Global Atomic Corporation (“Global Atomic” or the “Company”),
(TSX-V: GLO, FRANKFURT: G12) is pleased to announce its operating
results for the second quarter (“Q2”) and first half (“H1”) ended
June 30, 2018.
HIGHLIGHTS
|
• |
Consolidated net income for the Company was $1.1 million for Q2
2018 and $4.8 million for H1 2018, an increase of 175% from Q2 2017
and 71% from H1 2017. |
|
• |
The Befesa
Silvermet Turkey, S.L. (“BST”) joint venture shipped 8.2 million
pounds of zinc in concentrate for Q2 2018 and 19.1 million pounds
in H1 2018, an increase of 49% from Q2 2017 and 22% from H1 2017.
Global Atomic holds a 49% interest in the BST joint venture. |
|
• |
Global
Atomic’s 49% share of EBITDA in the BST joint venture was $4.2
million for Q2 2018 and $9.1 million for H1 2018, an increase of
152% from Q2 2017 and 76% from H1 2017. |
|
• |
Expansion
and modernization of the Turkish processing plant was started in
Q2, expected to increase annual production to 66 million pounds
(100%), with start up in September 2019. |
|
• |
Completed
an updated National Instrument (“NI”) 43-101 Mineral Resource
Estimate on the Niger DASA uranium project: |
|
|
- Tripled Indicated Resources to 64.8 million pounds and improved
grade 18% to 3,068 ppm eU3O8.
- Inferred Resources of 48.4 million pounds grading 2,600
ppm eU3O8.
|
|
• |
Near
surface drilling confirmed the Company’s understanding of structure
and high grade continuity at the Flank Zone at DASA. |
|
• |
Step-out
drilling has returned several high grade extensions on strike and
down dip at the Tegama Hill zones. |
OUTLOOK
|
• |
A
Preliminary Economic Assessment (“PEA”) is underway for DASA,
targeted for completion in September and a final technical report
is expected in H1 2019. |
|
• |
Permitting
will commence on completion of a final technical report. |
|
• |
Site
preparation for mining activities is expected to begin in early
2020. |
|
• |
Expansion
and modernization of the Turkish process plant is scheduled for
completion in Q3 2019. Existing cash flow and available lines of
credit is expected to be sufficient to fund this work. |
|
• |
Global
Atomic continues to work cooperatively with Orano Mining Ltd.
(formerly AREVA Mining) to evaluate plans to ship DASA uranium
bearing material to its nearby mill for processing. |
URANIUM DIVISION RESULTS
Global Atomic has drilled approximately 27,000
metres at the DASA deposit during its 2018 drill program which
began in January. The primary objectives of the drill program were
to prove the potential for near surface production at the Flank
Zone and to assess the potential for further discoveries and
resource expansion along strike and down dip. The Company was
highly successful achieving both of these objectives; drilling at
the Flank Zone significantly expanded Resources and drilling along
strike and down dip identified several new zones at the Tegama
Hill, Tegama Hill South, the Northeast extensions and the Southwest
Extensions (see the following map):
To view the image, DASA Targeted Drill Areas (Looking
East), visit the following
link: http://www.globenewswire.com/NewsRoom/AttachmentNg/6a699435-4b50-4b35-b039-8cdaf8a535a8
Near surface drilling at the Flank Zone
completed in the first half of 2018 was used as the basis for an
updated National Instrument (“NI”) 43-101 Mineral Resource
Estimate, prepared by CSA Global Pty Ltd. (“CSA Global”). The NI
43-101 Mineral Resource Estimate incorporated an additional 36
drill holes totaling approximately 15,000 metres drilled from
January to June 2018. In a report dated June 30, 2018, CSA Global
concluded on the following Mineral Resource Statement for DASA:
Category |
Tonnes |
eU3O8 |
Containedmetal |
|
Mt |
ppm |
Mlb |
Indicated – Pit Constrained |
7.08 |
3,251 |
50.8 |
Indicated – Underground |
2.5 |
2,553 |
14.1 |
Total Indicated |
9.59 |
3,068 |
64.8 |
Inferred – Pit Constrained |
0.26 |
1,135 |
0.7 |
Inferred – Underground |
8.18 |
2,647 |
47.7 |
Total Inferred |
8.44 |
2,600 |
48.4 |
* These results are based on gamma probing. Final
results will be released once chemical assaying is completed
at ALS Global in Vancouver, Canada. |
- Mineral Resources are based on CIM definitions and is reported
as at 1st June 2018.
- Mineral Resources for pit constrained resources are estimated
within the limits of an ultimate pit shell
- Mineral Resources for underground resources are estimated
outside the limits of ultimate pit shell.
- A cut-off grade of 320 ppm eU3O8 has been applied for open
pit resources.
- A cut-off grade of 1200 ppm eU3O8 has been applied
for underground resources.
- A bulk density of 2.36t/m3 has been applied for all model
cells.
- Rows and columns may not add up exactly due to rounding.
Subsequent to completion of the latest Mineral Resource
Estimate, the Company intersected additional high grade
mineralization at the Flank Zone. These intersections were not
included in the latest Mineral Resource Estimate, but will be
reflected in future economic studies (see press release dated
August 8, 2018).
Drilling at DASA along strike and down dip was
also successful in confirming the Company’s interpretation of the
deposit and identified several high grade areas of new
mineralization. The next phase of drilling will focus on these
extensions and a new Mineral Resource Estimate will be completed
(see press release dated August 15, 2018).
BASE METALS DIVISION
RESULTS
The BST joint venture owns and operates an
Electric Arc Furnace Dust (“EAFD”) processing plant in Iskenderun,
Turkey, which processes EAFD obtained from electric arc steel
producers. The EAFD, containing 25% to 30% zinc, is processed
through a kiln to produce a zinc concentrate, grading 68% to 70%
zinc, that is then sold to zinc smelters.
The following table summarizes comparative
operational metrics processing plant in Iskenderun.
|
Three months ended June 30, |
Six months ended June 30, |
|
2018 |
2017 |
2018 |
2017 |
100% |
100% |
100% |
100% |
Exchange rate (TL/C$,
average) |
3.38 |
2.66 |
3.20 |
2.73 |
Exchange rate (C$/US$,
average) |
1.29 |
1.34 |
1.28 |
1.33 |
|
|
|
|
|
Exchange rate (TL/C$,
period-end) |
3.48 |
2.71 |
3.48 |
2.71 |
Exchange rate (C$/US$,
period-end) |
1.32 |
1.30 |
1.32 |
1.30 |
|
|
|
|
|
EAFD processed
(DMT) |
18,334 |
10,683 |
32,383 |
28,354 |
|
|
|
|
|
Average zinc price
(US$/LB.) |
1.41 |
1.18 |
1.48 |
1.22 |
|
|
|
|
|
Production (DMT) |
5,679 |
3,511 |
10,036 |
10,016 |
Shipments (DMT) |
5,424 |
3,476 |
12,523 |
9,894 |
|
|
|
|
|
Shipments
(zinc content, 000 lb.) |
8,250 |
5,501 |
19,093 |
15,569 |
The following table summarizes comparative results for the Q1
and H1, ended June 30, 2018 and 2017 of the BST joint venture at
100%.
|
|
Three months ended June 30, |
|
|
Six months ended June 30, |
|
|
|
2018 |
|
|
2017 |
|
|
2018 |
|
|
2017 |
|
|
100% |
|
|
100% |
|
|
100% |
|
|
100% |
|
Gross sales
revenues |
$ |
12,664,378 |
|
$ |
6,311,774 |
|
$ |
30,404,289 |
|
$ |
19,712,383 |
|
Treatment &
transportation |
|
1,138,541 |
|
|
(62,206 |
) |
|
2,418,354 |
|
|
2,026,972 |
|
Cost of sales |
|
5,302,095 |
|
|
2,518,022 |
|
|
12,610,835 |
|
|
7,092,117 |
|
Foreign
exchange loss (gain) |
|
(2,247,097 |
) |
|
493,244 |
|
|
(3,284,208 |
) |
|
9,639 |
|
EBITDA(1) |
$ |
8,470,839 |
|
$ |
3,362,714 |
|
$ |
18,659,308 |
|
$ |
10,583,655 |
|
Management fees &
sales commissions |
|
492,651 |
|
|
275,975 |
|
|
1,006,457 |
|
|
770,683 |
|
Depreciation |
|
102,950 |
|
|
146,358 |
|
|
232,184 |
|
|
285,304 |
|
Interest income |
|
45,325 |
|
|
(21,556 |
) |
|
54,589 |
|
|
(35,122 |
) |
Other |
|
27,598 |
|
|
6,308 |
|
|
40,231 |
|
|
13,771 |
|
Tax
expense |
|
2,375,457 |
|
|
485,035 |
|
|
3,789,637 |
|
|
2,363,285 |
|
Net
income |
$ |
5,426,859 |
|
$ |
2,470,594 |
|
$ |
13,536,210 |
|
$ |
7,185,734 |
|
Global
Atomic's equity share |
$ |
2,659,162 |
|
$ |
1,210,591 |
|
$ |
6,632,743 |
|
$ |
3,521,010 |
|
|
(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) and financing expense (income),
amortization expense, and other expenses including management fees,
sales commissions; gain on sale of property, plant and equipment
and impairment charges. |
The improvement in zinc prices and shipment
volumes resulted in an increase in EBITDA from $10.6 million in the
first half of 2017 to $18.7 million in the first half of 2018.
Management fees and sales commissions, which are paid out to the
joint venture partners on a pro rata basis throughout the year,
increased in line with increased revenues.
Distributions of income are made to the joint
venture partners after the year has been completed and operating
results are known. In Q2, 2018, the Company received $6.9 million
in distributions from BST (2017 - $4.5 million).
In the first half of 2018, Turkish steel
production increased by 3.7%, after an increase of 12.9% in 2017.
Steel mill capacity has continued to improve and additional
electric arc furnace capacity is under construction. Coincident
with improved steel market conditions, there has been a significant
improvement in zinc prices. During the first half of 2018, the
average zinc price was US$1.48/lb (2017 - US$1.22/lb). Although
market analysts continue to predict zinc supply shortages and
resultant price strength, zinc prices have moved significantly
lower since June 30, 2018, with the current price at
US$1.15/lb.
In the second quarter of 2018, the board of BST
has made a decision to proceed with the expansion and modernization
project of the Iskenderun plant. As a result of this project, plant
throughput will double and operating costs will decline. Total cost
of the expansion and modernization project has been budgeted at
US$26 million, with most of the cost being done on a fixed cost EPC
contract. Final engineering and long-lead equipment purchases were
initiated, with approximately US$3.2 million spent in the quarter.
Site construction is scheduled to begin in February 2019, with the
new plant available for production in September 2019. It is
expected that funding will be achieved out of cash generated from
operations and by drawdowns of the Company’s lines of credit.
LIQUIDITY AND FINANCIAL
POSITION
Working Capital
The Company reported a working capital surplus
of $0.9 million at June 30, 2018. Throughout the year, the Company
receives its share of management fees and sales commissions from
the Turkish operations, which amounts fund the various corporate
costs.
Capital resources
Exploration activities in 2018 will be financed
with the free cash received from BST and potential equity capital
raises. Exploration expenditures are largely discretionary and the
amount of exploration activity can therefore be adjusted based on
availability of equity capital.
The Company is undertaking the expansion and
modernization of the Turkish plant, which will occur in 2019. It is
expected that funding will be available from operating earnings and
drawdowns of lines of credit, so no additional capital resources
will be required.
QP StatementGeorge A. Flach,
Vice President of Exploration, P.Geo. is the Qualified Person (QP)
as defined in NI 43-101 and has prepared, supervised the
preparation of, and approved the scientific technical disclosure in
this news release.
About Global AtomicGlobal
Atomic is a TSX Venture listed company providing a unique
combination of high grade uranium development and cash flowing zinc
concentrate production.
The Company’s Uranium Division includes six
exploration permits in the Republic of Niger covering an area of
approximately 750 km2. Uranium mineralization has been identified
on each of the permits, with the most significant discovery being
the DASA deposit situated on the Adrar Emoles III concession,
discovered in 2010 by Global Atomic geologists through grassroots
field exploration.
Global Atomics’ Base Metals Division holds a 49%
interest in Befesa Silvermet Turkey, S.L. (“BST”) joint venture,
which operates a processing facility located in Iskenderun, Turkey
that converts Electric Arc Furnace Dust into a high-grade zinc
oxide concentrate and 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, capturing approximately 50% of
the European EAFD market with facilities located throughout Europe
and Korea.
Key contacts:
Stephen G.
RomanChairman, President & CEOTel: (416) 368-3949Email:
sgr@globalatomiccorp.com |
George A. Flach,
P.Geo.Vice President, ExplorationTel: (416) 368-3949Email:
gaflach@globalatomiccorp.com |
The information in this release may contain
forward-looking information under applicable securities laws. This
forward-looking information is subject to known and unknown risks,
uncertainties and other factors that may cause actual results to
differ materially from those implied by the forward-looking
information. Factors that may cause actual results to vary include,
but are not limited to, inaccurate assumptions concerning the
exploration for and development of mineral deposits, political
instability, currency fluctuations, unanticipated operational or
technical difficulties, changes in laws or regulations, the risks
of obtaining necessary licenses and permits, changes in general
economic conditions or conditions in the financial markets and the
inability to raise additional financing. Readers are cautioned not
to place undue reliance on this forward-looking information. The
Company does not assume the obligation to revise or update this
forward- looking information after the date of this release or to
revise such information to reflect the occurrence of future
unanticipated events, except as may be required under applicable
securities laws.
Neither TSX Venture Exchange nor its Regulation
Services Provider (as that term is defined in the policies of the
TSX Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release.
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