Dasa Uranium Project Feasibility Study
Advances towards Completion
-
Stronger Zinc Pricing at the Turkish Zinc
Joint Venture
TORONTO, Aug. 12, 2021 /CNW/ - 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:
-
- Completion of water boreholes and water pump tests of various
aquifers
- Filtration and settling tests to confirm the process
flowsheet
- Process plant engineering, including detailed process design,
piping, instrumentation and electrical requirements
- Design of the underground mine, including stope sizing, optimum
excavation size, and equipment requirements
- Trade-off studies for several components of the Dasa Project
including backfill system design, mining method, and tailings
storage
- Accurate cost quotations for equipment and materials, including
reagents
- Mine Boxcut and Portal design completion
- 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 compared 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.
- 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 capital markets and wish him well in all his
endeavours."
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 the 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 $1.32/pound in Q2 2021, are
expected to remain strong through the balance of the year.
- Turkish steel production is expected to strengthen through the
remainder of 2021 and into 2022.
- Full repayment of the Befesa plant modernization loan is
anticipated by the end of 2021, subject to zinc prices and EAFD
availability.
- Turkish JV dividend payments will resume following repayment of
the non-recourse loan from Befesa.
- Global Atomic will continue to receive monthly management fees
and sales commissions helping to offset corporate cost.
Comparative Results
The following table summarizes comparative results of operations
of the Company:
Comparative
Results
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
June 30,
|
|
Six months ended
June 30,
|
(all amounts in
C$)
|
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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As
at
|
|
|
|
|
|
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
|
|
|
|
|
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 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 Somaïr 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
adviser 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 lbs)
|
5,632
|
11,842
|
|
20,056
|
|
24,345
|
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
|
(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 growth 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 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.
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 estimates; 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, is 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 materially 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.
SOURCE Global Atomic Corporation