Global Atomic Announces Q2 2021 Results Dasa Uranium Project Feasibility Study Advances towards Completion - Stronger Zinc Pricing at the Turkish Zinc Joint Venture
NEWS RELEASE
Global Atomic Announces Q2 2021 Results
Dasa Uranium Project Feasibility Study Advances towards Completion
-
Stronger Zinc Pricing at the Turkish Zinc Joint Venture
Toronto, ON, August 12, 2021: 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, 2021.
HIGHLIGHTS
Dasa Phase 1 Uranium Project in the Republic of Niger
➢ The Company advanced key components of its Feasibility Study including:
o Completion of water boreholes and water pump tests of various aquifers
o Filtration and settling tests to confirm the process flowsheet
o Process plant engineering, including detailed process design, piping, instrumentation
and electrical requirements
o Design of the underground mine, including stope sizing, optimum excavation size,
and equipment requirements
o Trade-off studies for several components of the Dasa Project including backfill
system design, mining method, and tailings storage
o Accurate cost quotations for equipment and materials, including reagents
o Mine Boxcut and Portal design completion
o Geotechnical drilling and lab testing of core samples for rock strength
➢ HCF International Advisers Limited was engaged as the Company’s financial adviser to assist
in project debt financing for the development of the Dasa Project. A short list of interested
financial institutions has been presented to the Company.
➢ Orano Mining (“Orano”) completed successful testing of Dasa ore to confirm blending
characteristics at Orano’s Somaïr uranium processing plant. As a result, the Company is
advancing negotiations with Orano relating to direct shipments of ore.
➢ The Company announced a drill program beginning in September 2021, with a focus on
upgrading the extensive Indicated and Inferred mineral resources to Measured and Indicated
categories through infill drilling on strike of the Phase 1, Flank Zone mining area. Exploration
drilling along strike will also be completed on high priority targets at Dasa.
Turkish Zinc Joint Venture in Turkey
➢ The Company’s share of the Turkish Zinc Joint Venture (“Turkish JV”) EBITDA was $1.6
million in Q2 2021 compa red with $0.9 million in Q2 2020, reflecting higher zinc prices,
partially offset by scheduled maintenance shut downs and limited EAFD supply from steel
mills. Year-to-date, the Company’s share of EBITDA was $5.8 million compared to $1.7 million
in 2020.
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➢ The Company’s share of the Turkish JV Net Income for Q2 2021 was $0.3 million compared
to a loss of $0.4 million in Q2 2020. For H1 2021, the Company’s share of Turkish JV Net
Income was $1.8 million compared to a loss of $1.6 million in 2020.
➢ For the 6 months ended June 30, 2021, the Turkish JV processed 36,642 tonnes EAFD (2020
– 29,026 tonnes) and shipped 20.0 million pounds zinc contained in concentrates (2020 –
24.3 million pounds).
➢ Cash balance for the Turkish JV at June 30, 2021 was US $5.0 million.
➢ The non-recourse Turkish JV debt owing to Befesa was reduced to US $7.65 million at June
30, 2021 (Global Atomic share – US $3.75 million).
Corporate
➢ In anticipation of the completion of the Feasibility Study, the Company added four key
members to the management team: Pierre Hardouin, VP Finance; Jacques Tremblay, P. Eng.,
Manager Mining Operations; Ian Moffatt, Project Superintendent, and Becher Raffoul, IT
Manager.
➢ Appointed Dean Chambers to the Board of Directors
➢ Cash balance at June 30, 2021 was $10.1 million.
Stephen G. Roman, President and CEO commented, “Extensive work has been done to advance
our Feasibility Study for Phase 1 of the Dasa Uranium Project. Based on the work of the 2020
PEA, as well as various trade-off studies, the better-than-expected results of our Pilot Plant trials
as well as the extensive and detailed engineering work completed to date, Global Atomic remains
on schedule to break ground for the Dasa Mine Portal in Q1, 2022. We continue to work on a
Project Debt Solution with our Advisers and expect bid proposals in Q4 from several EPCM
contractors regarding the construction of the Process Plant. We have expanded and strengthened
our management and operations teams as we move closer to field operations.”
“Our Turkish Zinc JV in Iskenderun is performing as expected and the price of zinc has recovered
well from the initial months of the pandemic in 2020, reaching an average of US$1.32 per pound
in the second quarter of 2021. In that quarter we took planned maintenance downtime to finetune
the plant and clean the kiln and built up EAFD stockpiles to enable higher operating rates in the
second half of the year. We expect that cash flow in the second half will be sufficient to pay off
the remaining Befesa debt related to the 2019 plant expansion and modernization, which will then
allow the cash flow to accumulate again for annual dividend payments to the Company.”
“During the quarter, we were pleased to have Dean Chambers join our Board of Directors, bringing
significant financial expertise to our Audit Committee and the benefit of his extensive career in
the mining and chemical industries. Dean was appointed Chair of the Audit Committee and
replaces Paul Cronin who stepped down from the Board to pursue his many other interests. We
thank Paul for his years of valuable guidance on matters relating to mining and capi tal markets
and wish him well in all his endeavours.”
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OUTLOOK
Dasa Uranium Project
➢ Complete the Feasibility Study by the end of Q3 2021
➢ Arrange off-take agreements for a portion of Dasa Phase 1 yellowcake production
➢ Commence a 15,000 meter drill program , September 2021, to upgrade extensive uranium
resources on-strike of the Phase 1 Flank Zone and increase the overall uranium resources at
Dasa with along strike step-out drilling
➢ Upgrade on -strike resources to enable design of t he Dasa Phase 2 Mining Area with
economics to increase current Dasa Project NPV and IRR.
➢ Arrange project debt financing
➢ Break ground to begin Boxcut and Mine Portal in Q1 2022
➢ Advance ramping and continue underground development in 2023; begin plant construction
➢ Commission Dasa Uranium Plant and commence commercial production in Q4 2024
Turkish Zinc Joint Venture
➢ The zinc plant is expected to operate at target operating efficiencies in the second half of 2021
and attain up to 70% of capacity EAFD processing for 2021.
➢ Zinc prices, which staged a strong recovery in 2020 and averaged $1.32/pound in Q2 2021,
are expected to remain strong through the balance of the year.
➢ Turkish steel production is expected to strengthen through the remainder of 2021 and into
2022.
➢ Full repayment of the Befesa plant modernization loan is anticipated by the end of 2021,
subject to zinc prices and EAFD availability.
➢ Turkish JV dividend payments will resume following repayment of the non-recourse loan from
Befesa.
➢ Global Atomic will continue to receive monthly management fees and sales commissions
helping to offset corporate cost.
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Comparative Results
The following table summarizes comparative results of operations of the Company:
The consolidated financial statements reflect the equity method of accounting for Global Atomic’s interest in BST. The
Company’s share of net earnings and net assets are disclosed in the notes to the financial statements.
Upon completion of the PEA, the Company undertook various optimization and trade-off studies
and initiated the final Feasibility Study for the Phase 1 mine plan. The Feasibility Study is well
underway, and results are expected to be announced by the end of Q3 2021.
The Orano underground Cominak mine in Arlit, Niger, ceased operating in March of this year and
has resulted in a large work force of skilled personnel seeking employment opportunities. Global
(all amounts in C$) 2021 2020 2021 2020
Revenues 166,627$ 225,456$ 609,790$ 449,653$
General and administration 1,704,173 948,460 3,715,706 1,501,288
Share of equity loss (earnings) (308,491) 363,072 (1,809,581) 1,604,274
Other income (32,000) (30,000) (67,000) (60,000)
Finance expense 6,262 4,412 10,601 8,856
Foreign exchange loss (gain) 82,755 7,063 53,373 (18,129)
Net income (loss) (1,286,072)$ (1,067,551)$ (1,293,309)$ (2,586,636)$
Other comprehensive income (loss) (792,754)$ (1,672,774)$ (3,886,893)$ (99,289)$
Comprehensive income (loss) (2,078,826)$ (2,740,325)$ (5,180,202)$ (2,685,925)$
Basic net income per share ($0.008) ($0.007) (0.008)$ (0.017)$
Diluted net income per share ($0.008) ($0.007) (0.008)$ (0.016)$
Basic weighted-average number of
shares outstanding 162,119,449 150,610,282 158,934,765 149,338,229
Diluted weighted-average number of
shares outstanding 162,119,449 159,229,299 158,934,765 158,801,398
30-Jun 31-Dec
2021 2020
Cash 10,080,192$ 2,448,235$
Exploration & evaluation assets 40,731,752 37,812,477
Investment in joint venture 11,206,341 11,497,351
Other assets 1,558,228 1,283,024
Total assets 63,576,513$ 53,041,087$
Total liabilities 1,019,047$ 1,231,149$
Shareholders' equity 62,557,466$ 51,809,938$
Three months ended June 30, Six months ended June 30,
As at
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Atomic is reviewing resumes as we plan our organization to begin the development of the Dasa
mine and construction of the mill.
The Company previously entered a Memorandum of Understanding with Orano to explore
opportunities to cooperate, including the potential shipment of ore to Orano’s operation in Somaïr,
Niger. In July 2021, Orano completed successful test work on Dasa ore to confirm blending
characteristics with Soma ïr ore. As a result, the Company has advanced its negotiations with
Orano to process up to 500,000 tonnes of Dasa ore at the Somaïr facility.
The Company has engaged HCF International Advisers as financial advis er to assist with the
arrangement of project debt financing. Concurrently, the Company has developed a marketing
strategy and initial contacts have been made with utilities, with a view to securing contracts for a
portion of Dasa Phase 1 yellowcake production.
In April, the Company announced that it will begin a 15,000 meter drill program in September.
The drill program is focused on upgrading the extensive Indicated and Inferred resources at Dasa
to the Measured and Indicated categories on strike of the Flank Zone. With the upgrading of the
on-strike resources, the Phase 1 Flank Zone mining area is expected to be expanded, adding to
the current 12-year mine plan at the Flank Zone as well as allowing Global Atomic to define the
Phase 2 mine plan incorporating the upgraded mineral resources. In addition to the infill drilling,
an exploration drill program is also planned to potentially increase the overall uranium resources
at Dasa.
Turkish Zinc JV, Iskenderun, Turkey
The following table summarizes comparative operational metrics of the Turkish JV facility.
Three months ended June 30, Six months ended June 30,
2021 2020 2021 2020
100% 100% 100% 100%
Exchange rate (TL/C$, average) 6.84 4.96 6.34 4.74
Exchange rate (C$/US$, average) 1.23 1.39 1.25 1.37
Exchange rate (TL/C$, period-end) 7.02 5.03 7.02 5.03
Exchange rate (C$/US$, period-end) 1.24 1.36 1.24 1.36
Average zinc price (US$/LB.) 1.32 0.89 1.28 0.93
EAFD processed (DMT) 12,235 20,606 36,642 39,026
Production (DMT) 4,262 7,715 13,017 14,161
Shipments (DMT) 3,742 7,738 13,197 15,752
Shipments (zinc content '000 lb.) 5,632 11,842 20,056 24,345
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The average zinc price in Q2 2021 was US $1.32/lb, up from US $0.89/lb in Q2 2020. The zinc
price was negatively affected due to COVID-19 in Q1 & Q2 2020, but then began recovering from
the summer 2020 through to the end of the year. The zinc price has continued to hold up
throughout 2021, in view of tight concentrate supplies and continued demand recovery.
A general recovery in the steel industry began in Q3 2020 and has continued into 2021, with all
global regions showing total increased production of 14.4% in H1 2021 compared with H1 2020.
Compared to the pre -COVID H1 2019, global steel production has increased by 8.5%. The
regional increases in H1 2021 compared with H1 2020 were as follows: Chinese production
increased 11.8%; European Union production increased 18,4%; North American production
increased 16.4%, and; Turkish production increased 20.6%. In H1 2021, Turkish steel production
was 19.7 million tonnes, indicating a capacity utilization of 79% , although steel mills with blast
furnaces typically run at higher rates than those mills using electric arc furnaces which supply the
EAFD for our Turkish JV.
The Turkish JV processed 36,642 tonnes EAFD in H1 2021 (H1 2020 – 39,026 tonnes), which
represents approximately 67% of plant capacity. In Q2 2021, BST processed 12,235 tonnes
EAFD compared with 24,407 tonnes in Q1 2021. The decline in throughput resulted from a
planned maintenance shut down as well as less EAFD availability in Q2 2021. The zinc content
in concentrate shipments during H1 2021 was 20.1 million pounds compared with 24.3 million
pounds in H1 2020.
The following table summarizes comparative results for 2021 and 2020 of the Turkish Zinc JV at
100%.
Three months ended June 30, Six months ended June 30,
2021 2020 2021 2020
100% 100% 100% 100%
Net sales revenues 6,408,616$ 8,810,299$ 22,207,251$ 17,094,569$
Cost of sales 3,279,251 7,281,400 11,266,770 14,430,707
Foreign exchange loss (gain) (88,850) (259,670) (817,225) (755,091)
EBITDA(1)
3,218,215$ 1,788,569$ 11,757,705$ 3,418,953$
Management fees & sales commissions 320,933 457,545 1,226,675 907,972
Depreciation 614,511 712,625 1,343,868 1,610,037
Interest expense 190,139 428,088 470,957 913,123
Foreign exchange loss on debt 611,937 1,242,187 3,234,932 4,254,847
Deferred tax expense 851,121 (310,914) 1,788,251 (992,997)
Net income 629,573$ (740,962)$ 3,693,022$ (3,274,029)$
Global Atomic's equity share 308,491$ (363,071)$ 1,809,581$ (1,604,274)$
Global Atomic's share of EBITDA 1,576,925$ 876,399$ 5,761,276$ 1,675,287$
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(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 issuers. 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.
The Turkish JV realized significant gr owth in revenues during H1 2021 compared to the same
period in 2020, largely impacted by the higher zinc price in 2021. However, due to lower
throughput in Q2 2021 compared with Q2 2020, revenues in the quarter declined from $8.8 million
in 2020 to $6.4 million in 2021. Notwithstanding the decline in revenues for the quarter, improved
operating efficiencies and reduced smelter treatment charges resulted in an increase in EBITDA
to $3.2 million for Q2 2021 compared with $1.8 million in Q2 2020.
The cash balance of the Turkish JV was US $5.0 million at June 30, 2021.
Total debt has been reduced to US $14.7 million in 2021 from US $21.8 million at the end of 2020.
At June 30, 2021, the Befesa loans totalled US $7. 7 million (December 31, 2020 – US $13.6
million) and bear interest at Libor + 4.0% with no fixed maturity date. The Turkish bank loan
balance was US $7.0 million at June 30, 2021 (December 31, 2020 - US $8.2 million) and bears
interest at 3.18%.
The Befesa loans have no fixed payment terms. Subject to continued strong zinc prices and a
strong steel market to provide EAFD supplies, it is expected that the Befesa loans will be largely
paid out by the end of 2021. The Turkish bank loans are structured as a revolving credit facility
and can be rolled forward . Once the Befesa loans have been repaid, dividend payments to the
Company are expected to resume.
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 publicly 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 with the flagship project being the large,
highgrade Dasa Project, discovered in 2010 by Global Atomic geologists through grassroots field
exploration. With the issuance of the Dasa Mining Permit and an Environmental Compliance
Certificate by the Republic of Niger, the Dasa Project is fully permitted for commercial production.
Final design in support of the Company’s Feasibility Study is ongoing.
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 zinc production plant, 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 t o zinc smelters around the world. The
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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 recy cling, 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, statements 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 esti mates; the 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, i s forward-looking information. Statements of forward -looking information are subject to known and unknown risks, uncertainties 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 intended. There can be no
assurance that such statements will prove to be accurate, as actual results and future events could differ ma terially from those 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.