Global Atomic Announces Q3 2023 Results, Provides Corporate Update and Re-engagement by Development Banks
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NEWS RELEASE
Global Atomic Announces Q3 2023 Results, Provides Corporate Update
and Re-engagement by Development Banks
Toronto, ON, November 10, 2023: 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 nine months ended September 30, 2023.
Global Atomic President and CEO, Stephen G. Roman commented “Further to our Q2 2023 update
regarding the Republic of Niger, a transition government is in place and includes a new Prime Minister
and Cabinet, as well as the previous experienced staff in the Government Ministries. The Government
of Niger is a 20% owner of the Dasa Project and recognizes that the Dasa Mine will benefit the Republic
of Niger by generating royalty and tax revenue, creating new jobs and opportunities for local business
and revitalize the northern region of the country. The Government has offered its positive support for
the development of the Dasa Project.”
“The continued closure of Niger’s border with Benin has impacted operations at Dasa. We have,
however, successfully initiated an alternate supply route through the port of Lomé in Togo and then
through neighbouring Burkina Faso. Once assurance of mine supplies is deemed reliable we will resume
underground development.”
“Relating to the Project Financing, and pursuant to our news release dated October 10, 2023 the official
designation by the U.S. Government of the change of Government in July as a coup would put a
temporary hold on U.S. Development Bank financing pending visibility of a return to democratic elections.
We are pleased to report that the U.S. Government has expressed support for the project financing to
proceed and both development banks have been authorized to re-engage with the Company and finalize
funding arrangements. At the same time, we are actively assessing viable alternatives to both the supply
issue and the project funding.”
“The Nuclear Renaissance continues with more countries signing on to build reactors including many
orders for Small Modular Reactors (“SMR”). Uranium supply growth will continue to be limited to a small
number of restarts, a few In-Situ Leach (“ISL”) projects and Dasa, which is the only greenfield uranium
mine currently under development. The Company’s existing Yellowcake off-take agreements remain
firmly in place. Dasa’s ore body is the highest-grade uranium deposit in Africa and based on our recently
announced increase in our Mineral Resource Estimate we are revising Dasa’s mine plan and Phase 1
Feasibility Study, which is expected to significantly increase Mineable Reserves and further improve the
economics of the Project.”
HIGHLIGHTS AND OUTLOOK
Dasa Uranium Project
Niger Political Situation
The Niger military initiated a change in government on July 26, 2023.
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The initial reaction included the closure of surrounding borders and Niger air space as well as
discussion of military intervention by the Economic Community of African States (“ECOWAS”), which
has not occurred and is considered unlikely.
Niger air space re-opened with international flights resuming operations.
All land borders have been re-opened except for Benin and Nigeria.
The Government of Niger has confirmed its support of the Dasa Project and for SOMIDA to proceed
on schedule.
On October 10, 2023, the United States formally recognized the “Coup d’Etat”, which designation
restricts funding of the interim government to certain humanitarian aid.
Since then, the U.S. Senate voted overwhelmingly to support continued U.S. military presence in
Niger.
Recently, the U.S. Under Secretary for African Affairs stated that the U.S. stands ready to support
Niger in a successful transition to democratic rule, which is suggested to be within 2 years.
Dasa – Financing
The Company estimates it requires an additional US $250 to $275 million financing to complete the
Dasa Project construction and commissioning, excluding financing costs.
The Company has been working with Export Development Canada and a U.S. development bank to
put a project financing in place.
With the change of Government designated a Coup d’Etat by the U.S. in October, the Company was
advised the project financing would be placed on hold, pending a resolution of the Niger political
situation.
Subsequently, the U.S. Government has expressed support for the project financing and both banks
are continuing to proceed.
The Company is well advanced in negotiating a term sheet and expects this to be concluded shortly.
With the re-engagement of the development banks, the schedule for project financing is targeted for
credit committee approval in January followed by final approval in March 2024.
In view of the uncertainties about the timing of completion of a project financing, the Company has
commenced a process to review alternative funding options.
The ability to achieve the target project completion date of the end of 2025 depends on the Company’s
ability to raise sufficient funding over time to keep the project moving forward on this schedule.
In the alternative scenario in which no funding is available from any source, the Company has
developed near term objectives which include completion of procurement of equipment and service
contracts, obtaining engineering from selected vendors, completing detailed engineering with vendor
engineering information, and completing an updated feasibility study, using its existing cash.
Management will continue to work towards a completion of the debt facility, while evaluating
alternative funding options that support a financing decision in the best interests of shareholders.
Dasa – Mining
Ramp development has been underway since the beginning of 2023, with over 600 meters completed
as of the end of July 2023 to reach the top of the ore body.
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In August 2023, the Company suspended mine development due to the interruptions of supply chains
and depletion of certain consumables.
The closure of the Benin border has interrupted the normal supply route from the Port of Cotonou
through Benin to Niger.
The Niger government has been working with the Burkina Faso government to establish regular
convoys of trucks to deliver supplies from the port of Lomé in Togo and overland through Burkina
Faso.
The Company is currently utilizing this logistics route and will restart underground mine development
once assurance of mine supplies is deemed reliable.
The Company is also exploring the potential logistics route from the Mediterranean through Algeria.
Although mine development is on temporary hold, the Company remains on schedule to supply
uranium ore to the processing plant from the end of 2025 onward.
The Company’s engineering team is nearing completion of a new Mine Plan that will integrate the
recently updated MRE and updated capital and operating costs.
In view of the significant increase in indicated resources (50% at 1,500 ppm cut-off), it is expected
that the reserves previously reported in the Feasibility Study of 2021 and the Life of Mine (“LOM”) will
increase significantly.
The Company is undertaking an updated Feasibility Study to be completed in H1 2024, so that such
increases can be defined and reported to shareholders and investors.
Dasa – Team
The Company added two key members to the Dasa management team: John Wheeler, Director of
Operations and Site General Manager and Daniele Va lentino, Deputy Director of Operations &
Assistant General Manager.
John is a Member of Engineers Australia, having spent the past 13 years in the mining industry in
project management roles and most recently as general manager of Resolute Mining’s Syama mine
sites in Mali. Prior to this, John spent 18 years in the Royal Australian Navy and defence industry.
Daniele is a PhD Engineer with a specialty in ro ck mechanics, having spent the past 5 years working
for Orano Mining (“Orano”, previously known as AREVA), including the position of deputy production
manager and underground mine manager at the COMINAK mine in Niger prior to its closure. Before
that, Daniele had spent 18 years in the mining industry in Italy.
Offtake Agreements
In January 2023, the Company formalized an agreement with a major North American utility for the
procurement of Dasa’s uranium, representing the supply of 2.4 million pounds U3O8 over a six-year
period commencing in 2025.
On May 8, 2023, the Company formalized its June 2022 Letter of Intent by signing a definitive
agreement with a second major North American utility for their procurement of up to 2.1 million pounds
U3O8 from Dasa within a multi-year delivery window beginning in 2025.
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On October 2, 2023, the Company received Letter of Intent for the procurement of uranium from the
Company’s Dasa Project, representing the supply of up to 3.5 million pounds U3O8 within a multi-year
delivery window beginning in 2026.
Off-take agreements now total 1.3 million pounds U 3O8 per year for the first five years of mining,
providing the Company with the ability to repay project construction loans while maintaining leverage
to a firming U3O8 price.
Ore Sales Arrangement
The Company signed a Letter of Intent with Orano in 2017, regarding delivery of Dasa ore to the
SOMAIR plant in Arlit.
The intent was to develop the underground mine rapidly so that ore could be shipped to Orano’s
SOMAIR processing plant according to a schedule proposed by Orano.
The Company has concluded that a final agreement with Orano is not forthcoming, and accordingly,
has excluded early ore shipments from its current planning.
Project Development Schedule
The Company has experienced delays in logistics due to the political situation in Niger.
Combined with certain delays experienced with engineering and procurement, the commissioning
date of the process plant is now forecast for the end of 2025.
The mine plan is currently being updated to incorporate additional Indicated Resources pursuant to
the Company’s updated Mineral Resource Estimate (“MRE”) of May 2023.
The current plan is to provide ore to the processing plant from the end of 2025.
Turkish Zinc Joint Venture
The Turkish Zinc Joint Venture (“BST” or the “Turkish JV”) plant processed 21,197 tonnes EAFD in
Q3 2023 as it resumed operations following the significant earthquakes earlier in the year.
The zinc contained in concentrate shipments wa s 4.1 million pounds and the average monthly LME
zinc price was US$1.10/lb in Q3 2023.
The Company’s share of the Turkish JV EBITDA was a loss of $1.9 million in Q3 2023 ($1.7 million
loss in Q3 2022).
The revolving credit facility of the Turkish JV was US$11.8 million as of the end of Q3 2023 (Global
Atomic share – US$5.8 million).
The cash balance of the Turkish JV was US$1.5 million as of the end of Q3 2023.
It is expected that the Turkish JV will operate at full capacity through to the end of 2023.
It is also expected that the Turkish JV will return to profitability in 2024 with the normalization of the
cost of the EAFD and coking coal used to produce the zinc oxide concentrate.
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Corporate
Global Atomic continues to receive quarterly management fees and monthly sales commissions from
the Turkish JV ($166,000 in Q3 2023 compared to $209,000 in Q3 2022), helping to offset corporate
overhead costs.
Cash balance as of September 30, 2023, was $23.5 million.
GLOBAL ATOMIC CORPORATION COMPARATIVE RESULTS
The following table summarizes comparative results of operations of the Company:
(all amounts in C$) 2023 2022 2023 2022
Revenues 165,669 $ 209,393 $ 498,783 $ 1,039,371 $
General and administration 1,539,895 1,874,722 6,179,047 6,907,950
Share of equity loss (earnings) 3,215,405 2,201,074 8,150,927 (328,227)
Other expense - (10,564) - 581,071
Finance income (353,635) (40,301) (958,763) (83,439)
Foreign exchange loss (3,435,995) (2,456,458) (621,889) (2,389,045)
Net loss (800,001) $ (1,359,080) $ (12,250,539) $ (3,648,939) $
Net loss attributable to:
Shareholders of the Company (804,775) (1,316,378) (12,280,586) (3,606,237)
Non-controlling interests 4,774 (42,702) 30,047 (42,702)
Other comprehensive income (loss) 2,524,768$ 1,614,064 $ (274,231) $ (2,921,921) $
Comprehensive loss 1,724,767 $ 254,984 $ (12,524,770)$ (6,570,860) $
Comprehensive loss attributable to:
Shareholders of the Company 1,732,294 189,625 (12,523,442) (6,636,219)
Non-controlling interests (7,527) 65,359 (1,328) 65,359
Basic and diluted net loss per share ($0.00) ($0.01) ($0.06) ($0.02)
Basic weighted-average
number of shares outstanding 202,191,445 178,178,390 196,386,501 176,709,774
Diluted weighted-average
number of shares outstanding 202,191,445 178,178,390 196,386,501 176,709,774
September 30, December 31,
2023 2022
Cash 23,483,749$ 8,400,008 $
Property, plant and equipment 119,719,403 82,234,716
Exploration & evaluation assets 1,312,217 1,115,983
Investment in joint venture 8,575,135 16,387,040
Other assets 5,130,736 2,118,258
Total assets 158,221,240 $ 110,256,005 $
Total liabilities 13,519,085 $ 8,746,681 $
Total equity 144,702,155 $ 101,509,324 $
Three months ended September 30, Nine months ended September 30,
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The consolidated financial statements reflect the equity method of accounting for Global Atomic’s interest
in the Turkish JV. The Company’s share of net earnings and net assets are disclosed in the notes to the
financial statements. See also the commentary below under “Turkish Zinc EAFD Operations.”
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.
Share of net earnings from joint venture represents Global Atomic’s equity share of net earnings from
the Turkish JV. In view of limited production, lower zinc prices in 2023, significant increases in expenses,
devaluation of the Turkish Lira resulting in a negative equity income of $3.2 million in Q3 2023 and $8.2
million for the nine months ended September 30, 2023.
URANIUM BUSINESS
Resources
On May 23, 2023, the Company announced an updated mineral resource estimate for the Dasa Project.
The new mineral resource estimate incorporates drill, probe and chemical assay data compiled from an
extensive 16,000-meter drill program initiated in September 2021 that focused on infill drilling to upgrade
Inferred Resources to the higher resource classification of Indicated to allow these resources to be
included in an updated mine plan and mineral reserve. The current basis for production plans at the
Dasa Project, remains the mineral reserve disclosed in the 2021 Dasa Technical Report. The Company
plans to update the Technical Report with the new resource information and will disclose any revisions
to that mineral reserve or to the mine plan, including in a material change report. The Indicated Resource
using a cut-off grade of 1,500 ppm eU3O8, has increased by 50%.
Reserve Expansion
Drill results from the 2021/22 16,000-meter drill program indicate that Zones 2, 2a and 2b now represent
a contiguous zone that joins up with Zone 3 and is estimated to be approximately three times larger than
initially defined.
On the strength of results from the overall drill program, Global Atomic updated the Dasa Mineral
Resource Estimate (“revised MRE”) and will in turn update its Mine Plan which is expected to result in
larger and contiguous mining Zones, reduced underground development work between the Zones, lower
operating costs and an increase in mineable reserves.
The revised MRE was completed on May 23, 2023. The Company plans to use the revised MRE to
complete a revised mine plan for the Dasa Project, followed by a revised Feasibility Study.
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Offtake Agreements
On May 8, 2023, the Company announced that it had formalized its June 2022 Letter of Intent by signing
a Definitive Agreement with a major North American utility for their procurement of uranium from the Dasa
Project. The agreement represents the supply of up to 2.1 million pounds U3O8 within a multi-year delivery
window beginning in 2025, representing about 7% of Dasa’s annual production over the period with a
revenue potential valued in excess of US$110 million in real terms. The announcement also noted that
in January 2023, the Company formalized a similar agreement with another major North American utility
for the procurement of Dasa’s uranium, representing the supply of 2.4 million pounds U 3O8 over a six-
year period commencing in 2025, representing a revenue potential of US$140 million in real terms. In
total these two agreements represent revenue potential of over US$250 million. On October 2, 2023, the
Company announced that it had entered into a Letter of Intent to sell up to 3.5 million pounds U 3O8 over
a multi-year delivery window beginning in 2026, representing a revenue potential of US$240 million in
real terms. Offtake agreements now total 1.3 million pounds U3O8 per year for the first five years of mining,
providing the Company with the ability to re-pay project construction loans while maintaining leverage to
a firming U3O8 price.
Niger Political Situation
On July 26, 2023, the military in Niger placed the president under house arrest and assumed day-to-day
operation of the government. This move was widely condemned by the international community. The
Economic Community of West African States (E COWAS) threatened military intervention, suspended
relations with Niger and closed their land and air borders with Niger. The risk of military intervention
appears to have diminished, and it is the Company’s expectation that a negotiated resolution to the
concerns raised by ECOWAS will be reached over the coming months. Many ECOWAS countries did not
support the border closures imposed by ECOWAS and all borders remain open to economic and human
traffic, except Nigeria and Benin. The Benin route from the Port of Cotonou has historically been the main
supply route for Niger, so its border closure has disrupted the Company’s supply chain, which resulted
in the Company discontinuing mine development activities in August. On October 10, 2023, the United
States declared that the military rule is now considered a Coup d’Etat, resulting in the suspension of US
economic assistance to the government of Niger. The United States government indicated that a
resumption of economic assistance to the government would require the military leadership to usher in
democratic governance in a quick and credible time frame.
Project Development Schedule
Mine development activities at the Dasa Project were halted in August 2023, as a result of depletion of
consumable supplies and the closure of normal logistics channels required to procure such consumable
supplies. The Company had completed 622 meters of ramp development at the time development
activities were halted. Deliveries of the required consumables are expected in November and the mine
development will resume once the Company is able to rely on its supply chains and funding is available.
Basic engineering of the processing plant and si gnificantly advanced the procurement process,
particularly for long lead items. Various delays in basic engineering and procurement processes delayed
the receipt of engineered documentation from key equipment suppliers which in turn has delayed detailed
engineering of the process plant. Assuming financing is available when required, the Company now
expects the commissioning of the processing plant will occur in Q4 2025. The key steps required to
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achieve that objective, in addition to completing the milestones disclosed under business objectives and
milestones, are the purchase of remaining required mine and processing plant equipment, completion of
mine development, and the construction and commissioning of the processing plant.
Ore Sales Arrangement
The Company had been in discussions for the potential sale of ore from the Dasa Project to Orano for
processing at their SOMAIR processing plant in Niger. The intent had been to ship ore beginning in 2024
with cash flow from such sales contributing to the capital cost of the processing plant. Discussions on a
potential agreement have not progressed and the Company does not currently expect to reach an
agreement with Orano and the potential for such an arrangement is no longer being included in the
Company’s planning.
Project Financing
The Company has been in on-going negotiations to obtain project financing. The project financing is
being negotiated with Export Development Canada and a U.S. development bank. On October 10, 2023,
the Company announced that because of the Coup d’Etat designation of the situation in Niger by the U.S.
Government, the U.S. development bank would temporarily put the project financing on hold pending
visibility on a return to democratic elections . The Company has since been advised by the U.S.
development bank that the U.S. Government has expressed support for the Dasa Project and the U.S.
development bank has been authorized to re-engage with the Company. The banks are now proceeding
with their review and finalization of credit committee documentation, with target credit committee approval
in January 2024. Project costs for purposes of the project financing have been estimated to be US$381.8
million, including financing costs, corporate costs and contingencies prior to achieving commercial
production (see details in management’s discussion and analysis of the Company for the three and six
months ended June 30, 2023). Additionally, a cost overrun facility of US$28 million has been
recommended by the technical consultants to the lenders. It is anticipated that the project financing will
provide 60% of the total project costs plus 50% of the cost overrun facility. The Company must finance
the balance with equity or quasi-equity, of which US$61 million has been funded to the end of September
2023.
Business Objectives and Milestones
The principal business objective of the Company is to complete the development, construction and
commissioning of the Dasa Project by Q4 2025 and begin shipping yellowcake in fulfillment of off-take
agreements in Q1 2026. As previously disclosed, the Company had expected commissioning of the Dasa
Project to occur in Q4 2024. However, the political situation in Niger has resulted in supply chain
disruptions and a delay in finalizing the necessary project financing. As result of the delays, the Company
has re-evaluated the timeline for commissioning of the Dasa Project and the near-term milestones
towards achieving its objective.
The Company’s business plan over the next 12 months includes the following milestones in advancing
the Dasa Project:
Complete equipment and construction contracts,