Global Atomic Announces Q2 2020 Results
NEWS RELEASE
Global Atomic Announces Q2 2020 Results
Toronto, ON, August 13, 2020: Global Atomic Corporation (“Global Atomic” or the “Company”), (TSX:
GLO, OTCQX: GLATF, FRANKFURT: G12) announced today its operating and financial results for the three
and six months ended June 30, 2020.
HIGHLIGHTS
Dasa Uranium Project: Preliminary Economic Assessment (“PEA”)
A PEA of the Phase 1 Development Plan for the Dasa Uranium Deposit was filed on SEDAR, indicating
an initial 12-year mine schedule to produce 44.1 million pounds U3O8, with an average processed grade
of 5,396 ppm;
The PEA estimates cash costs of US $16.72/lb U3O8, including corporate and all other off-site costs, and
an all-in sustaining cost of US $18.39/lb U3O8;
Based on a U3O8 price of $35/lb, the after-tax NPV discounted at 8% was estimated at $211 million for
an after-tax IRR of 26.6%;
Mining Permit Application
A Hydrogeological water well drilling and testing program has been completed to support the Mining
Permit application;
An Environmental Impact Statement (“EIS”) was completed and filed with the Niger Government;
A preliminary geotechnical report was completed and identified the drilling required to finalize
geotechnical inputs to the final mine design.
Turkish Zinc Joint Venture
The new Turkish Zinc recovery plant continues to ramp up with improved operating efficiencies.
The Company’s share of the Turkish Joint Venture (“Turkish JV”) EBITDA was $0. 9 million in Q2 2020
($0.8 million in Q1);
The non-recourse Turkish JV debt was US $22.85 million ( Global Atomic share - $11.2 million) at the
end of Q2 2020 and the cash balance was US $1.9 million;
The Company’s share of the Turkish JV loss was $1.2 million, attributable to a $1.5 million unrealized
foreign exchange loss on the Turkish debt, due to the decline in both the Turkish Lira and the Canadian
dollar relative to the US dollar.
Corporate
Global Atomic continues to receive management fees and sales c ommissions from the Turkish JV,
helping to offset corporate overhead costs;
Bob Tait was appointed Vice-President Investor Relations effective June 1, 2020;
Trace Arlaud, M.Eng., was appointed to the Board as an independent director effective June 29, 2020
The Company completed a private placement of 5,538,335 Units on May 15 th at a price of $0.60 per
Unit for gross proceeds of $3,323,000. Each Unit comprised one common share and one-half warrant
exercisable at $0.85 per common share over a 24 -month period with an a ccelerator clause if the
shares trade above C$1.10 for 20 days.
Stephen G. Roman, Chairman, President and CEO commented “ Global Atomic had an excellent second
quarter, 2020, achieving several milestones for the Dasa Uranium Project. The Preliminary Economic
Assessment filed in May, which outlined a 12-year schedule to mine the low-cost, high-grade Flank Zone,
is compelling at today’s uranium price. We have made great progress on completing various studies
required for our Mining Permit Application, which we expect to submit to the Government of Niger prior
to year end. While our EAFD recycling business is operating below capacity due to COVID -related
interruptions in the steel industry, cash flow has improved due to stronger zinc prices. After raising $3.3
million in the quarter, current cash on hand is sufficient to fund our work program into the first quarter of
2021, when we expect to receive our Mining Permit.”
OUTLOOK
Dasa Uranium Project, Niger
Public consultation meetings are scheduled to be held in the town of Agadez and Tchirozerine, Niger,
prior to receipt of an Environmental Certificate of Conformity from the Niger Government;
With the certificate of Environmental Conformity, the technical and other documentation will be filed
as part of the Mining Permit application; the Company expects this to be completed in Q3 2020;
Global Atomic anticipates the Mining Permit to be issued in Q1, 2021;
A structural and geotechnical drilling program will be undertaken in Q3/Q4 2020 to finalize the Dasa
mine design;
A Pilot Plant project to confirm Dasa Process Plant flow sheet design is underway;
Further studies are ongoing to optimize the mine plan, process flow sheets, begin detailed engineering
and finalize capital and operating cost estimates.
Turkish Zinc JV, Iskenderun, Turkey
The modernized Turkish JV plant in Iskenderun is anticipated to operate at approximately 60%
capacity during 2020; operations in 2021 will be driven by CO VID-19 impact on the Turkish steel
industry and the availability of Electric Arc Furnace Dust (“EAFD”);
Zinc prices have recently increased to above $1.00/lb;
Repayments will continue on the Befesa loan through 2020 and 2021, to eliminate Turkish JV Project
debt.
Dividend flow from the Turkish JV will resume following repayment of the non -recourse,
modernization debt.
Summarized income statement and financial position information is shown as follows:
The consolidated financial statements reflect the equity method of accounting for Global Atomic’s interest in BST. The Company’s
share of net earnings and net assets are disclosed in the notes to the financial statements.
Dasa Uranium Project, Niger
On April 15, 2020, Global Atomic announced the results of a Preliminary Economic Assessment (“PEA”),
followed by the filing of an NI43 -101 compliant technical report on May 20, 2020. The objective of the
PEA was to assess the economic and technical viability of a Phase 1 Mine Plan at the Dasa Project with a
Stand-Alone Processing Plant to produce yellowcake on the property. The Phase 1 Mine Plan is limited to
the Flank Zone, comprising mostly Indicated Resources (88.5%) and resulting in an initial 12 -year mine
schedule.
(all amounts in C$) 2020 2019 2020 2019
Revenues 225,456$ -$ 449,653$ 53,678$
General and administration 948,462 1,327,038 1,501,288 1,782,908
Share of equity loss (earnings) 363,072 (3,608,756) 1,604,274 (5,619,023)
Other income (30,000) (30,000) (60,000) (60,000)
Finance expense 4,412 - 8,856 -
Foreign exchange loss (gain) 7,063 141 (18,129) 60,572
Net income (loss) (1,067,553)$ 2,311,577$ (2,586,636)$ 3,889,221$
Other comprehensive income (loss) 1,672,774-$ 771,880-$ (99,289)$ (3,074,428)$
Comprehensive income (loss) (2,740,327)$ 1,539,697$ (2,685,925)$ 814,793$
Basic net income per share ($0.007) $0.016 (0.017)$ 0.027$
Diluted net income per share ($0.007) $0.015 (0.016)$ 0.026$
Basic weighted-average number of
shares outstanding 150,610,282 142,721,198 149,338,229 141,827,544
Diluted weighted-average number of
shares outstanding 159,229,299 152,821,304 158,801,398 149,566,812
Cash dividends declared $0.000 $0.000 $0.000 $0.000
2020 2019
Cash 4,884,278$ 3,890,665$
Exploration & evaluation assets 35,532,041 32,515,297
Investment in joint venture 12,856,825 15,870,717
Other assets 1,147,828 1,328,399
Total assets 54,420,972$ 53,605,078$
Total liabilities 605,717$ 647,755$
Shareholders' equity 53,815,255$ 52,957,323$
As at June 30,
Three months ended June 30, Six months ended June 30,
Summary project metrics for Phase 1 are as follows:
Summary Project Metrics @ US$35/lb U3O8
Project Economics
Average Royalty rate (based on Mining Code sliding scale) % 9.1%
Average annual mine EBITDA(1) $M $93.8
After-tax NPV (8% discount rate) $M $211
After-tax IRR % 26.6%
Undiscounted after-tax cash flow (net of capex) $M $437
After-tax payback period Years 4.00
Unit Operating Costs
LOM average cash cost(2) $/lb U3O8 $16.72
AISC(2) $/lb U3O8 $18.39
Production Profile
Phase 1 Schedule Years 12
Total tonnes of mineralized material processed M Tonnes 4.0
Peak tonnes per day mineralized material Tonnes/day 1,124
Mill Head Grade Ppm 5,396
Overall Mill Recovery % 92%
Total Lbs U3O8 processed Mlbs 47.9
Total Lbs U3O8 recovered Mlbs 44.1
Average annual Lbs U3O8 production Mlbs 4.4
Peak annual Lbs U3O8 production Mlbs 5.2
(1) Mine EBITDA is a non-IFRS measure, does not have a standardized meaning prescribed by IFRS and may not be comparable
to similar terms and measures presented by other issuers. Mine EBITDA comprises earnings before income taxes, interest
expense (income) and financing expense (income), amortization expense, and other expenses including corporate costs.
(2) Cash costs include all mining, processing, site G&A, and royalty costs, as well as all head office and other off -site costs. All-in
sustain costs (“AISC”) include cash costs plus capital expenditures forecast after the start of commercial production.
The economic analysis for the PEA was done via a discounted cash flow (“DCF”) model based on the mining
inventory from the PEA Phase 1 Mine Plan and a price of US$35 per pound of U 3O8. Sensitivity analysis
was carried out at $5 per pound price intervals from $ 25 per pound to $50 per pound, as shown in the
table below. The DCF includes an assessment of the current tax regime and royalty requirements in Niger.
Net present value (“NPV”) figures are calculated using a range of discount rates as shown. The discount
rate used for the base -case analysis is 8% (“NPV 8”). Cash flows are discounted to the start of first
construction.
Economic sensitivity with varying uranium prices(1)
Uranium price (per pound) $25/lb $30/lb $35/lb $40/lb $45/lb $50/lb
Before-tax NPV @ 8% $41 M $139 M $260 M $365 M $485 M $601 M
After-tax NPV @ 8% $34 M $113 M $211 M $294 M $391 M $485 M
After-tax IRR 11.5% 18.5% 26.6% 32.6% 39.7% 46.3%
(1) Mine Stope Optimization (“MSO”) and schedule for all uranium price sensitivities used the MSO base case model at $35 per
pound uranium
Economic sensitivity with varying discount rates using base-case uranium price $35/lb
Discount rate (%) 5% 8% 10% 12%
Before-tax NPV $341 M $260 M $215 M $177 M
After-tax NPV $279 M $211 M $173 M $141 M
Turkish Zinc JV, Iskenderun, Turkey
The following table summarizes comparative operational metrics of the Iskenderun facility.
The Turkish Zinc JV owns and operates an EAFD processing plant in Iskenderun, Turkey. The plant
processes EAFD containing 25% to 30% zinc that is obtained from e lectric arc steel mills and produces a
zinc concentrate grading 68% to 70% zinc that is then sold to zinc smelters.
Global Atomic holds a 49% interest in the Turkish Zinc JV and , as such, the investment is accounted for
using the equity basis of accounti ng. Under this basis of accounting, the Company’s share of the JV’s
earnings is shown as a single line in its income statement.
In 2018, the Turkish Zinc JV approved a capital project to modernize and expand the Iskenderun plant.
The project began in 2018 and was completed in 2019. Prior to February 2019, all work involved
manufacturing of components for the new plant. In January 2019, the Iskenderun plant shut down so that
the site reconstruction could begin. Commissioning of the new plant was completed i n August and
production ramp up began in September. The Iskenderun plant now has the capacity to process 110,000
tonnes EAFD per annum, an increase from the 65,000 tonne per annum previous capacity.
Three months ended June 30, Six months ended June 30,
2020 2019 2020 2019
100% 100% 100% 100%
Exchange rate (TL/C$, average) 4.96 4.39 4.74 4.21
Exchange rate (C$/US$, average) 1.39 1.34 1.37 1.33
Exchange rate (TL/C$, period-end) 5.03 4.42 5.03 4.42
Exchange rate (C$/US$, period-end) 1.36 1.31 1.36 1.31
Average zinc price (US$/LB.) 0.89 1.25 0.93 1.24
EAFD processed (DMT) 20,606 - 39,026 4,644 -
Production (DMT) 7,715 - 14,161 1,291
Shipments (DMT) 7,738 - 15,752 1,553
Shipments (zinc content, 000 lb.) 11,842 - 24,345 2,271
The following table summarizes comparative results for 2020 and 2019 of the JV at 100%.
(1) EBITDA is a non -IFRS measure, does not have a standardized meaning prescribed by IFRS and may not be comparable to
similar terms and measures presented by other is suers. EBITDA comprises earnings before income taxes, interest expense
(income), foreign exchange loss (gain) on debt, depreciation, management fees, sales commissions, losses ( gains) on sale of
property, plant and equipment and impairment charges.
BST processed 39,026 tonnes EAFD in H1 2020, which represents approximately 71% of plant capacity.
2019 production is not comparable, as the plant was shut down for reconstruction after January 2019.
Operations in the year earlier period was subject to the ramp-up and adjustment of certain equipment to
optimize performance. COVID-19 had a negative impact on the Turkish steel industry in Q2 2020 which is
affecting the availability of EAFD in Q3 and possibly Q4 as well. The current outlook is that the plant will
process about 65,000 tonnes EAFD in 2020.
The zinc content in concentrate shipments during H1 2020 was 24.3 million pounds. Based on the current
outlook for 2020, zinc content of concentrate shipments for the year is expected to be 36.2 million
pounds.
The total cost for the plant modernization and expansion was approximately US $26.6 million, which was
funded by cash on hand, available credit lines from the BST JV’s Turkish bank and loans from Befesa. At
June 30, 2020, the Befesa loans totaled US $16.85 million, bearing interest at Libor + 4.0% and mature
between May and December 2022. The bank loans totaled US $6.0 million at June 30, 2020 and bear
interest at an average rate of 3.6% and mature in August/September 2020. The bank loans are expected
to roll over into new one -year bank loans. The Befesa loans are expected to be partially repaid in 2020,
with the majority repaid by the end of 2021.
The loans are denominated in US dollars but converted to Turkish Lira for functional accounting purposes.
For presentation purposes, the equity interests are then converted to Canadian dollars. The foreign
exchange loss for the 6 months to June 30, 2020 related to the joint venture debt was C$4.3 million ($1.2
million for the three months ended June 30, 2020). This foreign exchange loss is an unrealized loss, and
largely relates to the depreciation of the Turkish Lira relative to the US dollar from 5.95 at December 31,
2019 to 6 .84 at June 30, 2020, as well as the Canadian dollar relative to the US dollar, from $0.750 at
December 31, 2019 to $.735 at June 30, 2020. In economic terms, all revenues are received in US dollars
and these will be used to pay down the US denominated deb t, so no real exchange gains/losses will be
Three months ended June 30, Six months ended June 30,
2020 2019 2020 2019
100% 100% 100% 100%
Net sales revenues 8,810,299$ 171,612$ 17,094,569$ 5,356,688$
Cost of sales 7,281,400 1,376,112 14,430,707 5,324,139
Foreign exchange loss (gain) (259,670) (435,357) (755,091) (774,737)
EBITDA(1)
1,788,569$ (769,143)$ 3,418,953$ 807,286$
Management fees & sales commissions 457,545 8,236 907,972 123,961
Depreciation 712,625 20,964 1,610,037 48,884
Interest expense 428,088 80,704 913,123 111,788
Foreign exchange loss on debt 1,242,187 - 4,254,847 -
Other expense (income) - (773) - (7,103)
Tax expense (310,914) (8,243,080) (992,997) (10,937,637)
Net income (740,963)$ 7,364,806$ (3,274,030)$ 11,467,393$
Global Atomic's equity share (363,072)$ 3,608,755$ (1,604,275)$ 5,619,023$
Global Atomic's share of EBITDA 876,399 -376,880 1,675,287$ 395,570$
realized in US dollar terms. The accounting exchange losses relate to the debt are shown below EBITDA
as a financing related cost.
The cash balance of the Turkish entities was $2.6 million at June 30, 2020.
The Turkish entities qualified for an investment tax credit incentive on the new plant, of which TL 77.2
million (C$16.6 million) remains as a carry-forward balance at the end of Q2 2020. Tax expense (income)
shown in the income statement is a non-cash deferred tax amount.
Overall, the Company’s share of EBITDA was $0.9 million in Q2 2020 ($1.8 million for H1 2020) and its
share of net loss was $0.4 million ($1.6 million for H1 2020), driven largely by the unrealized foreign
exchange loss recognized on the debt balances.
QP Statement
The scientific and technical disclosures in this news release have been reviewed and approved by Ronald
S. Halas, P.Eng. and George A. Flach, P.Geo. who are “qualified persons” under National Instrument 43-
101 – Standards of Disclosure for Mineral Properties.
About Global Atomic
Global Atomic Corporation (www.globalatomiccorp.com) is a TSX listed company that provides a unique
combination of high-grade uranium mine development and cash-flowing zinc concentrate production.
The Company’s Uranium Division includes four deposits wit h the flagship project being the large, high -
grade Dasa Project, discovered in 2010 by Global Atomic geologists through grassroots field exploration.
The Company plans to submit its Development Plan for the Phase 1 high grade underground mine to the
Ministry of Mines in the Republic of Niger together with a Mining Permit application in Q3 2020.
Global Atomics’ Base Metals Division holds a 49% interest in the Befesa Silvermet Turkey, S.L. (“BST”) Joint
Venture, which operates a new, state of the art proces sing facility, located in Iskenderun, Turkey. The
plant recovers zinc from Electric Arc Furnace Dust (“EAFD”) to produce a high-grade zinc oxide concentrate
which is sold to zinc smelters around the world. The Company’s joint venture partner, Befesa Zinc S .A.U.
(“Befesa”) listed on the Frankfurt exchange under ‘BFSA’, holds a 51% interest in and is the operator of
the BST Joint Venture. Befesa is a market leader in EAFD recycling, with approximately 50% of the
European EAFD market and facilities located throughout Europe and Asia.
Key contacts:
Stephen G. Roman
Chairman, President and CEO
Tel: +1 (416) 368-3949
Email: [email protected]
Bob Tait
VP Investor Relations
Tel: +1 (416) 558-3858
Email: [email protected]
The information in this release may contain forward-looking information under applicable securities laws. Forward -looking information includes, but is not limited to, stateme nts with respect to completion of
any financings; Global Atomics’ development potential and timetable of its operations, development and exploration assets; Global Atomics’ ability to raise additional funds necessary; the future price of uranium;
the estimation of mineral reserves and resources; conclusions of economic evaluation; the realization of mineral reserve estimates; th e timing and amount of estimated future production, development and
exploration; cost of future activities; capital and operating expenditures; success of exploration activities; mining or processing issues; currency exchange rates; government regulation of mining operations; and
environmental and permitting risks. Generally, forward-looking statements can be identified by the use of forward-looking terminology such as “plans”, “is expected”, “estimates”, variations of such words and
phrases or statements that certain actions, events or results “could”, “would”, “might”, “will be taken”, “will begin”, “will include”, “are expected”, “occur” or “be achieved”. All information contained in this
news release, other than statements of current or historical fact, is forward -looking information. Statements of forward -looking information are subject to known and unknown risks, uncertainti es and other
factors that may cause the actual results, level of activity, performance or achievements of Global Atomic to be materially different from those expressed or implied by such forward-looking statements, including
but not limited to those risks described in the annual information form of Global Atomic and in its public documents filed on SEDAR from time to time.
Forward-looking statements are based on the opinions and estimates of management at the date such statements are made. Although management of Global Atomic has attempted to identify important factors
that could cause actual results to be materially different from those forward-looking statements, there may be other factors that cause results not to be as anticipated, estimated or intend ed. There can be no
assurance that such statements will prove to be accurate, as actual results and future events could differ materially from th ose anticipated in such statements. Accordingly, readers should not place undue
reliance upon forward-looking statements. Global Atomic does not undertake to update any forward-looking statements, except in accordance with applicable securities law. Readers should also review the risks
and uncertainties sections of Global Atomics’ annual and interim MD&As.
The Toronto Stock Exchange has not reviewed and does not accept responsibility for the adequacy and accuracy of this news release.