as much as a conventional uranium plant, but it’s still a fairly significant Capex. I would say in the $100M. A conventional plant, you’d be in $300M. So all these are things that we have to take into consideration. We thought as a value opportunity. Doing something with Orano at early stages, could start generating cash flow. So we’re in discussions with them about doing something like that.

Matthew Gordon: So when’s the study actually due?

Stephen Roman: We won’t be finished until June of next year.

Matthew Gordon: So at some point you’re going to make some commercial decisions based on ‘how much money you need going in the ground’. And ‘what relationships you want to form’ and ‘what you’re going say to the marketplace’. So June next year?

Stephen Roman: I would say that we would have all the decisions by then. Of course, we’re going be putting up updates throughout the next 6 to 12 months. The other component is the government. The government wants to see us in production tomorrow.

Matthew Gordon: But their considerations are on employment, taxation, royalties.

Stephen Roman: Absolutely. This is their number one revenue generator in the country. Uranium mining. So that’s one of the reasons we’re there. I mean, in Canada, these are fantastic deposits in the Athabasca Basin, but it takes minimum 10 years, maybe up to 20 or 30 years to permit those mines. In Niger 4-6 months. It’s a whole different thing.

Matthew Gordon: They have some different drivers, haven’t they?

Stephen Roman: They have different drivers. But it’s it’s the only game in town, really. And now they have some oil there that the Chinese are developing. But really, uranium is the mainstay of that country.

Matthew Gordon: This comes down to the question we touched upon earlier with regards to buying cycles. Let’s not get into the macro story. But what it means for you and your shareholders and new shareholders coming in, is understanding how quickly can you get into production? And that’s there’s a bunch of factors… your at feasibility study. You can make an economic decision at that point. You’ve then got apply from mining license. You’re saying that’s a relatively quick process because there’s a lot of uranium mines already operating.

Stephen Roman: Well, there are in Niger. But on top of that, it’s a quick process, a very well-defined process in Niger.

Matthew Gordon: So that happens. And then is a question of which option you choose to go with in terms of how you start producing or processing your ore. What’s that timeline look like, you’re getting into production by when?

Stephen Roman: I would say get into production by, if Orano would like some feed by 2021, we could start then. If we have to build a plant, it would be probably 18 to 24 months later. Depends what scenario you go with.

Matthew Gordon: That’s your decision.

Stephen Roman: Well, we have to look at the economics at the end of the day. What can you do to move it ahead quickly and make money for shareholders.

Matthew Gordon: But that’s what this interview is about. It’s about making money for shareholders, which is where I’m coming at it from anyway. Let’s understand what happens next. What are the options? I want us on what’s happening in your head. What are you thinking about? You’re building something great here in Niger by the sounds of it? You believe you are. You’ve also got some optionality at what point you check out, right? You could get a strategic partner. You could hand the keys over, say, ‘there you go’. And say we’ve created value. Or you can build this thing out. What are you thinking?

Stephen Roman: Well, we’re mind builders. I just finished building a mine in Ontario in Canada, a gold mine. the company is called Harte Gold. And it’s it’s Ontario’s and Canada’s newest gold mine, probably in the last 10 or 20 years. we can take projects. From exploration to production. I had a project in Northern Ontario, a company called Gold Eagle Mines. So we made a big discovery in Red Lake, Ontario, and we were already working on sinking an exploration shaft, buying equipment for that. And we were approached by Goldcorp. So they were interested in buying our project. And we assessed the situation. And I made a deal with the Gold Corp for $1.5Bn for that gold deposit.

Matthew Gordon: It’s a great day at the office.

Stephen Roman: It was a good day at the office. All of our shareholders were very happy. Many of them made tens of millions of dollars on that transaction. There are a lot of those shareholders are now in a Global Atomic. They backed me on the next deal. So I have a track record of making money for shareholders. You have to assess things as they come along. We would like to develop this project because they’re really, frankly, is none other like it in Africa. There are very good projects in Canada, but the time-line to develop those is very long. So I think ours is exceptional from that point of view, both in the size, grade, value and time that you can actually start making money. To answer your question, we have the French in Niger, we have the Chinese in Niger, we have the Russians in Niger, we have the Indians in Niger. Everybody’s looking for something like this. So you know what? If a deal comes in the door, you have to assess it. You have to talk to the shareholders, ‘Would you like to have a buyout at some premium? And everybody get a big dividend, big payout’. You have to assess these things as they come along. In the meantime, we continue to create value by moving this ahead. We  derisk this project.

Matthew Gordon: That’s the answer every CEO has got to give me. They have to say we’re gonna build this thing, because you get that discount when you say, ‘we’re just developers’. We’re going take it to a point. You’ve got to be able to show that you can deliver those, don’t you?

Stephen Roman: Absolutely.

Matthew Gordon: And you would argue with the team that you’ve got, it not only is it about finding it but building mines is something that you’re very comfortable with.

Stephen Roman: Absolutely. Done it before many times.

Matthew Gordon: So I got to ask you’ve got the right team for exploration, development and production. You’re telling me you’ve got a great asset I’m hearing. Finance. Are you going to need to raise any capital or are we going to use all the money from Turkey to develop this thing?

Stephen Roman: Well, I think at this point in time, we’ve raised a little bit of money because there’s been a lot of institutional interest in this project. We have about $5M cash on board now, and Turkey is starting to kick out cash as we speak. So our new plant is just being turned on now. So we get management fees and sales commissions every month and then annually we get a big dividend payout.

Matthew Gordon: Is it enough?

Stephen Roman: Oh, yeah. That would be enough to move this project ahead.

Matthew Gordon: Depending on route you go with. I presume there’s a caveat there.

Stephen Roman: Yeah.

Matthew Gordon: But that decision is not made until June year.

Stephen Roman: That’s right.

Matthew Gordon: What are the other barriers? What are the other obstacles that you need to. You can see coming which you’re going to have to deal with or manage because it’s all about risk mitigation. Every day little fires to put out. What are you seeing as some of the things that you need to be dealing with between now and the point at which we get into production in Niger?

Stephen Roman: Well, I think in Niger one of the big issues that comes up is security in the country. So we’ve been there operating and running projects for many years now. We have a good security system in place. The Niger government wants to attract foreign investment. So they’re really clued in on the security situation. The Tim Mersoi basin and is seen as a strategic area. So they have a lot of military there. The Americans have built a new military base just 100km South of us. The French have one 100km North of us. So the area is very well patrolled. Niger is totally aligned with the West as far as being the hub of security for West Africa. So there are sporadic attacks from from various al-Qaida factions in West Africa. But Niger is managed to keep things fairly under control for some time now. AnWe expect them to continue that. And particularly with the American presence there and uranium being the material that they don’t want that being jeopardised.

Matthew Gordon: So thus it has always been with the Americans. That’s it for sure. But what else?

Stephen Roman: There’s there’s good trained labor force there because there’s been uranium mining going on there for 50 years. So I think we have a lot of people interested in coming to work for Global Atomic. It’s really getting the feasibility done and getting the capital organized, whether it’s through some sort of a leverage facility. Using our cash flow from from Turkey or coming up with potentially a JV partner. Maybe the French or the Chinese or the Russians are interested in farming into the project. These are all things we have to look at over the next year or two.

Matthew Gordon: Now talk about the markets, Your shareholder will want you to be talking, giving guidance, directing them as to what you’re up to. But you’ve got new investors looking to come in, pick a uranium team to go after. What are you telling them? Why is it Global Atomic versus the other companies?

Stephen Roman: Well, I think it’s a Global Atomic. Number one, we’re a profitable company. We’re not coming to the market every few months. That’s very unusual. Number two is the size and quality of the asset. There’s just nothing like it out there with a short timeline to production. So that would be that it would be the top qualifiers. I would say is excellent projects, good jurisdiction. Very quick permitting timelines. Definitely growth potential there. This thing could get even bigger than it is. And the profitability of the company as we currently sit.

Matthew Gordon: Plus the team has done it before.

Stephen Roman: We’ve done it a few times.

Matthew Gordon: Not many people can say that. I buy all that.  You do have your points of differentiation and what is it has been a difficult market for the last year for uranium players. What are you seeing happening in the next 12 months in the uranium space? I know we said we wouldn’t talk about macro, but just with regards to some of the companies and players in this space, what’s your sense of how they’re going to fare?

Stephen Roman: Well, the companies that have really outstanding assets. They may not be able to move them along very quickly, but they’ll always have value there. They’re the lower grade projects, I think are going to slowly fall away. Uranium is going to stay reasonably flat for the next couple of years. It’ll move a little bit. In the last three years, four years, there’s been and including this year, about 45 new reactors built in the world. Now there is another 150 scheduled to be built in the world. Uranium is going to be in big demand.

Matthew Gordon: There is a need. I mentioned specifically about the type of companies you think or what companies need to be able to survive. Because you’ve given a timeline which is quite interesting. I’ve heard all the last three days, last few months, since 232 about the timing of that, right? There’s lots people that needed to be before Christmas, right? Price discovery. And real quick, because they have cash flow issues. And that comes onto one of the points you’ve made. If you don’t have cash, you got to work out what business model you employ to survive. If it’s a two year timeline for this slow recovery, that’s going to put a lot of pressure on a lot of companies. And they can have to think about how they raise this capital, what they have to give away, what it’s going to cost them, the cost of that money. So that’s very important. So whether the asset is good or not. But the ones with lesser assets, they’re going to have a tough time, aren’t?

Stephen Roman: They will have a very tough time.

Matthew Gordon: That’s good for you. It’s good for people like you.

Stephen Roman: Well, the good thing about our company is we have very solid cash flow stream that is basically not reliant on a deposit.

Matthew Gordon: You’ve almost mitigated the risk there. It’s in a separate commodity, a separate country, separate company. So there’s no correlation anyway in terms of the risk.

Stephen Roman: That’s right. And even if things take a little bit longer on one side, you don’t have to come to the market to keep the lights on.

Matthew Gordon: You’ve got optionality.

Stephen Roman: You’ve got optionality. It’s very important. And I think people are starting to realise that now that sort of sets a Global Atomic apart from a lot of companies.

Matthew Gordon: But do you think that’s been priced into your market cap now or do you think there’s a ways to go?

Stephen Roman: I think our market cap right now is around CAD$70M.

Matthew Gordon: Where are people attributing the value? Is it the Turkish asset or is a what you’ve got on the ground in Niger?

Stephen Roman: Based on the way our partner Befesa trades at about 10 times EBITDA. Yeah. If we take the same for us, we should be trading at a $1.50.  And that’s without any value to the uranium asset at all. You get the uranium for free. As this new plant now cranks up and we start kicking out, you know, $20M- $30M EBITDA annually, our shares are going to move up just on the zinc asset alone. The uranium is a huge bonus for our shareholders.

Matthew Gordon: Perhaps maybe getting a slight discount because there’s a liability there. There is a cost of getting that in to production. People are thinking, does that mean dilution or these guys going to come up with a way of getting that finance, which doesn’t dilute me. So until you can answer that question….

Stephen Roman: Well, I’m a big shareholder. I continue to buy shares and put money into the company and I sell, you know, what I think says a lot? We’ve kept the share capital and the dilution very low. So we expect to continue to have that strategy. Low dilution and leverage what we have in order to develop something that’s that’s worth billions of dollars.

Matthew Gordon: So you don’t think it’s worth like getting a just a little bit in and give you a little bit of headroom for the unexpected?

Stephen Roman: Well, there might be…

Matthew Gordon: But there won’t be a lot.

Stephen Roman: No. There’s a couple of institutions that have approached us that have expressed an interest to have a position. We’ve said, well, that’s something we’ll consider at the right price.

Matthew Gordon: So you might facilitate that to get the right people on board. Again, to give you optionality going forward. But it’s not we’re not talking a huge amount of money.

Stephen Roman: No.

Matthew Gordon: Interesting approach. Well, I really appreciate the story. First time our viewers have heard this story. We know a lot about it because people talk about it. It’s an unusual position you’re in. And I think investors considering uranium as part of the portfolio should look at Global Atomic seriously, because the reasons we stated. The management teams experience, the cash flowing, very unusual, the scale of the assets in Africa. And all of those mitigating risks that we’ve just gone through in terms of how you going to manage this thing going forward. Impressive. Thanks very much for your time, sir.

Stephen Roman: Thank you.

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