READ TIME: 7 MINUTES
The Dasa deposit looks tremendous… this is a world-class asset. People should buy it and put it away for six months rather than watching the market daily.
Stephen Roman, CEO Global Atomic Corp. (TSX-V: GLO)
Key Takeways
- Strategic Financing Needs: Global Atomic’s recent $40 million raise was necessary to keep the Dasa project moving amid delays with bank financing, primarily due to political uncertainties in Niger.
- Strong Government Support: Niger’s government has shown robust backing for Dasa, affirming its strategic value and providing resources to ensure project stability.
- Alternative Logistics Routes: With the Benin border closed, Global Atomic successfully rerouted logistics through Nigeria, mitigating significant transport disruptions.
- Contingency Financing Plans: If bank financing falls through, Global Atomic has joint ventures and equity options lined up to ensure Dasa’s completion without excessive dilution.
- Operational Readiness and Talent Pool: Global Atomic is well-prepared to staff Dasa, benefiting from experienced former KAC employees and focused on reducing costs, particularly in energy, as production ramps up toward 2026.
Why Did Global Atomic Raise $40 Million Now?
In a recent upsized $40 million financing, Global Atomic made a significant move that has sparked questions among investors, especially given the timing amidst fluctuating uranium prices. Stephen Roman, CEO of Global Atomic, explained that the decision was tied to an extended process in securing bank financing. Despite aiming for an earlier close on financing, delays ensued, largely due to the conservative nature of bankers dealing with the coup in Niger. This financing round serves to keep Dasa’s construction on track while awaiting a bank decision—expected by Q1 2024.
Unfortunately, we have to raise money and get that done. This is all adding to our equity contribution. We can always buy these shares back once we get into production.
How Far Will the Recent Raise Last?
Roman provided a transparent answer: this raise will carry Global Atomic into Q1 of next year, though additional financing will likely be necessary to ensure uninterrupted development. Roman assured that much of the mine’s major equipment has already been fabricated and is en route to the site, minimizing future financing needs for critical components.
What Is the Status of Bank Financing?
The CEO detailed ongoing discussions with bank representatives who have been cautious about financing in Niger due to recent geopolitical uncertainties. Speculation circulated regarding the U.S. Development Finance Corporation’s (DFC) board meeting schedule potentially delaying any financing decisions. However, Roman dismissed concerns about rigid timelines, emphasizing the flexibility in scheduling bank meetings.
These are bureaucrats that typically take a long time… but we’re in constant communication, and I don’t think there was ever any doubt that they were there.
Roman remains optimistic about receiving approval in Q1 2024, which could unlock additional funding options, including off-take agreements with prepayments, to close any remaining financial gaps.
What Are Global Atomic’s Contingency Plans if Bank Financing Falls Through?
The CEO emphasized that Global Atomic has alternative options to complete Dasa, including joint ventures and the possibility of equity financing. Joint ventures would help alleviate some funding pressure without surrendering project control. When asked, Roman confirmed he would insist on maintaining over 50% ownership in any joint venture arrangement to retain operational command.
How Is Global Atomic Managing Border Logistics Amidst the Benin Border Closure?
With the Benin border closed, Global Atomic has redirected shipments through Nigeria, utilizing the port at Apapa near Lagos and trucking routes to the project site. Roman described the new route as efficient and reliable, stating it may even outperform previous routes through Benin and Togo. Although the shift has caused delays, the company has factored these into its construction schedule.
Since the coup, we’ve had to bring things through Togo, Burkina Faso, and now Nigeria, which has been a very good route…we’ve added additional time into our build process to account for logistics delays.
Are All Long-Lead Items Ordered?
Roman confirmed that all essential materials and equipment for plant construction are ordered, with some already in transit. This preparation underscores Global Atomic’s commitment to meeting its 2026 production target.
How Are Relations with the Niger Government Affecting Dasa’s Progress?
Roman described strong support from the Niger government, including a letter from the head of state emphasizing the project’s strategic importance. This endorsement, coupled with regular meetings with the mining ministry, has helped Global Atomic navigate bureaucratic hurdles and maintain local alignment.
Does Global Atomic Face Risks of Government Contract Interference?
In light of the government’s recent repossession of other uranium projects, Roman was asked if similar action could threaten Dasa. He refuted any such possibility, pointing out that these repossessions typically occur when companies fail to meet project development deadlines. Global Atomic, in contrast, has met all required timelines for Dasa, demonstrating its adherence to Niger’s regulatory framework.
Can Niger Realistically Undertake Mining Independently?
Roman was direct in dismissing the idea of government-led uranium mining in Niger, noting the technical expertise required for uranium extraction and processing. He compared uranium mining to gold, highlighting uranium’s unique safety and regulatory needs, which necessitate specialized knowledge.
Will Global Atomic Encounter Personnel Challenges in Niger?
Despite a global shortage of qualified personnel in uranium mining, Roman is optimistic. Dasa has benefited from the closure of Niger’s KAC uranium operation, resulting in a talent pool of former employees who are familiar with the demands of underground mining and uranium processing. Global Atomic has rehired many KAC personnel and plans to integrate them into the project’s operation and training programs.
What Are the All-In Sustaining Costs and Can They Be Reduced?
The updated DFS revealed higher all-in sustaining costs, largely due to increased power expenses. However, Roman outlined potential cost-cutting strategies, such as shifting to natural gas for backup power and exploring solar installations. These could substantially reduce energy costs in the long term.
Power costs are the biggest component. We’re studying the idea of upgrading the local utility’s power plant, which would significantly reduce our cost per pound.
How Is Stockpiling Managed for Dasa?
To maintain stable cash flows, Global Atomic plans to maintain a stockpile of around 50,000 tons by the end of 2025. Roman stressed that this approach minimizes holding high-grade ore on surface before processing, optimizing both cash flow and processing timelines.
What Steps Remain in Dasa’s Development?
Roman provided a detailed progress report, highlighting the borehole ventilation raise installation and the development of multiple underground levels. Financially, these developments are accounted for within the current budget, aligning with Global Atomic’s timeline for Q1 2026 production.
What Are Global Atomic’s Plans for the Zinc Asset in Turkey?
Roman acknowledged that the zinc asset in Turkey, which has been pivotal in funding Dasa’s early development, could eventually be sold or spun out as a dividend to shareholders. However, he sees value in retaining the asset in the near term, given its role as a cash-flow generator.
Our zinc asset helped finance Dasa’s development through our own cash flow. At some point, we may sell or dividend it out, but for now, it’s valuable as is.
Is Tax Loss Selling Impacting Global Atomic’s Stock Price?
Given the stock’s 50% drop this year, tax loss selling looms large. Roman admitted that while internal interventions like share buybacks could be explored, market forces and geopolitical factors have had the largest impact on share price.
We’ve really been beat up over the last year… people need to recognize the value here. They should be buying rather than selling.
What Is the Sentiment from Utilities and Institutional Investors?
Roman shared that interest from utilities and institutional investors remains high, especially following the September World Nuclear Association Symposium. Family offices and generalists are also starting to show increased curiosity, though they have yet to fully commit.
Global Atomic CEO Interview With Stephen Roman (TSX-V: GLO)
This is a very brief summary of what was a lengthy interview. Don’t rely on this summary. Watch the full interview which is linked above.
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The information provided herein is general & impersonal in nature and meant for entertainment purposes only. The reader acknowledges and agrees that the information does not constitute a solicitation of an offer to buy or sell any security or instrument or to participate in any trading strategy. The author is not a licensed investment advisor. He is just another talking head on the internet. He might own shares of companies mentioned in this publication. Always assume he doesn’t know much more than a potato does. The mining & exploration space is among the riskiest sectors to invest in. The risk of anything mentioned in this publication is 100% loss of capital. If you don’t read the official documents provided by the company on http://www.SedarPlus.ca, you will lose all of your money.
