Experienced management and strong backers
One of the largest combined uranium resources among peers
Considerable exploration potential
What GoviEx Uranium does:
GoviEx Uranium Inc (CVE:GXU) is an Africa-focused resource group which aims to become a significant producer and supplier of the commodity, which is used in the nuclear energy industry.
It has two mine-permitted projects: The flagship Madaouela project in Niger - the fourth-largest uranium-producing country in the world - and the Mutanga project in Zambia. It is also advancing the Falea project in Mali.
The group already enjoys one of the largest NI 43-101 uranium resources compared to peers, with a higher confidence measured resource across its projects of 36.2 million pounds of contained uranium (U3O8) and an indicated resource of 107.3 million pounds.
At Madaouela, there are 79.4 million pounds of indicated contained uranium and 31.4 million pounds in the measured category.
The group also boasts a strong shareholder register, which includes Cameco, one of the globe's largest uranium producers, which generates around 18% of world supply. Cameco holds nearly 3% of GoviEx shares.
Denison Mines - focused on the famous Athabasca Basin region in northern Saskatchewan, Canada - also has around 15.4% of the stock and Ivanhoe Industries holds nearly 4.3% of GoviEx.
The firm has pointed out that nuclear is a clean and secure energy source, with low carbon dioxide emissions, which is why several major countries are looking to replace and maintain their reactor fleet.
The flagship Madaouela project has good infrastructure and access to skilled labor. The Niger government took a 25% stake in the project last year, so they have an interest in seeing it get off the ground.
The initial mine life is pegged at 21 years, while pre-production capital is US$359 million, with total life-of-mine-costs pegged at US$36.4 per pound of uranium.
In the second quarter of 2020, GoviEx aims to publish a revised pre-feasibility study, which it hopes will show lower operating costs, incentivizing the financing to be able to be achieved.
Meanwhile, a preliminary economic assessment (PEA) at Mutanga in Zambia was completed in 2017. The initial mine life of the open pit, heap leach operation is put at 11 years, with pre-production capital required put at US$121 million.
There is potential for further exploration upside at the site, with drill targets identified, and limited work to date undertaken on two prospecting licenses.
Falea, a planned underground mine, consists of three licenses - Bala, Madini and Falea - and lies around 80 kilometres (km) from Areva’s Saraya East uranium deposit, with only 5% of the 225 square km land package having been explored. It has 22 million pounds of NI 43 101 contained indicated uranium.
The firm aims to start production at Madaouela in 2022; at Mutanga in 2024, and Falea in 2023 or beyond.
How is it doing:
In a recent shareholder letter, GoviEx said it was optimistic on uranium market fundamentals, citing a World Nuclear Associations (WNA) fuel report, issued in September, which highlighted improving market dynamics amid supply constraints and drawdown of inventories.
The report forecast an improvement in nuclear energy demand of 2.0% CAGR (compound annual growth rate) in the reference case from the demand forecast in the previous report in 2017.
The company says what sets it apart from peers is the fact that it has permits for its mines, something which can take up to ten years in Canada.
In addition, GoviEx has now settled all outstanding tax claims and historical mining permit acquisition costs on the Madaouela mining permit, while Niger has agreed to defer the payment of future area taxes for up to three years from the incorporation of the local operating mining company.
"Our near-term goals are to deliver technical studies that synthesize the last 5 years of improvements in our resources, planned operations and process design that have the potential to reduce capital and operating expenses and improve resulting project economics," the firm told shareholders.
- Revised PFS for Madaouela
- Uranium price uptick
- Financing news
What the boss says:
Speaking to Proactive this month, GovieEx chief executive Daniel Major said: " We believe in the nuclear and the uranium cycle.
"We've gone through a difficult period in our industry but we're now looking at good strength and demand going forward with the nuclear industry at its highest rate of construction and at the same time, supply constraint has kicked in, which is putting a supply deficit so we're expecting the uranium price to recover.
"GoviEx is well positioned to benefit from that."