Global Atomic Announces Q1 2022 Results Dasa Uranium Project Fully Permitted and On Schedule for Development and Financing
NEWS RELEASE
Global Atomic Announces Q1 2022 Results
Dasa Uranium Project Fully Permitted and On Schedule for Development and Financing
Toronto, ON, May 10, 2022: Global Atomic Corporation (“Global Atomic” or the “Company”),
(TSX: GLO, OTCQX: GLATF, FRANKFURT: G12) announced today its operating and financial
results for the three months ended March 31, 2022.
HIGHLIGHTS
Dasa Uranium Project
In Q4 2021, the Company began a 15,000-meter drill program at the Dasa Project with three
objectives:
o Conduct infill drilling to upgrade some of the extensive Inferred Resources to Indicated
Resources so that they may be included in a revised Mine Plan.
o Connect Mining Zones 2, 2a and 2b to Zone 3 to form one continuous expanded zone
instead of four separate zones.
o Expand the total resources in the area of Zones 2 and 3.
Drilling to the end of Q1 2022 succeeded in significantly expanding and upgrading the mineral
resources in the area of Zones 2 and 3.
Drill results subsequent to Q1 2022 indicate that Zones 2, 2a and 2b now represent a
contiguous zone with Zone 3 which is estimated to be approximately t hree times larger than
initially defined.
The Box -Cut blasting and excavation for the mine began in Q1 2022, were completed
subsequent to the end of the quarter and ground support is underway.
Site work in preparation for the portal and ramp development included construction of
employee housing, warehouse and maintenance facilit ies, surface buildings for mining
activities, power and water servicing of the site.
The Isakanan drill program on the Adrar Emoles 4 permit was completed in February, with
core sent to Canada for permeability and porosity testing to determine in-situ leach potential.
Turkish Zinc Joint Venture
The Turkish Zinc Joint Venture (“BST” or the “Turkish JV”) plant had a 3 -week maintenance
shutdown in Q1 2022 (none in Q1 2021) resulting in 19,785 tonnes EAFD processed in Q1
2022 (24,407 tonnes in Q1 2021).
The Company’s share of the Turkish JV EBITDA was $3.4 million in Q1 2022 ($4.2 million in
Q1 2021).
The zinc contained in concentrate shipments in Q1 2022 was 8.3 million pounds (14.8 million
pounds in Q1 2021) and the average zinc price was US$1.70/lb in Q1 2022 ($1.25/lb in Q1
2021).
P
age 2 of 13
The amount outstanding under the non-recourse Befesa 2019 plant expansion loan was
U
S$2.65 million at the end of Q1 2022 (Global Atomic share – US$1.3 million), a reduction of
US$2.0 million from the year end.
The
revolving credit facility of the Turkish JV remained at US$7.8 million at the end of Q1
2022.
The cash balance of the Turkish JV was US$4.3 million at the end of Q1 2022.
Corporate
G
lobal Atomic continues to receive management fees and sales commissions monthly from
the Turkish JV ($423,000 in Q1 2022 compared to $444,000 for Q1 2021).
Cash balance at March 31, 2022, was $24.3 million.
Stephen G. Roman, President and CEO commented, “This year promis es to be one of the
most exciting in Global Atomic’s history as we expect to significantly advance the fully permitted
Dasa Project. We rec ently rec eived a Letter of Interest from Canada’s Ex port
Development Corporation, to provide up to US$75 million in project financing. We are currently
in discussions with other lenders with the intention of being fully financed by the end of 2022. At
the same time, we continue to move forward with the Niger Government to form our Niger mining
subsidiary, with Orano Mining regarding the sh ipment of ore to generate revenue as early as
mid-2023, and with several electric utilities to sign our initial off-t ake agreements. The uranium
market continues to be strong with prices significantly higher than our Feasibility Study Bas e
Case of US$35 per pound, boding well for our future profitability.”
“On the ground in Niger, we have completed the Box-Cut blasting and excavation and are on
schedule with the installation of surface infrastructure in anticipation of start ing underground
development this fall. As well, the Dasa drilling program that we began in 2021 has been very
successful in identifying additional high-grade mineralization between known mining Zones, which
will be reflected in an updated Mineral Resource Estimate and revised Mine Plan later this year.”
“Our Turkish Zinc JV is benefitting from higher zinc prices which will ensure final payment on the
Befesa loan and resumption of annual dividends to the JV Partners. The second quarter promises
to be better yet for our Turkish business as zinc prices have remained strong and we expect
higher throughput in Q2 as no maintenance shutdowns are expected.”
OUTLOOK
Dasa Uranium Project
The C
ompany expects to finalize the incorporation of its Niger mining company in Q2 2022.
In April, Export Development Canada provided the Company a Letter of Interest for a potential
participation, at typical bank rates for a greenfield mining project finance and subject to normal
due diligence, of up to US$75 million to form the cornerstone for a banking syndicate on the
Dasa project financing.
Page 3 of 13
The Company is in discussions with other institutions to complete the banking syndicate and
expects to close its project financing in Q4 of this year.
The Company is continuing discussions with Orano Mining relating to the direct shipment of
development ore to the Somaï r processing facility located 105 kilometers north of the Dasa
Project.
Discussions with international Electric Utilities continue with the expectation that initial long-
term contracts will be concluded during 2022.
Surface infrastructure construction to support mine and mill development activities continues.
Mining equipment and supplies have begun to arrive on site and at the Port of Cotonou in
Benin to support the start of mine development.
Additional mining equipment and supplies will arrive throughout Q2 and Q3.
CMAC-Thyssen (“CMAC”), our contract miner, will begin training programs in Q3 and start
mine development in Q4 2022.
An EPCM (Engineering, Procurement, and Construction Management) contract is expected
to be awarded in Q2 2022.
Detailed engineering will be initiated immediately following the EPCM contract award to
support the start of the processing plant construction in Q1 2023.
On completion of the Dasa drill program, currently scheduled for June, and the receipt of
assays, the current Mineral Resource Estimate (“MRE”) will be updated.
Following the MRE update, a revised Mine Plan will be developed, and the reserve statement
updated. It is expected that this will result in an increase in Phase 1 ore reserves and lower
operating costs.
Turkish Zinc Joint Venture
The Turkish zinc plant continues to operate at target operating efficiencies.
The zinc price continues to be strong.
Repayment of the remaining Befesa loan is expected to occur in Q2 2022.
Turkish JV dividend payments will resume following repayment of the Befesa loan.
Page 4 of 13
COMPARATIVE RESULTS
The following table summarizes comparative results of operations of the Company:
Page 5 of 13
The consolidated financial statements reflect the equity method of accounting for Global Atomic’s
interest in the Turkish JV.
Revenues include management fees and sales commissions received from the joint venture.
These are based on joint venture revenues generated and zinc concentrate tonnes sold.
General and administration costs at the corporate level include general office and management
expenses, stock option awards, depreciation, costs related to maintaining a public listing,
professional fees, audit, legal, accounting, tax and consultants’ costs, insurance, travel and other
miscellaneous office expenses. The variance between the years is largely due to higher stock
option grants in Q1 2022 and increased staffing that took place in Q2 and Q3 2021.
Share of net earnings from joint venture represents Global Atomic’s equity share of net
earnings from the Turkish JV. In view of higher zinc prices in 2021, operating margins more than
offset the non-cash expenses, resulting in a positive equity income of $1.4 million.
Comprehensive Income (loss) represents unrealized exchange gains (losses) that arise from
the translation of the balance sheets from functional currencies (West African CFA Franc and
Turkish Lira) to the Canadian dollar presentation currency. For example, the Turkish plant had a
cost to construct that is reported in Turkish Lira, translated at the time the investment was made.
Since then, the Turkish Lira has depreciated relative to the Canadian dollar, so an unrealized loss
occurs on translation of the same asset at the current date , even though there has been no
change in its economic value. This unrealized loss on translation of non-monetary balance sheet
assets and liabilities is recorded as comprehensive income (loss).
Uranium Business
Following completion of the Preliminary Economic Assessment of the Dasa Project in May 2020,
the Company initiated various trade-off studies which were followed up by a Feasibility Study. The
Feasibility Study was reported with an effective date of November 15, 2021 and the full Feasibility
Study was filed on SEDAR on December 30, 2021.
Laboratory test work was undertaken in three independent pilot plant campaigns with results from
each campaign guiding and directing the subsequent campaign. Variations in quantity and type
of process recovery consumables were used to determine the optimum recovery of uranium for
the most practical equipment selection with the lowest reasonable consumable cost. The final
selection of the process followed the principles established in uranium operations in the region
which have proven to be successful over the past 50 years.
Mineral Reserves for the Dasa Project were estimated based on the geology and Mineral Reserve
Estimate (“MRE”) previously reported by CSA. An engineering design and costing exercise was
undertaken to a feasibility study level of accuracy which supports the MRE.
P
age 6 of 13
Detailed and preliminary engineering designs were undertaken for the underground mine
workings, mining surface infrastructure, process plant, tailing storage facility, and support services
infrastructure. These designs enabled detailed pricing enquiries to be issued to the market in the
development of a comprehensive capital cost and sustaining cost estimate. Manning and
consumable material requirements were developed and costed in the open markets to establish
an expected operating cost over the life of mine of the operation. Sourcing of electrical power and
water was determined to meet the mine requirements, and these too, contributed to the
operational cost estimate. The capital cost estimate, sustaining cost estimate and operational cost
estimates for the various elements of the mine and process plant were combined into an economic
analysis of the project to determine a financial model for the mine.
The Feas
ibility Study was completed at a detailed level of design and engineering to enable an
appropriate level of confidence to be applied to the economic viability and outcomes of the project.
As a result of the Feasibility Study, the following Mineral Reserves were estimated.
Mineral Reserve Category
RoM
(tonnes)
U3O8
(ppm)
U3O8
(t)
U3O8
(Million lbs)
Proven Mineral Reserve - - -
Probable Mineral Reserve 4,066,390 5,267 21,417 47.217
The Feas ibility Study identified five zones of mineral reserves as shown in the provided
schematic.
P
age 7 of 13
The mining inventory included in the Feasibility Study included a minor amount of Inferred
Resources shown as follows:
RoM tonnes U3O8 ppm U3O8 (t) U3O8 (Million lbs)
Measured - - -
Indicated 4,066,390 5,267 21,417 47.217
Inferred 187,236 3,375 632 1.393
Total Mining inventory 4,253,626 5,184 22,050 48.611
The Zones vary in grades, with Zone 1 (Flank Zone) contributing the largest portion of the U 3O8
tonnes:
Zone In-situ Tonnes U3O8 ppm RoM tonnes Rom U3O8 ppm RoM U3O8 Tonnes
1 2,464,615 6,980 2,316,047 6,887 15,950
2 264,339 3,621 256,078 3,574 915
3 656,114 3,093 633,541 3,056 1,936
4 604,673 3,003 584,616 2,966 1,734
5 478,916 3,312 463,345 3,269 1,515
Total 4,468,657 5,279 4,253,626 5,184 22,050
Reserve Expansion
Ther
e are significant Inferred Resources located above Zone 3 and between Zones 2 and 3. In
Q4 2021, the Company began an infill drilling program to convert the Inferred Resources to
Indicated Resources. To date, this drilling program has been very successful and has identified
additional resources in these areas as well. The drilling campaign will likely be completed at the
end of Q2 2022. Once the assays have been received, the MRE will be updated to reflect both
the additional resources and changes in resource categorization.
Thes
e drill results indicate that Zones 2, 2a and 2b now represent a contiguous zone with Zone
3 which is estimated to be approximately three times larger than initially defined.
As the next step to compiling these drill results into a new Mineral Resource Estimate (“MRE”) for
Dasa, the Company has engaged Dmitry Pertel of AMC Consultants of Perth, Australia. Mr. Pertel
completed all the previous work on the Dasa Project while with CSA Global. The updated MRE
results will then be used to develop an updated Mine Plan and resultant Reserves update, which
Page 8 of 13
are planned for completion in Q4 2022. With increased Indicated Resources between Zones 2
and 3, such resources are expected to extend the number of years of mining in Zones 2 and 3,
which will defer the development required to access Zones 4 and 5. This should improve overall
production costs of the Dasa Project.
Mining Permits and Niger Mining Company
In September 2020, GAFC applied for the Mining Permit on the Dasa deposit and the Mining
Permit was subsequently awarded on December 23, 2020. The Company also completed its
Environmental Impact Statement and on January 28, 2021 received its Environmental Certificate
of Compliance. GAFC now holds all permits required to construct and mine the Dasa deposit.
Under Niger’s Mining Code, upon the issuance of a mining permit, the resource must be
transferred to a newly incorporated Niger mining corporation, which the Company and the Niger
Mines Minister have agreed to name Société Minière de Dasa S.A. avec CA (“SOMIDA”). The
Niger government is granted 10% of the common shares of SOMIDA at no cost on a carried
interest basis and GAFC is entitled to be repaid 100% of the total costs incurred to that date.
The Republic of Niger also has the right to elect at the time of its formation to increase its interest
in the common shares of SOMIDA by up to 30% by committing to fund its proportional share of
future debt and equity requirements. The Government interest in SOMIDA is solely in the common
shares of that entity and entitles it to payments of dividends on such equity shares.
Discussions are on- going about other aspects of the incorporation of SOMIDA. On August 19,
2021, the Mines Minister issued a formal l etter to the Company indicating that it would only be
participating in the equity of SOMIDA for the 10% free carried interest. Notwithstanding, the Mines
Minister could change this position up until the incorporation of SOMIDA.
Dasa Mine Development and Construction
The Company has entered into an agreement with CMAC -Thyssen International Inc. (“CMAC”),
a contract miner based in Val d’Or, Quebec to provide contract mining services in the development
of the Dasa underground mine over the first 24 months of mining. Foll owing the March 2020
closure of the Cominak underground uranium mine in Arlit, there is a pool of skilled miners
available to the Company in Niger. CMAC will be providing training, development and oversight
of the Niger workforce with the new equipment that will be used at site. Initial mining will comprise
only ramp development during the first 12 months, followed by access and level. Equipment and
mining consumables are being procured and shipped to site. In view of worldwide supply chain
disruptions, moving materials to site is taking longer than expected.
The boxcut has been blasted and excavated and ground support work is underway. Surface
infrastructure is under construction and will continue to be installed throughout the summer. All
equipment and supplies should arrive at site by the end of the summer to be ready to start the
portal and ramp development thereafter. Mine portal and ramp development is expected to
commence in Q4 2022, once all materials are on site and the mine employees are in place.