Dasa Uranium Project Feasibility Study
Nears Completion
-
Stronger Uranium and Zinc Prices Improve
Outlook
All monetary amounts are in Canadian dollars
unless otherwise indicated.
TORONTO, Nov. 11, 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 nine months ended September 30, 2021.
HIGHLIGHTS
Dasa Phase 1 Uranium Project in the Republic of
Niger
- The Company's Feasibility Study is near completion and will be
released in November.
- The Company's financial adviser has received initial interest
from project finance institutions and negotiations are expected to
escalate upon the release of the Feasibility Study.
- The Company and Fuel Link Ltd., have initiated Yellowcake
offtake discussions with Utliities and presented the Dasa Project's
expected development timelines and production schedule.
- In August, the Republic of Niger confirmed it will limit its interest in
the Dasa Project to the statutory 10% minimum through the Company's
Niger mining subsidiary.
- The Company is advancing negotiations with Orano Mining
("Orano") relating to Direct Shipping Ore ("DSO").
- The Company began the 15,000 meter Dasa drill program in
September 2021 as planned, with a
focus on upgrading mineral resources located on strike of the Phase
1 Flank Zone mining area to the Measured and Indicated categories
and, extending mineralization on strike.
- The Company also began a drill program at the Isakanan deposit
on the Adrar Emoles 4 permit to recover core for In-Situ leach
testing.
Turkish Zinc Joint Venture
- The Company's share of Turkish Zinc Joint Venture ("Turkish
Zinc JV") EBITDA was $3.1 million in
Q3 2021 compared with $1.2 million in
Q3 2020, reflecting higher zinc prices and production levels in
2021.
- Through Q3 2021 the Company's share of Turkish Zinc JV EBITDA
was $8.9 million compared to
$2.9 million in 2020.
- The Company's share of Turkish Zinc JV Net Income for Q3 2021
was $2.1 million compared to a loss
of $1.4 million in Q3 2020. For the 9
months ended September 30, 2021, the
Company's share of Turkish Zinc JV Net Income was $3.9 million compared to a loss of $3.0 million in 2020.
- For the 9 months ended September 30,
2021, the Turkish Zinc JV processed 53,012 tonnes EAFD (2020
– 51,295 tonnes) and shipped 28.1 million pounds zinc contained in
concentrates (2020 – 30.6 million pounds).
- Shipments of zinc concentrate from the Turkish Zinc JV to
smelters continued unabated in Q3 2021 despite energy-related
shutdowns at some smelters.
- Cash balance for the Turkish Zinc JV at September 30, 2021 was US $4.0 million.
- The non-recourse Turkish Zinc JV debt owing to Befesa was
reduced to US $5.65 million at
September 30, 2021 (Global Atomic
share – US $2.77 million) and on
schedule to be fully repaid by year end.
Corporate
- Cash balance at September 30,
2021 was $7.6 million.
Stephen G. Roman, President and
CEO commented, "We are entering a new era of clean, sustainable
electric energy where uranium will play an important role in
meeting the world's carbon emissions targets. We are fortunate to
have advanced our Dasa Project to completion of the Feasibility
Study through some difficult years and are now rewarding our
shareholders with a world class project fully permitted and ready
to build. The Uranium market fundamentals have improved
substantially and many nations are now adopting the benefits of
baseload nuclear power with China
leading the charge with the recent announcement of 150 new reactor
builds over the next 15 years."
"The zinc price rise over the past year has also been
impressive and contributed to a rapid payback of development
capital at our Iskenderun Project which remains on track for the
year end payout of the Befesa loan."
"The Dasa Project is progressing on several
fronts. As we complete the Feasibility Study to build
the mine and processing plant, we have also initiated activity at
the Dasa Project site. A local Niger contractor has been engaged to begin
Box-Cut excavation in January. Once completed, CMAC-Thyssen,
a Canadian mine contractor based in Val
d'Or, Quebec, will collar the portal and begin underground
mine development. Equipment for these work programs has
been secured."
"Our in-fill drilling program is currently underway to
upgrade on strike resources and add additional potential to the
Phase 1, Flank Zone mining area. At our Isakanan deposit,
core samples are now being recovered through additional
drilling in order to test the deposit's porosity and
permeability for In-Situ leaching."
"Global Atomic has been very active over Q3, and our pace
will continue as we remain on track for deliveries of first
Yellowcake by January, 2025."
OUTLOOK
Dasa Uranium Project
- The Feasibility Study results will be announced in
November.
- The Company will complete the incorporation of the Niger mining company and issue 10% of the
common shares to the Government of the Republic of Niger.
- The Company has engaged a Niger contractor to begin the mine Box-Cut
excavation in January 2022.
- CMAC-Thyssen International ("CMAC") has been selected as the
contract miner for the Dasa mine development. Contract discussions
are being finalised.
- CMAC is planning to mobilize to site in March 2022 and begin ramp development in April,
2022. CMAC will provide contract mining services for the first 2
years, after which the Company plans to transition to
owner-operated mining.
- The Dasa mineral resource will be updated in 2022 to
include results from the current drill program, enabling design of
the Dasa Phase 2 Mining Area with economics that are expected to
increase the current Dasa Project NPV/IRR. The Phase 1, Flank Zone
area encompasses only 20% of the current Dasa resource.
- The Company is continuing discussions with Orano Mining for the
processing of DSO at the Somaïr facility and could begin shipments
in 2023.
- Upon completion of the Feasibility Study, the Company will
enter discussions to select an Engineering, Procurement,
Construction and Management ("EPCM") contractor.
- Initial project debt financing discussions have begun and
financing for the mill construction is expected to be in place H2
2022.
- The Company will advance ramping and underground development in
2022 with plant construction beginning Q1 2023.
- The Dasa Uranium Plant is expected to commence commercial
production in Q4 2024.
Turkish Zinc Joint Venture
- The Turkish Zinc JV plant is expected to process approximately
70,000 tonnes EAFD in 2021.
- Zinc prices staged a strong recovery in 2021, averaging US
$1.36/pound in Q3 2021, and are
expected to remain strong through the balance of the year and into
2022.
- Turkish steel production is expected to strengthen through the
remainder of 2021 and into 2022.
- Full repayment of the Befesa plant modernization loan is
anticipated by the end of 2021.
- Turkish Zinc JV dividend payments will resume following
repayment of the non-recourse loan from Befesa.
- Global Atomic continues to receive monthly management fees and
sales commissions helping to offset corporate costs.
COMPARATIVE RESULTS
The following table summarizes comparative results of operations
of the Company:
|
|
|
|
|
Three months ended
September 30,
|
|
Nine months ended
September 30,
|
(all amounts in
C$)
|
2021
|
|
2020
|
|
2021
|
|
2020
|
|
|
|
|
|
|
|
|
Revenues
|
$
|
223,645
|
|
$
|
146,225
|
|
$
|
833,435
|
|
$
|
595,878
|
|
|
|
|
|
|
|
|
General and
administration
|
1,839,403
|
|
676,197
|
|
5,555,109
|
|
2,177,485
|
Share of equity loss
(earnings)
|
(2,134,265)
|
|
1,384,333
|
|
(3,943,846)
|
|
2,988,607
|
Other
income
|
(1,000)
|
|
(33,044)
|
|
(68,000)
|
|
(93,044)
|
Finance
expense
|
7,709
|
|
3,870
|
|
18,310
|
|
12,726
|
Foreign exchange loss
(gain)
|
7,481
|
|
(2,659)
|
|
60,854
|
|
(20,788)
|
Net income
(loss)
|
$
|
504,317
|
|
$
|
(1,882,472)
|
|
$
|
(788,992)
|
|
$
|
(4,469,108)
|
Other comprehensive
income (loss)
|
$
|
148,130
|
|
$
|
(924,400)
|
|
$
|
(3,738,763)
|
|
$
|
(1,023,689)
|
Comprehensive
income (loss)
|
$
|
652,447
|
|
$
|
(2,806,872)
|
|
$
|
(4,527,755)
|
|
$
|
(5,492,797)
|
|
|
|
|
|
|
|
|
Basic net income per
share
|
$0.003
|
|
($0.012)
|
|
$
|
(0.005)
|
|
$
|
(0.030)
|
Diluted net income
per share
|
$0.003
|
|
($0.012)
|
|
$
|
(0.005)
|
|
$
|
(0.030)
|
|
|
|
|
|
|
|
|
Basic
weighted-average number of
shares outstanding
|
162,330,717
|
|
150,695,797
|
|
160,449,845
|
|
149,402,735
|
Diluted
weighted-average number of
shares outstanding
|
172,921,252
|
|
157,871,978
|
|
160,449,845
|
|
157,541,571
|
|
|
|
As
at
|
|
30-Sep
|
|
31-Dec
|
|
2021
|
|
2020
|
|
|
|
|
Cash
|
$
|
7,559,938
|
|
$
|
2,448,235
|
Exploration &
evaluation assets
|
43,264,573
|
|
37,812,477
|
Investment in joint
venture
|
13,288,281
|
|
11,497,351
|
Other
assets
|
1,976,907
|
|
1,283,024
|
Total
assets
|
$
|
66,089,699
|
|
$
|
53,041,087
|
|
|
|
|
Total
liabilities
|
$
|
1,087,648
|
|
$
|
1,231,149
|
|
|
|
|
Shareholders'
equity
|
$
|
65,002,051
|
|
$
|
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.
Revenues include management fees and
sales commissions received from the Turkish Zinc JV. These are
based on joint venture revenues generated and zinc concentrate
tonnes sold. Revenues in 2021 have increased with the increased
zinc prices and higher sales in the Turkish Zinc JV.
General and administration costs at the
corporate level include general office and management expenses,
stock option awards, costs related to maintaining a public listing,
professional fees, audit, legal, accounting, tax and consultants'
costs, insurance, travel and other miscellaneous office expenses.
Stock option expenses, professional fees and salaries have
increased in 2021 compared with 2020 due to growth required to
support Dasa development.
Share of net earnings from joint
venture represents Global Atomic's equity share of net
earnings from the Turkish Zinc JV. The significant growth in 2021
EBITDA of the Turkish Zinc JV has resulted in positive equity
income compared to a loss in 2020.
Uranium Business
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 results of the
Feasibility Study are expected to be announced shortly.
After close to 50 years in operation, in March 2021 Orano shut the Cominak underground
mine in Arlit, located approximately 100 kilometers north of the
Dasa Project, due to ore exhaustion. The Cominak shut down provides
the Company with a large skilled work force available for the Dasa
Mine. Global Atomic has begun the interviewing process and plans
building the in-country Global Atomic mining team over the coming
months.
The Company signed a Memorandum of Understanding with Orano
Mining in 2017, to supply DSO to its Somaïr plant and to explore
other opportunities for cost savings for both
operations. The Company has continued to advance its
negotiations with Orano to process up to 500,000 tonnes of Dasa
development 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
discussions are ongoing with utilities with a view of securing
contracts for a portion of Dasa Phase 1 Yellowcake production.
The Company began a 15,000-meter drill program at Dasa in
September 2021. The drill program is
focused on upgrading Indicated and Inferred resources on strike of
the Phase 1 Flank Zone Mining Area to the Measured and Indicated
categories plus an extension of mineralization on strike. With the
upgrading of the on-strike resources, the Phase 1 Flank Zone mining
may expand, 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.
The Company also initiated a drill program at the Isakanan
deposit in September. Previous drilling has indicated a substantial
resource exists. The Isakanan deposit may be amenable to In-Situ
leaching and the current drill program and related test work will
define this potential.
Turkish Zinc JV EAFC Operations
The following table summarizes comparative operational metrics
of the Turkish Zinc JV facility.
|
|
|
|
|
Three months ended
September 30,
|
|
Nine months ended
September 30,
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
|
100%
|
|
100%
|
|
100%
|
|
100%
|
|
|
|
|
|
|
|
|
Exchange rate (TL/C$,
average)
|
6.78
|
|
5.44
|
|
6.44
|
|
4.98
|
Exchange rate
(C$/US$, average)
|
1.26
|
|
1.33
|
|
1.25
|
|
1.35
|
|
|
|
|
|
|
|
|
Exchange rate (TL/C$,
period-end)
|
6.98
|
|
5.80
|
|
6.98
|
|
5.80
|
Exchange rate
(C$/US$, period-end)
|
1.27
|
|
1.33
|
|
1.27
|
|
1.33
|
|
|
|
|
|
|
|
|
Average zinc price
(US$/lb)
|
1.36
|
|
1.06
|
|
1.31
|
|
0.97
|
|
|
|
|
|
|
|
|
EAFD processed
(DMT)
|
16,370
|
|
12,269
|
|
53,012
|
|
51,295
|
|
|
|
|
|
|
|
|
Production
(DMT)
|
5,461
|
|
4,593
|
|
18,478
|
|
18,755
|
Shipments
(DMT)
|
5,460
|
|
4,189
|
|
18,658
|
|
19,941
|
|
|
|
|
|
|
|
|
Shipments (zinc
content '000 lbs)
|
8,015
|
|
6,296
|
|
28,071
|
|
30,641
|
The average zinc price in Q3 2021 was US $1.36/lb, up from US $1.06/lb in Q3 2020. The zinc price was
negatively affected by COVID-19 in Q1 & Q2 2020, but began
recovering from the summer 2020 through to the end of the year. The
zinc price has continued its upward trend throughout 2021.
China has imposed reduced
operating hours for smelters and European smelters have reduced
production, both the result of higher energy costs and lower
availability. Notwithstanding, Waelz oxide concentrates sold by
Befesa, including those from the Turkish Zinc JV, continue to be in
high demand, so there has been no impact on our business.
A general recovery in the steel industry began in Q3 2020 and
has continued into 2021. For the 9 months ended September 30, 2021, global steel production was
up 7.8% over the comparable 2020 period. Global steel production in
Q3 2021 showed virtually no change from the same period in 2020.
Within this, Chinese steel production declined by 13% in Q3 2021
compared with Q3 2020, resulting in a decline in China's market share from 60% to 53%. Steel
production in the rest of the world increased by 19% in Q3 2021
when compared to 2020.
The World Steel Association recently published its short-term
outlook for demand, which projects a 2.2% overall global demand
growth in 2022. This demand growth is broadly-based across all
countries, with the exception of China, where demand growth is projected to be
flat in 2022. China has
experienced adverse weather, a weakened real estate sector, and
government caps on steel production due to energy constraints. The
World Steel Association expects all economies to experience
continued steel demand growth due to pent up demand in the
manufacturing sector and the gradual easing of supply chain
disruptions in the automotive sector.
Turkish steel production has increased by 15% in the 9 months of
2021 compared with 2020. Expanding consumer loans and
infrastructure projects have helped to drive steel demand. As well,
Turkey has increased its exports
to offset reduced Chinese exports. The steel producers in
Turkey are increasing production
capacity. In recent months, a major Electric Arc Steel Mill in the
Iskenderun region has resumed production in a plant that had been
on care and maintenance for a number of years. Another producer has
announced plans to begin construction of a new plant in the
Iskenderun region. In the Izmir region, two steel producers have
announced plans to expand their production facilities. These
projects will increase the supply of EAFD in the Turkish market and
should enable the Turkish Zinc JV to increase throughput at the
Iskenderun plant.
The following table summarizes comparative results of the
Turkish Zinc JV at 100%.
|
|
|
|
|
Three months ended
September 30,
|
|
Nine months ended
September 30,
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
|
100%
|
|
100%
|
|
100%
|
|
100%
|
Net sales
revenues
|
$
|
12,694,730
|
|
$
|
5,555,087
|
|
$
|
34,901,981
|
|
$
|
22,649,656
|
Cost of
sales
|
6,252,229
|
|
3,681,069
|
|
17,518,999
|
|
18,111,776
|
Foreign exchange loss
(gain)
|
27,880
|
|
(611,932)
|
|
(789,346)
|
|
(1,367,023)
|
EBITDA(1)
|
$
|
6,414,622
|
|
$
|
2,485,950
|
|
$
|
18,172,328
|
|
$
|
5,904,903
|
|
|
|
|
|
|
|
|
Management fees &
sales commissions
|
461,697
|
|
294,929
|
|
1,688,371
|
|
1,202,901
|
Depreciation
|
630,438
|
|
802,560
|
|
1,974,306
|
|
2,412,597
|
Interest
expense
|
170,015
|
|
457,675
|
|
640,972
|
|
1,370,798
|
Foreign exchange loss
on debt
|
56,059
|
|
4,415,934
|
|
3,290,991
|
|
8,670,782
|
Other expense
(income)
|
-
|
|
(49,097)
|
|
-
|
|
(49,097)
|
Deferred tax
expense
|
740,770
|
|
(610,882)
|
|
2,529,021
|
|
(1,603,879)
|
Net income
|
$
|
4,355,643
|
|
$
|
(2,825,169)
|
|
$
|
8,048,666
|
|
$
|
(6,099,199)
|
Global Atomic's
equity share
|
$
|
2,134,265
|
|
$
|
(1,384,333)
|
|
$
|
3,943,846
|
|
$
|
(2,988,608)
|
|
|
|
|
|
|
|
|
Global Atomic's share
of EBITDA
|
$
|
3,143,165
|
|
$
|
1,218,116
|
|
$
|
8,904,441
|
|
$
|
2,893,402
|
(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 Zinc JV realized significant growth in revenues
during the nine months of 2021 compared to the same period in 2020,
benefitting from higher zinc prices and reduced treatment charges
in 2021. EBITDA increased to $18.2
million for the 9 months 2021 (Global Atomic share -
$8.9 million) compared with
$5.9 million in 2020 (Global Atomic
share - $2.9 million).
The cash balance of the Turkish Zinc JV was US $4.0 million at September
30, 2021.
Total debt was reduced to US $12.65
million in 2021 from US $21.8
million at the end of 2020. At September 30, 2021, the Befesa loan totaled US
$5.65 million (December 31, 2020 – US $13.6 million) which bears interest at Libor +
4.0% with no fixed maturity date. As at September 30, 2021, Global Atomic's share of the
Befesa loan was US $2.77 million. The
local Turkish revolving credit facility balance was US $7.0 million at September
30, 2021 (December 31, 2020 -
US $8.2 million) and bears interest
at 3.18%. It is expected that the Befesa loan will be paid out by
the end of 2021. The Turkish revolving credit facility can be
rolled forward. Once the Befesa loan has been repaid, dividend
payments to the Company will 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 modern 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,
Asia and the United States of America.
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
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SOURCE Global Atomic Corporation