Global Atomic Corporation (“Global Atomic” or the “Company”),
(TSX-V: GLO, FRANKFURT: G12) is pleased to provide the following
update regarding the filing of the Company’s Preliminary Economic
Assessment (“PEA”) on Sedar, interim unaudited Financial Statements
and MD&A for the three and nine month period ended September
30, 2018 and the closing of its non-brokered Private
Placement.
Preliminary Economic
Assessment
Further to the Company’s news release dated
October 23, 2018 a summary of the PEA is provided below, including
opportunities being explored through an alternate mining strategy
to accelerate development of the Project for early mining. All
figures are stated in U.S. dollars, unless otherwise stated.
Highlights
- The objective of the PEA was to study the DASA Project as an
integrated underground mining operation, processing mineralized
material through an on-site mill (the “DASA Standalone
Scenario”) initially operating at 2,500 tpd and ramping up
to 3,000 tpd. Highlights include:
- High grade resource: 69 million lbs U3O8 recovered at an
average grade of 2,380 ppm U3O8 over a 15 year mine life.
- Scalable production: Annual production sustained from 4 Mlb to
7 Mlb U3O8 over the mine life.
- Low cost operation: All-in sustaining cost (“AISC”) of
US$28.51/lb U3O8.
- Initial CAPEX: US$320 million, including US$141 million for an
on-site mill; US$467 million including sustaining capital and
reclamation.
- Significant NPV and project return at expected long-term
uranium price:
|
NPV and IRR – DASA Standalone
Scenario |
|
|
Unit |
Uranium Price (US$/lb U3O8) |
|
$45.00 |
$50.00 |
$55.00 |
Pre-Tax |
|
|
|
|
NPV @ 8% |
US$ M |
$342 |
$539 |
$735 |
IRR (100% Equity) |
|
27% |
37% |
46% |
Post-Tax |
|
|
|
|
NPV @ 8% |
US$ M |
$172 |
$299 |
$437 |
IRR (100% Equity) |
|
18% |
25% |
32% |
The PEA was completed in accordance with NI
43-101, Canadian Institute of Mining, Milling and Petroleum (“CIM”)
standards. The PEA is preliminary in nature and includes Inferred
Mineral Resources that are too speculative geologically to have
economic considerations applied to them that would enable them to
be categorized as Mineral Reserves. There is no certainty that PEA
results will be realized. Mineral Resources are not Mineral
Reserves and do not have demonstrated economic viability.
- An alternate mine plan scenario, the “Alternate Mining
Strategy”, based on the July 2017 MOU signed with Orano
Mining (“Orano”), in which high grade mineralized material is sold
to Orano targeting early cash flow, identified a significant value
opportunity. Highlights include:
- Fast track to cash flow: Accelerated underground development
with minimal infrastructure.
- Reduced initial capital: US$35 million to start mining, no mill
required.
- High grade material: Potential to ship 360,000 tonnes annually
for the 5 year contract containing on average 2.8 million lbs U3O8
grading 3,698 ppm
- Low cost mining: Minimizing operating costs, US$10.94 per lb
U3O8 before transport and processing, indicates this scenario is
potentially profitable at low uranium prices.
- The Company expects to permit the Alternate Mining Strategy Q4
2019, with ramp development beginning as early as 2020.
- Management also identified the following additional value
opportunities which are currently being explored to improve overall
project economics:
- Improve modelled uranium recovery with further metallurgical
test work.
- Mine plan optimizations to reduce dilution and minimize
underground development.
- Improve grade and increase Mineral Resources with further
infill drilling.
- Value opportunities currently being explored are expected to be
reflected in an updated Feasibility Study targeted for 2019.
Financial Statements and MD&A For
Periods Ended September 30, 2018
On November 28, 2018, the Company filed its
financial statements and MD&A for the three and nine months
ended September 30, 2018. The following summary was
provided. All figures are in Canadian dollars, unless
otherwise noted.
Highlights
- Consolidated net income for the Company was $5.6 million for
the 9 months ended September 30, 2018 compared to $5.8 million for
the same period in 2017.
- Net income for Q3 2018 was $0.8 million compared to $3.0
million in 2017, which results were impacted by a maintenance
shutdown and the decline in zinc prices during Q3 2018.
- The Befesa Silvermet Turkey, S.L. (“BST”) joint venture shipped
24.6 million pounds of zinc contained in concentrate during the 9
months ended September 30, 2018 compared with 26.2 million pounds
in 2017. Global Atomic holds a 49% interest in the BST joint
venture.
- Global Atomics’ 49% share of EBITDA in the BST joint venture
for the 9 months ended September 30, 2018 was $10.7 million
compared to $9.6 million in the same period in 2017. Q3 2018 EBITDA
was $1.6 million compared to $4.4 million in the same period in
2017.
- The expansion and modernization of the Turkish processing plant
began in Q2 2018. US$4.4 million of the estimated US$26 million
cost has been incurred. On completion, annual production capacity
will double to 66 million pounds zinc (100%) and reduce operating
costs. Start-up of the new facility is scheduled for September
2019.
- Additional drilling and technical studies at the Company’s DASA
uranium deposit were initiated in early 2018.
- Near surface drilling confirmed the Company’s understanding of
structure and high grade continuity at the Flank Zone at DASA.
- An updated Mineral Resource Estimate was completed on the Niger
DASA uranium project in Q2, which:
- Tripled Indicated Resources to 64.8 million pounds and improved
grade 18% to 3,068 ppm eU3O8.
- Inferred Resources were increased to 48.4 million pounds
grading 2,600 ppm eU3O8.
- The Company raised $8.6 million in an equity financing in
November 2018.
- Application has been made and the Ministry of Mines of the
Republic of Niger has accepted the related payments for the
extension of the Adrar Emoles 3 and 4 Exploration Permits for a
period of 18 months during which time Global Atomic will complete
its Feasibility Study. This application is expected to be finalized
shortly. In addition, the Company will file applications for the
extension of its other 4 Exploration Permits.
Outlook
- A Feasibility study is underway and a final technical report
for DASA is expected in H1 2019.
- Permitting will commence on completion of the final technical
report.
- Site preparations for mining activities are scheduled to begin
in early 2020.
- Expansion and modernization of the Turkish process plant is
scheduled for completion in September 2019. Existing cash flow and
available funding is expected to be sufficient to complete this
work.
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 for sale to zinc smelters.
The following table summarizes comparative
operational metrics of the processing plant in Iskenderun.
Table: http://www.globenewswire.com/NewsRoom/AttachmentNg/b8e46b87-b857-48d0-a058-29bd450f5763
Global Atomic holds a 49% interest in the BST
joint venture and as such, the investment is accounted for using
the equity basis of accounting and the Company’s share of BST’s
earnings is shown as a single line in its income statement. The
following table summarizes comparative results for the three and
nine months ended September 30, 2018 and 2017 of the BST joint
venture at 100%.
Table: http://www.globenewswire.com/NewsRoom/AttachmentNg/a2a317d3-11f5-4e72-bae1-909ede2dd2ac
- 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.
Private Placement
The Company is also pleased to announce that it
has completed its previously disclosed (November 16, 1018)
non-brokered private placement (the “offering”) raising aggregate
gross proceeds of $8,591,000. Securities issued pursuant to the
offering are subject to statutory hold period ending March 17,
2019.
The Company paid finder’s fees on certain
subscriptions comprised of g of 6% cash and 6% common share
purchase warrants with the aggregate finder’s fees paid totaling
$467,414 and 1,491,380 warrants. Of the total cash finder’s fee
payable, $351,600 was settled through the issuance of 1,172,000 of
common shares of the Company at a price of $0.30 per share. The
finder’s warrants are exercisable at $0.30 for a period of eighteen
(18) months from closing.
Proceeds from the financing will be used to fund
technical studies and permitting related to commercial production,
exploration at DASA and for general corporate purposes.
About Global Atomic
Global Atomic Corporation 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 (“EAFD”) into 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, capturing
approximately 50% of the European EAFD market with facilities
located throughout Europe and Korea.
BST is well underway with an expansion project
to significantly modernize and expand its processing plant in
Turkey. The expansion is targeted to double annual production of
zinc from 30 million lbs to 60 million lbs and is supported by EAFD
supply currently available for processing in Turkey. The new
plant is scheduled for completion by September 2019.
Key contacts:
Stephen G. Roman |
George A. Flach, P.Geo. |
Chairman, President & CEO |
Vice President, Exploration |
Tel: (416) 368-3949 |
Tel: (416) 368-3949 |
Email: sgr@globalatomiccorp.com |
Email: gaflach@globalatomiccorp.com |
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
Atomic’s development potential and timetable of its operating,
development and exploration assets; Global Atomic’s ability to
raise additional funds necessary; the future price of uranium; the
estimation of mineral reserves and mineral resources; conclusions
of economic evaluation; the realization of mineral reserve
estimates; the timing and amount of estimated future production,
development and exploration; costs 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", “targets”,
"expects" or "does not expect", "is expected", "budget",
"scheduled", "estimates", "forecasts", "intends", "anticipates" or
"does not anticipate", or "believes", or variations of such words
and phrases or statements that certain actions, events or results
"may", "could", "would", "might" or "will be taken", "occur" or "be
achieved". All information contained in this news release, other
than statements of current and historical fact, is forward looking
information. Forward-looking statements 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 as of the date such statements
are made. Although management of Global Atomic has attempted to
identify important factors that could cause actual results to
differ materially from those contained in 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 on forward-looking statements. Global Atomic does not
undertake to update any forward-looking statements, except in
accordance with applicable securities laws. Readers should also
review the risks and uncertainties sections of Global Atomic’s
annual and interim MD&As.
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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