Small Uranium Companies May Need to Change Strategies to Survive – Dustin Garrow (Transcript)

Dustin Garrow, former Paladin Director, and industry advisor to Uranium companies, Uranium ETFs and Uranium Funds, was involved in writing the WNA Nuclear Fuel report, especially the uranium chapter. A lot of investors on social media are seeing the findings of the report as a signal for a recovery in the uranium price. We ask Dustin Garrow if this a realistic assumption.

Analysts say there needs to be production at higher price. This report says ‘yes there needs to be more investment in the fuel cycle and particularly uranium. So everyone is saying the same thing. The Demand forecast marginally positive. Dustin tell some of the factors for altering the data from companies to show a more realistic outlook.

Will some of the junior uranium companies fall off the cliff if the price discovery takes longer than hoped. How will their strategies need to change?

Certainty is still not here, but the mood is more positive. Dustin Garrow saw 10-12 investment groups which is more than have attended more many years. Not a lot of the US utilities. He talks about conversations with generalist investors. And also an update about the 90 Day Working Group.

The report has previously had a reputation of being vague. But a lot of hard work has gone in to making it a little bit more commercial. But still avoids talking about the economics! It doesn’t talk price. Surprised, we were. But it does now discuss long-term contracts and term market.

Did you know that the EU and US represents over 50% of the uranium requirements. 1.9 billion pounds of uranium, and 90% was on long-term contracts.

Interview Highlights:

  • WNA Expectations
  • WNA Fuel Report: What Will it Do For The Market?
  • Current Mood in The Market: When Will Price Discovery Happen?
  • Struggles of Raising Funds in The Junior Space
  • Investment Hacks: What Should You Look Out For Before Investing?
  • Buying Physical Uranium: What Should You Know?

Click here to watch the interview.

Matthew Gordon: It has. We, like you, have been trotting around, meeting people, interviewing people at the WNA Symposium London, getting a sense of what the mood is. What do you want to get out of it?

Dustin Garrow: I think an important part is the biannual market Fuel Report from the WNA. I happen to have been involved in the uranium chapter. And the initial reactions have been very positive from outside organizations and people. I think the report reflects more of the concern of some of the fuel cycle participants. And it goes not just to uranium, but also the conversion side. I think the industry perspective now is more in line with what I’ve been seeing, particularly in the uranium side, on the supply issues that are looming.

Matthew Gordon: The WNA Fuel Report comes out every two years. It has had a reputation of being just a little bit vague. It paints a broad picture. But this year, a lot of hard work has gone into it. And we’ve met some of the authors of that. You were involved as well. It’s just that little bit more commercial. It’s getting to where it needs to be. You were involved with the uranium component. What was the brief?

Dustin Garrow: I’ve been involved in the report for many series of it. It was originally designed as an internal communication document. It wasn’t nearly as critical as to how it was put together. And the other thing is you can’t talk economics, can’t talk prices for anti-competitive reasons. But then it became the industry position, as particularly more investor groups, began to look in the uranium side. So, there’s been that lengthy transition. Still can’t talk economics. But it now it addresses things like the need for long-term contracts. There is still a big hurdle at this point. A lot of companies are at the starting gate in various forms, but without the utilities committing to more than a 2-3 forward year agreement, they can’t raise financing. It’s now being recognized, the term-market, it’s role in this industry. I looked at the US and the EU deliveries since 2000. There’s really good data on both the regions, which represents more than 50% of uranium requirements. Over that period, they’ve taken delivery of 1.9Bn lbs of uranium and 91% was under long-term contracts. So, the idea that the utilities rely on the spot market just doesn’t reflect reality. They still buy about 20Mlbs a year in the spot.

Matthew Gordon: It talks about long-term contracts which is a really important part of the industry for sure, but it’s not giving any indication around price because it can’t be anti-competitive.

Dustin Garrow: So you say things like ‘adequate’. And that depends on the specific company. What’s adequate for a Cameco is not adequate for a new build project somewhere else. But it’s a crucial element in the progression of the production facilities.

Matthew Gordon: If I look at people like TradeTech or UXC, they can get into this. And I think is important for commercial reasons that they can get into this. They sell those reports into utilities funds etc. But these interviews are for the ordinary guy like me and you, who want to buy shares in equities. What does this report do for them? Does it give certainty to the marketplace so therefore, people start behaving in a different way and therefore the equities react?

Dustin Garrow: What’s important is a lot of the investment analysts have concluded that there is a need for more production and it will be at a higher price. It has to be because of the economics of the new production facilities. The WNA, without talking the economic side, is saying, y’es, there is a need for more investments in the fuel cycle and particularly uranium’. So now everyone is saying the same thing. Now the contrarian would say, ‘well, now it’s time to look over the other direction’. I think one thing that was brought out in the WNA Fuel Report is the demand forecast. Recently the WNA had a low-case which had demand eventually dropping off. Well, now even the low-case is a positive I think it’s 0.1% growth. But it’s not a drop off. So, across the three cases, the reference case is about 2% growth per year and the higher one is 3.5%

Matthew Gordon: How did that how did they marry this up with the supply case? Most companies will overstate, will be a little bit hopeful about what they’re going to be capable of doing, but they are restricted by a number of factors.

Dustin Garrow: I think what what’s another important thing is there’s more judgment being put into the WNA Fuel Report. In other words, you can take the public statements of all these companies and say, ‘well, his history suggests that it’s going to take longer, it’s going to be slower’, or whatever and more of that’s going in the report.

Matthew Gordon: That’s great news.

Dustin Garrow: So, it’s not like, ‘oh, no, you’ve got to say just public information’. So, there’s some judgment that goes into it from people…Frank Haney, who ran the working group. He’s retiring next year after 50 years in the industry. So, we have some long beards involved.

Matthew Gordon: So that’s the WNA Fuel Report. Generally, very positively received. It’s certainly an upgrade from where it’s been, a lot of hard work gone into it and a lot more realism. Let’s talk about mood. I’ve been speaking to people and I’d say the general mood is positive, without necessarily being certain. It’s better than it was 6 months ago when we first started discovering the world of uranium. I’ve had some fantastically wide-ranging views on when price discovery happens from 3 months through to 18 months. Now everyone’s got a different business model, and everyone has different needs. But the people sitting in the middle are thinking maybe it’s going to happen next year. What are you hearing?

Dustin Garrow: I thought it was interesting that at the WNA symposium I think there were ten or twelve investment groups represented. We’ve never had that before. We’ve had maybe 2 or 3.

Matthew Gordon: And these are generalists?

Dustin Garrow: These are these are the guys that are either going to buy physical or buy inequities. They’re the guys that are going to put the money up for the industry. And someone said last night at a dinner I attended… when you’ve been around in this business so long, you walk in a room and you sense the mood, and it is on that positive side by the producers, either real or those that plan to come into production. The meetings that I’ve had outside of this symposium had been very positive. It’s not, ‘oh, well, what about the Japanese? They’re never going to’…It’s more like, ‘I’m on board now. When is it going to happen?’. The Section 232 in the United States… we had the July 12th memorandum from the President, which some people interpreted as, he had no interest in helping the domestic industry. But if you read his statement, it was ‘at this time’. And now the 90 Day Working Group will come out with some kind of remedy. But it will be uranium conversion, enrichment and probably be pretty neutral regarding the utilities. What’s going to be their exposure? But the point being, it’s not going to affect the general market. It’ll be kind of played out in support of the US government. But I think some of the utilities, particularly in the US, have the big unfilled needs, are saying, ‘well, I still don’t know what’s going to come out’. We’ll have that answer by mid-October. And then I think that they’ll start making their procurement decisions.

Matthew Gordon: We’ve had similar conversations. I think quotas, tariffs, subsidies. No-one knows.

Dustin Garrow: I think that’s all off the table. There will be some form of government support just directly. It won’t limit imports of other origins or anything like that.

Matthew Gordon: Let’s step back and see what happens there. But I think that’s going to be very interesting, obviously, for the US uranium companies. One of yours, Energy Fuels, obviously waiting to see what’s happening there.

Dustin Garrow: I think that activity in the term-market is what’s going to help raise the spot price. So, it’s not going to be the spot price goes up and then there’s term activity. The utilities are already doing their due diligence. They’re contacting suppliers. How much have you got? What timeframe? What kind of pricing are you looking for? That’s a precursor for them coming out. And like one of the US utilities was just in the long-term market, 2021-2025… So, again, they’re starting the process that they’ve not been willing to do because of the price differentials for a number of years.

Matthew Gordon: So, you were at the Eight Capital dinner last night. What were you hearing? What were the questions that are being asked?

Dustin Garrow: Well, no one’s saying, ‘well, is the price going to drop?’. What are the factors that are going to move it up and when do we see those asserting themselves? Now, some of us, we are die hard optimists. We could start to see it before the end of the year. But I think by first quarter, keep in mind, there’s a big conference in Nashville at the end of October, where there’s only like 3 US utilities here. They’ll all be in Nashville; the producers will be there. I think there’ll be much more discussion because we’ll know what the working group recommendation is or outcome. So, we could see some of them will say, ‘well, I’m going to get out there now. I’m not going to wait’. And we could start to see an uptick in term-contracts.

Matthew Gordon: Based on your assertion that you think it’s pretty soon, a lot of companies are going to like that news. Not saying it’s going to happen, just that they’re going to like your view. If that doesn’t happen… we’ve been speaking to a few people and we’ve been interviewing a few people. So, we’ve got a broad sense of what’s happening with it with a junior uranium space. A lot of them are needing to raise capital to keep going. They may get to the end of the year, but that’s it. Do you feel that the funds or the institutions that you’re talking to are ready to have those conversations with these juniors or are they going to struggle?

Dustin Garrow: I think some, because they have a good business plan, good projects, they’ll be able to maybe live on the drip for a while. They’re not going to get that big multi $100M financing done without term-contracts. I think they may be optimistic on how long that takes. It’s not that the price goes up, the next day the phone rings and all the utilities sign big contracts and by the end of the week away you go. It can take months and months. And at some point, the Cameco’s enter the market. And at some point, you’re going to see a lot of activity once you get to a certain degree.

Matthew Gordon: That’s great saying that because I think if I look at the retail following that we’ve got within uranium. Very passionate, very optimistic and patient group of people, very knowledgeable too. But they shouldn’t expect an immediate pop in price. There’ll be a gradual escalation on price. Is that what you’re saying? That could be as well as long as 12 months before it gets to where it needs to be? When does it get to $50?

Dustin Garrow: Well the term-price at $30 we could see $40 very quickly, because I think that’s the next plateau. A bit of contracting by some, then another pop up to $50. Well, how long does that take? Are we dictated to by the utilities when they come on the market? So, yes, by some time. First half of next year should you see a lot of term-contracting activity. And it’ll affect the spot-price. I think we’re within a 6-month window.

Matthew Gordon: I’m going to go back to my institutional days. I’m looking at price, if it hits $40. Most of these companies are still under water at $50-$55. So, in a meaningful way, it doesn’t matter if it is $20 or $40, but for the funds, if they see contracts in place, they have security. They still have to take a guess on what the future holds. And that the company can get product to the utilities. They’re got to say this will get to $55. That’s only break even for some of these companies. Some these companies need to make more than that to be able to pay back anything they have borrowed. So, there’s still a lot of uncertainty in terms of ability to raise capital. Is there not, at this point?

Dustin Garrow: Yes. That’s why some of them are out meeting, a lot of meetings, a lot of discussions and preparation for them. Then you go out and you do your whatever amount of term-contracting. I think the financing is available, but with the right conditions.

Matthew Gordon. We’ve been meeting and talking to a lot of the funds and institutions, and they’re generalists who, as you say, are coming back in and having a look at what’s going on. They’re having to get back up to speed, to understand what’s happening in the market, and they’ve going to take a view on what the future looks like. But, yes, I think the money is there, under the right conditionas. But that is going to come down to 2 quite important things that I’ve discovered in the past 6 months, management teams who have produced uranium and got it into market. Not many of them, right? And then, of course, the basic fundamentals of mining, is this a good asset? Can you get it out of the ground, let alone get it into market?

Dustin Garrow: Well, as you know, we’re having more specific questions. In other words, will a rising tide lift all boats? I think some of the investors that have either been in the space or more sophisticated, whatever, are saying, well, now of this group of companies, where should I place my funds? I think probably the primary question that I’m getting back is, ‘I’m on board, I think it’s great, next year. But where do I place my funds?’ And part of it is, like you say, management teams, the experience. And that’s hard to come by these days. Very difficult. There’s just not many veterans left. And uranium is a unique commodity because of the political, social issues surrounding it.

Matthew Gordon: I’ve been calling it in the past few days ‘Mining +’. Mining’s hard enough. Then you have the uranium component, which is a political hot bed. And some of those geopolitical concerns. But without getting at the macro, we all agree that the general consensus is it’s positive, a huge infrastructure needs filling. But if we come back to the management team. There’s about 50-55 companies in the uranium space at the moment. As the market recovers, you’re going to have new entrants coming in. It’s hard to imagine that any of them are going to have relevant uranium experience.

Dustin Garrow: It will be difficult.

Matthew Gordon: So, again, for our Subscribers, that’s something that they need to consider when making an investment decision. A new story doesn’t necessarily equate to capital appreciation, because these new entrants are unlikely to get into production with new management teams with no experience. Not impossible, just unlikely.

Dustin Garrow: During the last uplift, there were like 400 / 500 companies. I was at PDAC and everybody was tacking up a sign. ‘We also do uranium’, on top of everything else. And geologists with some drill logs they were they were getting funded. I think this time around it will be more difficult, because the questions will be asked, ‘who is behind it?’, peal it to the next layer and. And who’s going to do this? I want names. And that’s going to be a difficult part of the equation for some of the companies to convince funds. And it goes into the term-contracting. The utilities will say, ‘I’ll do a 200,000lbs /300,000lbs contract. I’m not going to do 500,000lbs. I don’t know you guys. I don’t know your project. It’s not built. So, I’m going to be cautious’. So, that means junior companies have to even do more contracts than maybe an established producer, of which there aren’t many left.

Matthew Gordon: Yes. A few things going on there. If you don’t have anyone who’s produced or been involved with producing uranium before, as an investor, you’ve got to think twice because it’s complex. It is not just drilling holes in the ground, finding it, digging it. It’s not that simple. There’s what happens afterwards. The bit that you’ve got a huge track record on was, I’m not selling you by the way… I’m just referencing that you have huge experience in this, the contract side of things. That’s not easy because, time comes into this. There are buying cycles. Term-contracts are 5, 7 years, aren’t they?

Dustin Garrow: They come in cycles. And just as a quick side note, when we did the bankable contracts for Langer Heinrich, the banks laid out very specific requirements. How much volume? At what price? Over so many years. So, we had to then construct a contracting plan that met all those needs. And sometimes you have holes and the banks go ‘fill the hole before I’m going to press that release of funds’. So, there’s more to it than like I said, the phone rings and you pass around contracts and you’re done. Won’t happen that way. It’s not to say these other companies can’t be successful. It just may take a bit more time. They may have to be more flexible in contracting.

Matthew Gordon: I think the phrase I heard yesterday was that ‘they don’t know what they don’t know’.

Dustin Garrow: And it’ll come to their front door.

Matthew Gordon: And that takes time. And that takes money. And sometimes they can’t fix it. So, a lot of things to be cautious of as an investor in the uranium space, unless you get a team that’s been there, done it before. I think that’s important because a lot of people, generalists, I’m not talking about the wonderful uranium crowd that have been in there through thick and thin over the last two years. I’m talking about generalists coming back home when uranium does kickback, will need to understand that. It’s not a case of all boats float on a high tide. I fundamentally disagree with that statement. I think all boats float for a while. And then the inevitable happens, they sink. So that’s great if you get it on the way up. But if you’re if you’re left on the boat, you’re in trouble.

Dustin Garrow: TradeTech, one of the two long time industry consulting firms has just put out a study on production. And it goes beyond, ‘well, here are the costs’. They look at full cost because a new project’s not going to be built on cash costs only, but then they try to look at what are the impediments? What about the secondary licensing? What about the mine plans? What about contract? Have they gone out and approached the market? Are they ready to do that? So, it’s kind of a guideline, a cookbook, to look at and go, ‘well, you know, just because you’ve got the best technical project, you may not be in the first mover group. You may not veto the third’, because of where the projects located for a number of reasons. So, the industry is trying to help some of the consulting firms in that regard.

Matthew Gordon: But that’s fine for people like you and me. We can afford that report. I saw it yesterday. Great report. And we can interpret that and extrapolate what we want from that for retail, family office, high net worth. They’re not going pay for that report. They don’t have access to that. They’re going to have to trust the information that they’ve got access to. And that’s why I’m interested in talking to people like you, you’ve been around the block a few times. You’ve seen a few cycles, influencers who understand what’s going on in the uranium space. But it can also help bring to light some of these issues. What the company says and what the company is capable doing are sometimes polar opposites. They’re very far apart and that’s the difference between making money and losing money. And that’s important. This is investor’s money. That’s what I care about.

Dustin Garrow: I think money will be made in this space again. I think it will probably be on a more selective basis.

Matthew Gordon: Pick the right team. The right boat.

Dustin Garrow: Yes. And a lot of it’s the right team that can get things done.

Matthew Gordon: Are you seeing any good stories out there? Over the past 2-3 days and over the past six month I’ve heard different business models and I don’t mean physical or ETFs or equities. I just mean companies which are up or coming at it in a different way, which makes sense, or companies which have got all the fundamentals in place. What type of company would you invest in? Or advocate in investing in?

Dustin Garrow: I think you’ve hit the high points, those that can demonstrate some experience in the commodity and mining in general. That always helps. If they’re not totally cash starved at the moment, that’s a plus. It gives them a little more breathing room so they can go out and meet with utilities and lay the groundwork. And if it’s like, ‘well we can’t go out, we can’t talk to anybody, we don’t have any money’, then it’ll be tough for the utilities to put you on their supplier list. When they don’t see you and you may have the best widget, but they can’t see it. The utilities need yellow cake in the can. They aren’t that interested in your share price. They can’t stuff shares or certificates in their reactor. They want to make sure in 2023 on June 1st you’re going to deliver that 100,000lbs, because they work it into their fuel plan. So that’s what they’re after. And so it goes beyond just the investor side. You’ve got to convince the customers that you’ve got credibility, particularly with new projects. If you’re a new person on the block it’s it can be a challenge.

Matthew Gordon: I just talked about something which was buying physical uranium. There’s a company in the UK called Yellow Cake. You’ve got one in North America which is called Uranium Participation Corporation (UPC). How does that work? What is buying physical uranium?

Dustin Garrow: There’s really more than one model and I’ll talk UPC, Yellow Cake. They’re being characterized as sequesters of the uranium. UPC has held their inventory for 15 years. And Yellow Cake, the business model, as you know, I’m chief commercial officer for Yellow Cake. Is to accumulate that inventory at good acquisition cost. The current 9.4Mlbs we acquired at under $22. Buy it and hold it for an extended period, add to it when the stars are aligned correctly to where we go out and raise money, buy more. We’ve got the option with the Kazakhs. And it’s an investment that the investor can make up a bet on the market. In other words, ‘I think it’s going to keep going up. I will accumulate shares’. At some point they may say it’s $45-50, could come off. Then they’ll take a different decision. But it’s basically that store of value that they can make decisions on.

Matthew Gordon: And it’s based purely on the price of uranium spot that that day. ‘I bought it $25, it’s now at $40, I’m checking out’, because it just happens to be in the form of shares. You’re buying and selling physical product.

Dustin Garrow: But the material doesn’t like come in the market. Now there’s a different group, which there’s 6, 8, 10 investors that have bought physical. Now that means they hold the U308 at a conversion facility. They come in, they add to that when they think the price is going up. And at some point, I think when they say, ‘well, OK, I’ve doubled my money in six months and I’ll sell some of it off’. I think that happened earlier this year. So, that’s a different model.

Matthew Gordon: One is physically selling off, but that’s a group of institutional guys, presumably. The first one you described was there’s an inventory sitting there. So, you can you can buy shares in that. It will continue to sit there. And once you want to sell your share, you can sell it someone else. But the uranium still remains there. It’s not going into the market per se. It’s a security.

Dustin Garrow: Yes, it’s a lot easier than if you buy physical because then you get into the storage accounts. There’s fees, there’s all kinds of things. Not to say that’s a bad part of a three-legged stool, but it’s different. And I know the analysts are really struggling with ‘how do you model that?’. Cameco has mentioned it on their calls. But apparently late last year, that group bought 8-10Mlbs. Could have been more, could have been less. And I’m asked how and when will they sell? At what price? Some might sell at $35. They go, ‘hey, I bought it at $25 I’ll sell it’. That’s a great deal, I’ll go do something else. Others may say this thing’s rate going up quickly. I’ll hold to $50. They may sell at $35 and come back at $40. So, it’s a growing part of the spot market that to some degree you can’t model. It’s like, ‘well, how do we model this? We know what the utilities are going to do. We know the producer buying’. I contend you can’t model it. If it was one person you go, well, I can kind of figure out what they’re doing, but it’s now a diverse group all over the world. South America. Australia. North America.

Matthew Gordon: Right, so if I’m looking at something like Yellow Cake. You buy at $22. If the price goes down. There’s nothing you can do about that. So, the value of what you bought is less than what you paid for it. But your expectation by investors buying shares is that it’s going to go up. So, there’s no equity risk per se, it’s just purely on the products above the ground sitting in containers, Cameco’s facility or wherever it’s held. Whereas equities, a bit more exposure to all the risks below the ground and management decision making and availability of cash. So, it’s just a different risk profile.

Dustin Garrow: So, it allows you to participate in the uranium space by either Yellow Cake, UPC or physical. I understand one of the large banks that’s been involved in buying physical has been providing that service. You don’t have to get a supplier or storage agreement. We’ll do it under ours. So, there’s the entrepreneurial side of that, for a fee. So, then that takes some of the goodness out of it. And then it’s the equities. Everybody says, well I’m going to buy Cameco. Well yes. They’re a fundamental part of the business. But actually their upsides are limited by ceiling prices and defined price contracts. So, if the price goes to above $100, if you look at their sensitivity table, they start to hit a ceiling. Now, on the downside, they don’t go down below about $30. So, they’ve got a collar. And that’s part of their business model. I’m not sure everybody looks at that. They think, well, if the price goes to $200 it great but  in reality Cameco will hit their ceiling.

Matthew Gordon: It’s also not good because there will be a lot of entrants, new entrants in at that point.

Dustin Garrow: I mean but then the different strategy, different risk.

Matthew Gordon: So, to finish off because I know you’ve got places to be, you’re meeting lots of people today. You think uranium people should be looking at it, should be considering as part of their investment portfolio. General consensus is quite positive.

Dustin Garrow: Yes. More and more people are looking. I did a roadshow in April with yellowcake and it was mostly North America. And certainly, we did Boston, New York, but out on the West Coast. Los Angeles. San Diego. So, we see a broader spectrum of interest. And I think it’s waiting on the Section 232 though, we don’t know what that kind of means. But once the green light goes, even if it’s a pale green. I think there’s going to be a lot of investment.

Matthew Gordon: People will be waiting until then, I think generalists are waiting till then, see what that outcome is, whatever it is, some degree of certainty about how to move forward.

Dustin Garrow: Figure out what does it mean and then the utilities will react so you’ll see that term market start to pick up.

Matthew Gordon: Dustin. Good to see you face to face here in London. Enjoy the rest of your time here. I think you’re diving on aeroplane tomorrow. We’ll catch up hopefully in October.

Vimy Resources (ASX: VMY) – WNA Nuclear Fuel Report Contributor, Julian Tapp, Talks Price Manipulation (Transcript)

Chief Nuclear Officer and economist Julian Tapp of Uranium company Vimy Resources (ASX: VMY) did his own research in to the nuclear market and his findings told him that the WNA Report was inaccurate. So he got involved in putting this new and improved version out.

As an economist Julian loves getting in to the detail. He helps us understand what investors should be focused on. And who the winners and potential losers are. Can the 3 biggest players control pricing and effect the chances of juniors getting into production? Julian gives us his opinion. The pricing matrix is very delegate. Manipulation or markets?

If you believe the WNA Nuclear Fuel Report is an important catalyst you need to understand what is in this report. Julian tells us why the report is more commercial and has more rigour in the process of putting the information together.

Interview Highlights:

  • WNA Expectations and The WNA Nuclear Report Overview
  • What is The Importance of The WNA Nuclear Report? What Needs To Be Improved?
  • Big Nuclear Players Could Affect Prices, So Why Don’t They? What Does That Mean For Junior Players?
  • Winners vs Losers & How To Tell The Difference
  • Vimy Resources: Can They Affect The Share Price Before Prices Change?

Click here to watch the interview.

Matthew Gordon: You’ve been meeting and greeting lots of people, sort of finding out what’s the mood is.

Julian Tapp: Everybody turns up for the WNA Symposium. So, you just hang around, talk to people, find out what the views are.

Matthew Gordon: What do you think the general mood is, positive or negative?

Julian Tapp: I think there’s a certain amount of optimism. I know it might sound odd but the past the past few reports, every time the WNA Report has come out, the forecast has got worse.

Matthew Gordon: You’re talking about the WNA Fuel Report. You’ve been involved in it. What was your role in that?

Julian Tapp: Yes, I have. Well, it is quite interesting. Going back a couple of years, when we did the (Vimy) DFS, I actually built a model to forecast world demand for uranium on a reactor basis. When I finished I wondered how it compared to what the WNA had done. I looked at their model and we got similar answers in aggregate. But regionally, there were big differences and wondered how they got those numbers?

Matthew Gordon: Why is that important?

Julian Tapp: I think actually their assumptions were wrong.

Matthew Gordon: That was a couple of years ago.

Julian Tapp: If you look at the current one, you’ll see that the projections are more optimistic. They’ve been raised, particularly the lowest scenario.

Matthew Gordon: What has been raised?

Julian Tapp: The forecast capacity of nuclear reactors operating and getting uranium over the next 20 years.

Matthew Gordon: Got it. And why is it better?

Julian Tapp: A couple of prominent reasons. Firstly, the assumption used to be that the French were going to reduce their nuclear capacity to meet 50% of electricity target by 2025. So, although the previous Fuel Report didn’t have them getting there by 2025, they were trying. Everybody now recognized Emmanuel Macron (French President) had kicked the can down the road. It’s 2035, if you actually listen to what he says. It’s isn’t ever going to happen. So for the pessimistic forecasts they put out, that lower case scenario used to have them losing 20Gw capacity. And that’s now not forecast to happen. In America there was an expectation that nuclear reactors, when they reach the end of their license life or when they just won’t get extended. And again, we had a lot of discussion about this. I kept saying when it gets the end of its life, it doesn’t get an extension if it’s not safe. But please tell me who thinks these reactors aren’t going to be safe after 40 years? They’ll be perfectly safe. Well, same argument where they get 60 years. Will they be safe? Now, sometimes you have to spend money to upgrade them, to keep them going. And if the economics are not good, maybe you wouldn’t pay for that upgrading.

Matthew Gordon: Are they safe? Have there been any incidents?

Julian Tapp: None. There’s never been a nuclear accident that was related to the age of the plant.

Matthew Gordon: That’s semantics. So, have there been incidents? Deaths?

Julian Tapp: Not in recent times. It’s interesting you should also ask that question. Even Fukushima. A vast majority of deaths were nothing to do with it, it was all to do with the tsunami. Now you will see people walking around saying “oh, there’s been one reported death.” Not true. There was a guy who worked at TEPCO who went to the site. He was like a radiation inspector and he got lung cancer.

Matthew Gordon: Unconnected?

Julian Tapp: Well, when you look at the time between when he was exposed and when he got the lung cancer, it was like two years. Usually it’s ten years between being exposed to radiation and radiation he was exposed to wasn’t high enough to trigger that sort of reaction. A different subject to be talked about but nuclear reactors are incredibly safe. A horrible way to talk about it, but if you look at the fatalities or deaths per thousand terawatt hours produced. There was a comment about it in the WNA Nuclear Fuel Report that comes from Lancet in 2007. They said that nuclear is safer than any other form of power. 90 deaths per thousand terawatt hours. I looked to that number and asked where did they get a number that high from. Do you know how much electricity is produced a year by nuclear reactors?

Matthew Gordon: Tell me.

Julian Tapp: About 2,500 terawatt hours. If you’re getting 90 deaths per thousand. Where all these deaths are coming from? Sometimes it’s because they included Chernobyl in the numbers. But I went and found that Lancet article, found out where they got their data from. Traced it all back to a French report in 1991 that assumed that very low levels of radiation spread over a large population would kill a small percentage of those people. The science has moved on from there. That’s simply not true.

Matthew Gordon: Let’s not focus on that, because I think that there’s too many reference points required to have a in-depth conversation. So, let’s come back to why is the WNA Fuel Report important for the industry?

Julian Tapp: I think it’s important for the industry, because love it or loathe it, it’s a reference document that everybody has a copy of it. Financial community, utilities, everybody gets it.

Matthew Gordon: But why this year is it more important? Obviously there have been some changes. It’s a little bit more commercial. Is that fair to say? I don’t mean in the sense that it’s commercial telling you what that nuclear industry is going to do but it’s a little bit more commercial in the sense that it’s giving people in the industry more information about what’s going on.

Julian Tapp: And I would say more rigor in the analysis. Don’t get me wrong, when I say it’s a little bit more positive. Nobody sat down and said it needs to be a little bit more positive. The way the forecasts are done are, literally country by country, reactor by reactor. Which ones are going to be built, which ones you don’t think are going to be built. They just all added up. And that’s was the answer.

Matthew Gordon: It’s on everyone’s desk, on fund managers desks, institutional investors desks, all the utilities, everyone who sits on this thing. What’s it going to do for them? Is it going to change behaviour or is it just a kind of the broad sentiment and things are better? We know the macro story. It’s fine. We’ll just park that. I’ve got that. Read the summary and move on.

Julian Tapp: I think there are a number of things in it. The first thing is since the last fuel report, Cameco have closed McArthur River. They’ve also shut in Rabbit Lake. Langer Heinrich is closed so there’s a new category of what’s called’ ‘idle mines’. And you need to pull them out because traditionally when mines idled, they put them in a basket with reserve projects that might come back at some point in the future. You know, the dynamics are very different from an idle mind than they are for a reserve project. They might get to be developed some time in the future. And that the economics around them coming back are very different. Mostly idle mines are owned by producers, that have other producing assets. And roughly 80% of the market is controlled by three companies. And they’re the three companies that have shut production down because market prices are unsustainably low. People say “oh, well, they’ll turn on this mine when the price gets to a certain level” but when the price gets to that level they will have just seen the profit on their existing mine go up a lot and what they don’t want to do is turn back on supply and see the whole thing collapse again. So, they’ve got a completely different way of looking. And I’m not suggesting that they collude in any way, but it’s the nature of economics. You have an oligopoly and there would be a classic description oligopoly. They’re going to look at the other guy and see what he’s doing.

Matthew Gordon: We saw recently with KazAtomProm and Camecos’ announcements, the marketplace is a little bit of jousting and a little bit of kidology, etc. around what they were saying or what they weren’t saying. Early days when I was getting into the uranium space, trying to understand it, because it’s not like mining. It is mining, but it’s not mining. I was intrigued by this potential control of will it be duopolies or oligopolies. And how you use that to your advantage. New entrants can come in and ruin things for everyone. You’ve got a group of juniors who can’t get the money that they need right now. So maybe this is a chance to take out some of the competition and starve the market of the supply. You can start affecting pricing. Those three companies can affect pricing. I’m not saying it’s a good thing to do or that they’re doing it, but they could do that. Why wouldn’t you?

Julian Tapp: I would say to you what the dynamics will be. They will keep these mines shut, until the price gets to a level where they will make the decision as long as the others haven’t broken. Because being oligopolies, they’ll be watching each other.

Matthew Gordon: There are going to be smaller players who are significantly advanced. Vimy potentially is one, where you’re quick to production. It’s potentially two years from pressing go, assuming it’s fully funded, and getting into production. You could get back into the market before some these big boys could de-mothball some of these operations. Surely?

Julian Tapp: Their lead time would be not dissimilar to ours. They can get back into production two years. KazAtomProm much faster than that. They don’t want to because when the price starts to rise, they’d much rather price kept rising than they turned on production and killed the rally. What about the juniors? When they’re looking around, what they do not want to happen is a 10Mlbs or 15Mlbs a year mine to get started.

Matthew Gordon: Well, that’s my next point. We’ve been told by the past couple of days by some other juniors who are quite close production, that are three years to production. So, if you’re saying the big boys can get into production before them, they’ve got no chance. These juniors have got no chance of being funded, have they?

Julian Tapp: Well, I’m not going to throw stones. If you look at Vimy’s DFS, I haven’t changed my mind since I did the economics behind that. My conclusion was these guys will keep their production shuttered till about $60 a pound. And let’s not discuss whether that’s contract or spot price. Just roughly when they think that $60 is like the sustainable price, they’re going to say if it goes any higher, there’s going to be too many entrants into the market. And once they’ve started, they’ll keep going. So, my view was the price would get to $60, but not go any higher.

Matthew Gordon: That’s price manipulation isn’t it?

Julian Tapp: No, it’s not. It’s perfectly rational behaviour.

Matthew Gordon: Sure it is, someone’s controlling it.

Julian Tapp: One would say, I’m prepared to keep supply cut until it gets to a certain point. And it’s perfectly rational for me to say at, look, if it gets to $70, I don’t know. Some big project in Tanzania is go getting to launched. I don’t want that to happen. I’m going to make sure these guys don’t get the signal they want, when it gets to $60 I’m making a handsome margin now. I just don’t want anybody else coming in

Matthew Gordon: That’s my point. If I’m one of these junior companies and I’m trying to raise money. I’m talking to the institutions and they’re cognizance that this could happen. I’m not going to find institutional investors to give me the money I need, because it’s not in my control. The pricing is being controlled at $60 bucks, is what you’re saying.

Julian Tapp: Yes but bear in mind also that for somebody like Vimy, in order to get finance, we have to we have to be writing some contracts. We’re talking about long-term contracts. Once you’ve signed those long-term contracts.

Matthew Gordon: I want to be clear, I wasn’t talking about Vimy. I was talking about some companies that are in a similar position to you but have got a longer lead time, which I think potentially could cause problems. I want understand winners and losers and what the factors are around that.

Julian Tapp: Yes, the longer your lead time, the more problematic. It’s not just because idle production could get in. But when you have a very long lead time, it’s more problematic in being able to write contracts. So, we’re in a position where we want to write contracts with utilities and you’ve got to write the contract and then go into production. The longer that window into production is, the riskier you’re going to be perceived to be to them, and the less willing they’re going to be to write contracts with you.

Matthew Gordon: Vicious circle.

Julian Tapp: Being two years away from production, it’d be much better if we could be one year away. And two years is fine. Because most long-term contracts deliveries aren’t normally for a couple of years. So, we’re in that window now where we know utilities are looking for deliveries, 2021, 2022, sometimes even 2023 for the beginning date.

Matthew Gordon: Let’s come back to the report, because the question I asked was what is the commercial use of that when people buy that, read that. What are they thinking and doing? And what I’m hearing is the sentiment is positive, but it’s not going to give people necessarily the commercial data they need to make a decision and on its own. Do you think the WNA needs to rethink the way that the report is being constructed again? Are you happy with the structure of it?

Julian Tapp: No I am not. I don’t think it’s any surprise to anybody. Everybody would like to see some discussion around price. Price put into the dynamic. So anti-competitive guidelines, nobody wants to sit down and agree what the price is going to be, which is what the guidelines are designed to stop you doing. It doesn’t seem to me sensible that you can’t have a discussion with people about, let’s say, what happens if the price stays at today’s level for forever? It’s how people do it with things, economic forecasts they don’t know. Let’s just assume the exchange rate stays forever. What does it mean? You know what happens? What interest rate can I use? Well, let’s just leave it at that current level and see what the model says going forward. So, there’s no reason why they shouldn’t put a price in, say, today’s price, spot price $25, $30 a pound. Run that out for the next 20 years. What does that do? That shows a really interesting picture. Basically, supply goes over a cliff and never comes back. So I don’t know if there’s a higher price that would be sensible. Maybe $50, maybe $60, run assumption again but you’re still a bit short. And then that’s the message doesn’t really come across at the moment basically that there’s a problem coming.

Matthew Gordon: If I look at people like TradeTech and UXC, you see the data which they gather and they put together and reports that they put out compared to the WNA, it seems a bit more robust, a little bit more goes into it. And they do talk about price. They need to and they do it on a company, country, industry basis. WNA needs to up its game, it seems to me, if it’s it wants to be a kind of commercial venture? So, what I’m hearing and seeing, and it’s not just you, there’s other people I’ve spoken to about this one. This report needs to do more, doesn’t it?

Julian Tapp: I think there’s measures to try to see what extra can be injected into it for next time round. I mean, this was an improvement on last time. I think there are various people who would like to see some pricing brought into it some way. If you be smart, you don’t have to sit and agree what you think the price is going to be. I said to you, you could use different price decks to show the impact. And to get better understanding. So, what you got now in the forecast is this unspecified supply, and nobody makes a judgment on who’s going to come into it, because you can’t without some sort of price assumption. Some of those are sitting at $80 a pound.

Matthew Gordon: Well, let’s how it’s going to be received. We’ll know in the next couple of weeks what people what people are thinking and we can get that feedback. Just to finish off on Vimy, you’re working there with Mike. Things are going well?

Julian Tapp: Very well.

Matthew Gordon: Confident?

Julian Tapp: Well when the price gets up.

Matthew Gordon: Do you think there’s anything your company can affect to help with share price? Or do we just wait for the price?

Julian Tapp. Look, there’s not much more we can do with the Mulga Rock project that can affect the share price. So, we’re going through the final stages of getting all the secondary approvals ready. That’s not regarded as a job stopper so when we’ve got them I’m not expecting a big uplift. Oh, you’ve got secondary approvals. So, in Angelaly, Northern Territory stuff we found a big haystack. Bigger than we thought it was the haystack. We think there are some valuable needles in there, we’ll continue to look for them.

Matthew Gordon: Thank you for your time, sir. Really appreciate that insight into the WNA Fuel Report. Fascinating what’s happening in the industry at the moment. And I like speaking to an economist. You look at it differently from everyone else which really helps.

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UEX Corporation (TSX: UEX) – How Does a Junior Uranium Miner Monetise 21 Assets? (Transcript)

We spoke with Roger Lemaitre, President & CEO of Athabasca Basin located Uranium company UEX Corporation (TSX: UEX). Roger says the mood is starting feel like the Uranium space did back in 2004. UEX formed in 2001 and they have 21 projects, 18 in Uranium and 3 in Cobalt, all in the Athabasca Basin. Their strategy is to develop the resources for when the market moves. Focus is on two main projects.

Roger positions UEX as a Uranium company but they want to see if they can create value with their Cobalt project. They have talked about a spin out last year but got hit by the significant drop in the Cobalt price. So how does a CEO mitigate risk and create value in difficult markets? Why didn’t they get the spin out? How much money have they spent developing the cobalt asset? And how does UEX plan to recoup that capital. Roger explains.

Interview Highlights:

  • WNA Expectations
  • Company Overview
  • Cobalt, Nickel & Uranium – Strategy, Thinking and Focus: What Are They Building?
  • Shareholders: What Can UEX Do to Increase Their Share Price?
  • Management Remuneration

Click here to watch the interview.

Matthew Gordon: Hi Roger. So you’re in London for the WNA?

Roger Lemaitre: We are in and around the WNA and meetings around it as well.

Matthew Gordon: And what are you hoping to get from it?

Roger Lemaitre: Well, we’re just hoping, honestly, for our shareholders to a little more exposure to what we’re doing in the Uranium and Cobalt sectors, outside of the Canadian market. Uranium interest is starting to pick up again.

Matthew Gordon: Have you got shareholders over here in Europe?

Roger Lemaitre: We do have a few shareholders here in Europe, but we’re predominantly Canadian and American shareholder base.

Matthew Gordon: What’s the general mood? Have you picked anything up?

Roger Lemaitre: General optimism. People, I think, are starting to sniff value at the bottom of the Uranium cycle. And over the last few years, there’s been a whole lot of hype. And it reminds me so much of 2004 when I was in the Uranium space 20 years ago. People have heard it’s coming, it’s coming. It’s coming. They get tired of hearing it coming. And now I think people are trying to believe it might be coming. So we’re just trying to talk to people what we’re doing so that when that comes, they know who we are.

Matthew Gordon: A lot of people talking about the macro story and nothing but, to the detriment of telling their own story, but no one’s quite sure of when it’s coming. So I think we’ll leave it leave it to people smarter than me.  Let’s talk about your project. Can you give us a minute summary and then we’ll get stuck into some questions?

Roger Lemaitre: UEX is one of the older junior companies out there. We reformed 2001 and we’re probably the third or fourth oldest junior company in the world. We have 21 projects, 18 in Uranium, 3 and Cobalt, but we have four flagship product. A lot for a junior company. And our goal really is… we have two projects that are on the wings waiting for development that under today’s Uranium prices, even in being hosted in the Athabasca Basin, all our projects, just won’t move ahead like any other company that’s in the Athabasca Basin. So our goal short term is to build the pie, as much resource we have in our portfolio, when that time comes. And then when that time does come, we’ll be able to move those other two projects towards construction.

Matthew Gordon: You’re an interesting story to me, because you’ve got a lot going on. You pick the tough commodities, Uranium and Cobalt. And Cobalt is coming back up a bit,  there’s a Nickel component to that. And then there’s the Uranium stuff. So can we just talk about what your thinking is and what you’re trying to build out here? Because there’s a lot of moving parts. You can’t fund them all.

Roger Lemaitre: No, true.

Matthew Gordon: And there’s a lot of resource required to actually get these things moving. So let’s talk about what you’re trying to build first. So talk to me about the management plan.

Roger Lemaitre: We’re definitely a Uranium company. So first and foremost is moving  our two core Uranium projects forward. But because they’re at the study phase and ready to move forward, in the current market, it’s not feasible, nor does it makes sense to try to build something that’s not ready for the market. Or the market’s not ready for. Meanwhile, on our Uranium projects, we had a Cobalt prospect and we realised into late 2017 that it was a pretty significant Cobalt prospect by world standards outside of the DRC. And so the plan has always been to get shareholder value for those Cobalt assets that are non-core to the company. And eventually move them out somehow. And there’s multiple ways we can do it. And last year, we’re looking at a spin out and unfortunately that timing for the spin out, by time we did the work we did, hit the downswing in the market. So we have some shareholders that are very unhappy that we didn’t do the spin out. It makes no sense for us to do something with those Cobalt assets.

Matthew Gordon: So that’s off the table?

Roger Lemaitre: No, we’re still we did lots of work on the Cobalt this year, but on a temporary basis. We are defining a deposit. So we put some resources into that this year. Our plan is still to create value for those assets for our shareholders.

Matthew Gordon: So I just want to be clear, because like you say, there’s a lot of kind of discourse in the marketplace. What happened? We were promised this. The timing of the Cobalt price wasn’t with you when you were thinking of doing that?

Roger Lemaitre: It actually imploded all in the same one week period.

Matthew Gordon: There you go. And your job, apart from mitigating risk across the organisation to maximise value. All of these lovely cliches. But what does that mean for shareholders? We decided not to do that project, to spin that out, because we’ve been the wrong thing for shareholders.

Roger Lemaitre: Absolutely. And I think the only reason to do a spin out is that the spin out creates more value than having it inside the company in the short-term. And when we were ready to do the spin out, got our NI43-101 report together from a program that we started only in January. By the beginning of June, we were ready to start to spin out with resource. The market price cratered and then being in Canada and Toronto focused in terms of the markets. There was a financing done in Toronto in the Cobalt space that did not go really well. Not our financing, it was another company, and that commodity became a four letter word in Toronto for a period of time. So we could have done it, no matter what and forced it to happen. But I think there was a strong, strong risk that we would have orphaned the Cobalt assets or imperiled the Uranium company. And at that time, we said, ‘OK, we’ll put it off temporarily and we’ll see when the market demands value for that Cobalt’.

Matthew Gordon: Do you know what you’ve got with that?

Roger Lemaitre: Yes, we do.

Matthew Gordon: You know exactly what you’ve got. What data do you have?

Roger Lemaitre: So we’ve done just a little under $5M worth of work over the last two winters on the Westborough Cobalt-Nickel project. And we’ve defined resources over a strike length of 650m, pittable starting at 30m  depth, going down to about a 100m depth. We fully defined it and we’re in the process of putting together a final resource on that. We did an interim resource on it last year. While that was not big enough to be moved forward last year. the deposit was open ended in all directions. I think we’ve defined the limits of this particular single deposit. At this point in time, and now we’re ready to start moving forward.

Matthew Gordon: So you’re a $60M market cap. How much should we think of that is attributable to Cobalt-Nickel?

Roger Lemaitre: I would say probably about 20%. But if you asked any investor, they’d have a very different view on that. Some would say higher. Some would say lower. I’m going to say about 20%.

Matthew Gordon: So it’s not worth a whole bunch of money right now. So what you going to do?

Roger Lemaitre: Right now. I think it comes down to whether investors want to be in the Cobalt. And when we look at the assets, if it’s going be spun out or find a partner. It has to create value. So the last thing we do, say we went to spin out route and spun it out. How does it financed? Is it financing? The question would be,.

Matthew Gordon: What’s your liability?

Roger Lemaitre: Absolutely. And so you’re sitting here going, ‘well, maybe we can spin it out and maybe we can raise six months worth of money to keep it floating’. What happens in six months? Is it orphaned? And then there’s no value to that property to a current UEX shareholder.

Matthew Gordon: So what’s happening. You just going do nothing with it this year?

Roger Lemaitre: We are still looking to move forward. I think the market in Cobalt is changing, as we watch it every day. And the moment the time is right. We have been contacting people other people, not just the spin out route, to see where the value is. So we’re very active on it, but it is very quiet because negotiations and discussions and talking with bankers isn’t something you put in the public domain.

Matthew Gordon: But there are conversations going on and you are evaluating it. But there is no sense of timing yet?

Roger Lemaitre: Not not yet. But our goal has always been to do it as soon as it’s feasible, in our opinion, feasible from the board point of view. But, you know, in the Canadian market and North American market for Cobalt particularly, we’re seeing a lot of M&A activity right now. What I see particularly happening over the last year, is a change in the way that that Cobalt future is valued by investors. There is a lot of rumours out there about Cobalt not being used in EV batteries, which is driving all the interest, it’s engineered out. And we think we’ve seen that that’s not the case and it’s not going to be the case anytime soon. And then we’re seeing a global ticking global market and turning into a regional market. Here in Europe people are really busy trying to build regional Giga-factory. We’re seeing the same in North America. We’re seeing, of course, China dominates things now and everyone’s trying to get into this sort of, I think, what Benchmark Minerals calls the EV arms race. And so there is definite interest in seeing Cobalt projects that aren’t DRC based and groups jump to those challenges with the sourcing out of the DRC?

Matthew Gordon: Yeah, it’s a much told story. But like you say, making it happen is another matter. So you’re parking that for now. How much money if you spent on it in total?

Roger Lemaitre: In total in the last two years, just a little under $5M. We’ve drilled the about a 175 drill holes. So we’ve done a lot of work for a little bit of money.

Matthew Gordon: So you’d want to recoup at least that.

Roger Lemaitre: I think it’s fair for shareholders one way or the other. And the form may differ. Could be cash up front if bought out sale. Our company was founded on a dividend to shareholders through a spin out. The shareholders of the parent company received our shares in exchange and that we would look at that as well.

Matthew Gordon: So it’s very early stage. You’ve got to re keep your your capital. Are you viewing it as a distraction?

Roger Lemaitre: I think, for some shareholders. Yes. And for another is not. And I think that’s one of the key reasons why our company feels that eventually they have to be separated from each other somehow.

Matthew Gordon: Let’s leave that. Sit back and wait and see. You’re not sure on timing and you’ll let us know when you know.

Roger Lemaitre: The market will actually probably let you know more than us.

Matthew Gordon: We’ll see. So that’s about Uranium, because that’s why I’m here. WNA is happening this week, as we said. You’re meeting a bunch of people, shareholders, funds, trying to get everyone gee’d up and get a sense of what’s going on. So if 20% percent of your $60M market cap is Cobalt Nickel, there’s $48M, just under $50M, which is you think this company’s worth based on its Uranium play? There’s a lot going on with the Uranium assets. You’ve got a lot of assets. You’re a small company. How much cash you got?

Roger Lemaitre: We have just a little under CAD$5M right now.

Matthew Gordon: And again, back to the strategy. Back to what you’re thinking. You’re going spend $5M to do what. What’s the first thing on the list?

Roger Lemaitre: The first thing on the list is grow the Uranium resources in our inventory.

Matthew Gordon: That’s your strategy. Grow the resource.

Roger Lemaitre: That’s correct. And now we do have two projects or Shea Creek Project and Horseshoe-Raven Project, where we have Resources. We’ve have PEA level type studies on them that are ready to move forward in the next stage. We know that for example, Horseshoe-Raven Project, it’s going to take $48 Uranium to break even. So we could sit there and try to pretend to match this project forward. But the market’s not ready for it, and nor is the signal there that we’re going see that price imminently in the next few weeks.

Matthew Gordon: So it’s $48 bucks to break even.

Roger Lemaitre: Which is pretty comparable to what you see in the Athabasca project.

Matthew Gordon: People talking $50-$60…

Roger Lemaitre: That’s a Horseshoe-Raven. And then our Shea Creek project is on the West side. It’s the first of those West Side discoveries. Done back in the mid 2000s, when we were the market darlings of the Uranium world back then.  And we’re partner is Orano and Orano has been going through their challenges and that that project’s been put on their shelf short-term while they reorganize their their operations.

Matthew Gordon: So how do you prioritise what you’re going to do? You’ve got a project. You’ve got to wait till price discovery happens and starts moving. Utilities start buying, doing contracts and it’s going to get to $48 bucks. That’s a break even level for you.

Roger Lemaitre: So you need a little higher to be incentivized.

Matthew Gordon: Yes. That’s what I’m saying. So I said we wouldn’t talk macro. Now I’m going to talk macro! So what’s your company’s view on the timing of this? Again, are you sitting back and dependent on what’s going on in the marketplace or what level of control you’ve got, but you move forward?

Roger Lemaitre: So on the Horseshoe-Raven project, we have complete control about how we work on that. It’s on 100% our project. And we can move that as we see as we see fit. We have been doing little things with that project over the last couple of years. Doing some heap leach studies to change the processing methodology. And that’s going along and continuing to move along. But at a pretty slow pace, because we’re not spending huge dollars was on it. We don’t feel it’s appropriate to dilute shareholders and spend tens of millions of dollars on a project at this point in time in the market. So yes, when we see momentum in that direction, we’ll start to move on that project. It’s a relatively simple project in the Uranium space in that part of the world because of its location, its grade, and the fact that we literally have infrastructure crossing over the deposits; power, road, et cetera. So it’s a relatively easier project to move forward than some of the other ones. We don’t have water issues. It’s conventional mining. So we think while there’s no such thing as fast tracking in the Uranium space, it’s one of the ones that can move quicker.

Matthew Gordon: And when you say maybe quicker…if you got to press the button. How much money would you need? How quick would you get into production? And how quick would you be able to get into the market?

Roger Lemaitre: Our PEA from from a few years ago shows it’s about $225M to get to the finish line.

Matthew Gordon: So it sounds like you’ve got to do some more studies and more economic studies above the PEA.

Roger Lemaitre: Correct.

Matthew Gordon: Totally understand that and optimise that. So what’s the timing?

Roger Lemaitre: You’re probably looking in the seven year window.

Matthew Gordon: Seven year window. So you know where you fit in the cycle, as it were. So as soon as the cycle moves, you know where you are, and how you win.

Roger Lemaitre: Yes

Matthew Gordon: That’s project number one.

Roger Lemaitre: And Shea Creek, that ones, unfortunately, in control of our majority shareholder Orano. And I think that will be part of what happens on the west side. But we’re not in control that and we will participate in the best we can. Encourage our partner to do more. And we don’t feel that the deposit has been fully defined. In fact, we’re pretty comfortable, it’s not even close to being fully defined. And we’re gonna be pushing them to make that bigger, in the meantime, to incentivise something to happen in that part of the world.

Matthew Gordon: What are they doing in the moment and what’s the financial relationship?

Roger Lemaitre: Well, we’re joint venture partners, right? And so they. But they’re also the operator. So they get to pick and choose when projects get done. And because they own the majority they have the ability to say yay or nay to projects.

Matthew Gordon: What are you obligated to do financially?

Roger Lemaitre: We don’t have to do anything we don’t want to. So we can dilute on any project we so desire. We have 8 joint venture projects with them. Shea  Creek is by far the most important one. And we can decide whether to dilute on each individual one. At Shea Creek, we’d like them to propose some more programs. It’s been idle for a couple of years. So we haven’t had to make any decisions on that.

Matthew Gordon: So the trouble with partnering with big companies is they’ve got lots of options all around the world, and lots of different priorities to you.

Roger Lemaitre: Correct.

Matthew Gordon: So you can try and push this on, but they aren’t going to move to your drum beat. They’re going follow their own strategy. So this is a project which would you say you’re slightly out of control of? Or what are your options, when you say, ‘we’ve got options?’ What can you do?

Roger Lemaitre: I always like to put ourselves in the other person’s shoes and say, what do they have for options, when you look around the world of what they have. This is actually one of their better projects. I kind of think, quite frankly, they just need to be reminded about the potential above and beyond what they already have. And I think that’s one of things we can do to help them out. And help them move the story.

Matthew Gordon: Why do you say it’s one of their better projects?

Roger Lemaitre: Because of 1. it’s location. 2. the fact that there’s going to be infrastructure built up in that part of the world from some of the other companies that have success in that area? When you look at what they have around the rest of the world, some of their stuff is in more difficult terrains and probably at higher cost, to be very honest, than what they could do here and there. Other good project in a similar jurisdiction, they just put on the back-burner.

Matthew Gordon: Jurisdiction. Get it? Infrastructure, get this. Some more isolated projects which they may have and the cost of getting that to a port, let alone out of the ground, is prohibitive. But what do you know about this in terms of grades.

Roger Lemaitre: At Shea Creek. We have almost a 100Mlbs deposit there, at a little over 1.3%, which is road average for the Athabasca Basin or a little bit above average. It’s located 22km South of their former Cluff Lake operating mine that they ran themselves. So they’re familiar with the neighbourhood. We have a road going right over it. It’s a classic  unconformity deposit with basement roots. Similar to what was mined at Key Lake in the 1980s. So technically, this isn’t as much of a challenge. It’s a little deeper than some of the Athabasca projects. And that’s probably the biggest challenge.

Matthew Gordon: Good margins? What do you need to get? 

Roger Lemaitre: Sorry?

Matthew Gordon: It was $48 bucks for the other project?

Roger Lemaitre: I would think it’s probably a little bit North of that, closer to the $50-$55 range.

Matthew Gordon: And then what’s the next project?

Roger Lemaitre: So the next project on our list is Christie Lake. And Christie Lake is immediately on strike North of McArthur River, 9km away. The structure that hosts every pound at McArthur River crosses onto our property. And there’s 3 known deposits there to date. We’re the only junior that has land package between the two worlds largest, highest-grade mines, Cigar and McArthur. And in 2017, we made a discovery there that grew the resource at Christy Lake. And it’s we picked this up on an option we vested or option now to say we own 60% of the property and our partner is JCU Canada and the Japanese private company. That’s actually one of the bigger players in the Canadian Uranium industry that nobody knows about. They own chunks of several deposits and our JV partners with all the big players, Cameco, Dennison and Orano as well as us.

Matthew Gordon: You’ve got a lot of moving parts there and some of it and control some of it you’re not. You can spend some money building out resource. You got partners who are not playing ball. How do you reassess or how do you assess your current strategy? And how often do you reassess that in terms of what’s going on in the market with price, whether JV partners want to do something or not. You’ve got this sponsorship with Orano, but you say you’ve got options there to dilute. Is that something you considered doing sooner rather than later?

Roger Lemaitre: Hard to build on resources when our goal is to grow the number of pounds we have in the portfolio.

Matthew Gordon: But there’s got to be other projects, which…

Roger Lemaitre: Yes, we are. And we have been on some of our grassroots project. So of our large number of products, we have the 14 or 15 grassroots projects we’re not working on we actually vended one out a couple of years ago. And my goal would be to see more of that portfolio working for us. But not necessarily using our resources so finding partnerships. One of the advantages that we have over everybody else in the basin is that we were there in 2001 before the last run up. And so we have a monstrous land package and there are companies have monstrous land packages. The difference is where our land packages are located in the primaries, in the Western Basin and in the eastern part of the basin around the infrastructure. And quite frankly, we’re sitting on projects that… there’s one project we have called Real Lake. We have three mineralised drill holes. And I’ve never followed it up because it’s not the priority in our portfolio. So the things that we have in the wings would be flagship projects for other juniors of similar or smaller size us. And when the market does turn, will engage them to take on some of these projects for us. My view is it’s better to have 50% of something than of nothing.

Matthew Gordon: It comes back to this strategy. What are you what are you thinking? How are you having to change and adapt to market conditions? Sitting on a large land package is like a liability quite frankly. It’s a cost, right? How do you monetise it?

Roger Lemaitre: So monetising it with. We did a deal with a company called ALX to have them work some of the property and work it for it. And so we are spending their money to decide whether we want to be involved in that product or not. We have a handful of those other projects that we want to do exactly the same thing with, that are not our core projects. On the core projects. We have two that we can we can’t move forward now because they’re ready to move forward. So the idea is to make those other ones move forward. Grow the pounds and then move the most appropriate projects forward when the market does change. We can’t control the macros, but we can’t control discovery. And what’s clear in the Uranium industry over the last 5-6yrs is that even in tough markets, a good discovery in the basin creates great value for shareholders. And so that’s our goal. Create the next discovery in advance of being able to move our project forward.

Matthew Gordon: So you’ve got some institutional shareholders in there?

Roger Lemaitre: We have a few Cameco are still our largest shareholder. They’re one of our founding shareholders when we first started the company. They contributed to a whole bunch of land packages, our Hidden Bay and Westbear, Horseshoe Uranium projects were their projects at one point in time, they contributed to them. And then we had a junior company called Pioneer Metals contribute to cash and the rest in the management team, that founded the company back in 2001-2002.

Matthew Gordon: So they got their own problems right now.

Roger Lemaitre: Cameco does. yeah.

Matthew Gordon: So are they picking up the phone and going, ‘what are you doing’, or are they just focused on themselves?

Roger Lemaitre: Well, I think if you asked anybody in the industry right now, Cameco is completely focused on themselves and rightfully so. They used to have and a right to participate in our financings when things got really tough for them. They had to make a choice between theirs or ours. And they, of course, chose theirs. It made the most sense for them to do so. They have a fantastic plan package because they’ve been around the longest and things that made a lot of sense for them. We do keep tabs with them. We do you talk to them regularly so they know what we’re up to? And they’re very happy with what we’re doing. So they tell us anyway.

Matthew Gordon: You’re still taking their calls. That’s good.

Roger Lemaitre: I think as much as they’re taking my calls as well.

Matthew Gordon: You’ve got $5M left. When does that run out?

Roger Lemaitre: We can refinance through to the end of next year without much trouble. What the level of activity in next year will be dependent upon what we decide to do. And I think that we’d like to be a little bit active at least. But we’re not going to go out there and try to do something crazy to dilute shareholders.

Matthew Gordon: So what you are saying to shareholders is ‘I need to be a bit fluid because the market bit flat at the moment and we need to keep our options open’. But at some point, you’re going need to go back to market, right?

Roger Lemaitre: Absolutely.

Matthew Gordon: You don’t have a whole bunch of shares.

Roger Lemaitre: 381M shares give or take few hundred thousand.

Matthew Gordon: You seen worse.

Roger Lemaitre: It’s not bad for a company’s been around since 2001.

Matthew Gordon: It does come back to what your plans are for next year. How much you’re going to raise. That’s a finger in the air time.

Roger Lemaitre: The key reason we don’t know about what we want to raise really comes down to what we do with Cobalt assets. And our goal was to get that out.

Matthew Gordon: You’re not expecting any money from that are you? The stage it is at?

Roger Lemaitre: Hard to say. It’s one of the only two only four in North America project with a resource to date. Sure. So it’s unique. It’s jurisdiction is unique. And yes, it’s still early stage. But I think what we’re trying to do with the Cobalt thing is also tell people, Cobalt deposits the Athabasca Basin are unknown. It’s a new style deposit no one’s ever seen before. And despite the fact that Cobalt Nickel is commonly associate with several deposits in the basin, what we’re finding are Nickel Cobalt deposits that aren’t associated with Uranium. And that’s not been looked for, despite the long history of exploration there, and despite the fact that several people have probably drilled a hole into one of these things and not realized it, because it didn’t sample it correctly. So what we have is a little bit of a knowledge and we’re willing to sell that along with whatever that process is, because we think we can turn the Athabasca, a global world class Uranium district, but it could be a significant Cobalt district as well.

Matthew Gordon: Potentially.

Roger Lemaitre: But it’s early stages. It’s very early days.

Matthew Gordon: It’s very early days. People have got to work out if they can mine it economically. So what the economics look like, what the metallurgy looks like. And indeed, if it’s worth doing. But again, you’re not in control in the sense that you’re own the asset. But in terms of any negotiations, if you’re going to just do it for cash, it’s not going to be a whole bunch of cash. If you sit and go along for the ride with them, it’s gonna be a while before they run into the money. So you can’t rely on that as a contributing factor for your Uranium?

Roger Lemaitre: It could be. I wouldn’t count on it. And I would agree with you there. To count on it would be silly.

Matthew Gordon: So with Uranium, you’re number one priority is Christie Lake, how much money would you need to raise and how much would you raise? Well, you’re going say that’s dependent on what what the price gets to because you’ve got to start somewhere.

Roger Lemaitre: We’re in the process of just doing a $2M program right now. And we look into 2020. I’d say we look to do somewhere between $2-$3M on our whole portfolio of assets. We will do an extremely small amount of somewhere around $400,000 on the Cobalt angle, because we believe that we have the next prospect right on our property. It’s easy player to get into with really short drill holes. And so we’ll put a little bit of money into that if we need to. And then the bulk will go into doing work at Christie Lake. We do have coming up this in probably in November. We’re going to do an extremely small drill program about 2,000 meters, right next door to the McClean Lake mine. We border up to the Riou Lake deposit and in fact the boundary the pit is within metres of the property boundary. We’ve looked down the trend and not found anything, we’re looking at a concept that our exploration team, including myself, were involved with discovering mineralization at the Eagle Point mine. Could be that extension at Eagle Point that they did back in the mid 2000s for a cross linking feature to actually right across the property boundary. And we’ve done some work to test up that theory and now we’re going to grow some holes in there. So it’s one of the few juniors companies that can look at true brownfield style exploration. And we’ll do a little bit of work on that. But what we’re trying to do is maximize every dollar we have.

Matthew Gordon: I get the idea that’s coming across loud and clear. I think you’re what you said is smart, intelligent in terms of the planning. I think you watch the cents and the dollars and you’ve got a low G&A, and we’ve looked at your numbers. It looks good. Your shareholders, though, so they’re waiting for great things. And they’re either they’re all in or they’re not. What would you say to them in terms of how this thing grows? I mean, price will bring some sort of bump and return here. How are you affecting share price? How can you affect share price? Can you?

Roger Lemaitre: Oh, absolutely. We’ve seen it with some of our peer companies, with the with no discovery. So the trick is, what land do you have? Is it really perspective? And are you looking for pure grassroots stuff or are you looking for stuff what we call mid-stage exploration projects? So at Christie Lake, for example, this year we’re following up old PNC, which was the previous operator back in the 1990s, where they hit mineralization and didn’t follow it up. What we’re not doing is saying, ‘here’s a chunk of moose pasture. Let’s go drill some holes and see if we’re lucky.’. What we’re doing is saying, ‘here’s a target that hasn’t been tested, up deep or down dip’, depending on whether we’re looking for classic unconformity. ‘Is this the right place to be looking up and down dip of’. Hey, on our Christie Lake project, we had that discovery at Aura on the North end of the three deposits and then suddenly that spot the trend dies. How did it die? This is kind of unusual because our experience, our team has extensive experience in the Athabasca. We haven’t seen this before. And we did some work and went ‘Oh’. We did resistivity survey. Looks like it’s offset the trend by 125m-150m. Let’s test that offset to see it continues like we think it might. So we’re not just hoping to find something on moose-pasture. We’re following up hot leads that would be flagship type projects for most of our peer companies. And I think that’s what separates our portfolio of opportunities. When we sit on opportunities like that on 4-5 other products, we’re not even be able to work because we don’t have the resources. We’re not starting from ground zero, we’re starting from a base of something that we know. And our team’s expertise isn’t so much about, ‘I can drill holes’, as how do we play these Uranium exploration mid-stage products to a T.

Matthew Gordon: So give me an example of that, because to me, I’ve seen so many companies do some drilling, get a report on a study done and expect that to radically change people’s perception of the company. Quite frankly, the market doesn’t care.

Roger Lemaitre: No, and I would agree.

Matthew Gordon: So I hear what you’re saying. And that’s, again, smart use of time and money and using data to make decisions. I think a lot of companies would claim that. What do you what do you what do you want to tell shareholders about what you’re doing, about making sure that, 1, you’re gonna be around long enough to see all this out and 2. how you’re going to see a significant bump? What’s the thing which gives them a significant bump. Why the market will react?

Roger Lemaitre: The only thing we can control is how we execute our portfolio to make any discovery. That’s clearly what we can do outside the market dynamics. And I love to say we’re going to move Horseshoe-Raven forward today, but this is not realistic. So all we can do is make discoveries on the portfolio. But looking at that lowest hanging opportunities we have on our tree. And what we do differently than everybody else is that we’re not bound by the models. So if you were in a Uranium explorationist, there’s the classic unconformity model. And what a lot of people do is follow the model to a T, and no matter what they see, they’re going to follow the model. What our team does differently is we say, no, ‘what does the rocks tell us we need to do? Where do we need to go?’ So, for example, that target we’re talking about to set the McClean Lake is something that nobody else would do. But we’ll do it because we’ve been involved in a discovery that actually did one of those. When we looked at our Christie Lake project, we had a plan about what we wanted to do starting it. And we started doing the work on our project at Paul Bay, and growing that we realized something that the previous operator didn’t understand. And so, for example, a classic unconformity deposit, where the fault structure in graphite comes to unconformity surface, and that forms a trap. And that’s where’s the Cigar Lake and Key Lake deposits are found. And it was almost a religion in the 1980s, 90s and even 2000s and even some companies today. What we realized is that we need to follow the structure, which sometimes is in the graphite and is something does not. And not only do we have the follow structure, we have to be at the bottom of the structure, and not projected somewhere differently than what was drilled in the past. And we went out and drilled where we thought was the right place. We made the Aura discovery. We’re applying that thinking across the rest of the property. So we let the rocks tell us where to go. We don’t let model tell us where to go.

Matthew Gordon: You’re agile thinkers technically. So you adapt according to what the rocks tell you. I get that. What are you doing in the market? You’re here at WNA. You’re meeting a few funds, a few investors. What are you doing other than that? Are you be bothered? What do you think it’s like? We’ll sit. Now’s not the right time. We’ll see where we are in the New Year and we’ll talk to the market then.

Roger Lemaitre: Always bothered me. If you’re not bothered, then you shouldn’t be in the public company. It should bother you. And it bothers me. It bothers me every day. But I think when it comes to what we do. We’ve varied. our strategy over the last few years, depending upon whether we thought the traction was right or not. We believe now with interest being a little bit different than it’s been in the last couple of years. Now it’s time to push and hear our story and show people what is different than what our peer company are doing. We’re not a project play per say. We’re a portfolio place. If you want a portfolio play on a bunch of Uranium opportunities, then we’re one of your best players. If you want to invest in a project specific thing, And want to see where Project A gets to in the next development cycle. Then that’s where you should be. What our difference is, is we’re a portfolio of opportunities that includes potential for projects because we have them in the wings.

Matthew Gordon: Gives you optionality, Ok I like that. I’m going to finish up with something which I talk to CEOs about, remuneration. How do you guys reward yourself in this market when no one’s making money, because you’re not producing. Shares are flat. You’ve got shareholder money. You’s got to prove you’re creating value, and it’s difficult in this marketplace. How does your board decide how to pay yourselves or remunerate yourselves?

Roger Lemaitre: Well, you’ll notice in our group there’s been very little changes in terms of the salaries for the executive team and the board over the last several years. And that’s market related. Our board doesn’t believe that in tough times that they should be giving out our company’s money. And personally, I would have been recommending that we don’t over last few years. We do stock options. And that’s the primary way we’re rewarding people today.

Matthew Gordon: What’s the average stock option at?

Roger Lemaitre: Probably for the board members you’re looking at about 300,000 – 500,000 in a given year.

Matthew Gordon: At what price?

Roger Lemaitre: At whatever the market prices is at that time. At that point in time. And the same thing for executives. The CEO’s getting a little bit more than that, but not much. We’re not giving away much. We have a 10% threshold allowed in North America, in Toronto. We’re trying to keep well below that. In the 8% or so range.

Matthew Gordon: It’s all public information. People should have a look. I think it’s very telling statistic.

Roger Lemaitre: We don’t see a lot of salary raises. And in this particular year, I wouldn’t be counting on salary raises for anybody as well, because it’s tough times.

Matthew Gordon: It’s tough times for everyone who has given their money to you. How much money have you put into the company or how much money has been put into the company? Well, I’ve been going back a while….unfair question.

Roger Lemaitre: My shares are definitely under water. So I hurt like everybody else at this point in time. I’m just a little 180,000 shares right now. But I’ve had to fund that out of salary since I started. And I haven’t been given any shares, which is appropriate.

Matthew Gordon: Thanks very much. That’s a wonderful first run through. We’ve not spoken to you or anyone in your company before, so our subscribers will get a good sense of what you’re about.

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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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