GoviEx Uranium Inc. (GXU.V and GVXXF), since it acquired uranium licences in Niger in 2007, the Company has completed over 600,000 metres of exploration and resource development drilling, completed its pre-feasibility studies (PFS) and had its environmental impact assessment (EIA) approved and its first mining license granted by the Niger Government.
In June 2016, GoviEx acquired the African projects of Denison Mines (DML.TO) in exchange for GoviEx common shares, and now has a portfolio including four projects in four African countries: Niger, Zambia, Mali and Namibia. With this acquisition, GoviEx obtained its second mining permitted project at the Mutanga in Zambia.
The looming uranium supply deficit is the key higher prices in the uranium market. Global nuclear power capacities are projected to increase by 44%, from 376.6 gigawatts in 2015 to 540.6 gigawatts in 2030. Uranium demand could grow by over 48% to as high as 266.8 million pounds U3O8 by 2030 from an estimated 179.3 million pounds of U3O8 in 2015. Over the same period uranium supply is forecast to decline 4%. As a result, many market analysts are forecasting uranium supply to go into deficit by 2020.
According to a Fasken Martineau paper (a leading international law firm founded in Canada), the permitting of Canadian uranium projects has historically taken 7 - 23 years to complete, causing a long backlog of Canadian projects that will not have their development permits in time for the upswing in uranium price that analysts are forecasting.
GoviEx was founded by Govind Friedland, son of mining magnate Robert Friedland, whose family background and qualification in geology from the Colorado School of Mines enabled him to identify the opportunity to acquire some of the most prospective exploration ground in Niger, adjacent to Areva’s mines (producing approximately 7% of global uranium supply for almost 50 years). From 2002 to 2011, Mr. Friedland was based in Beijing adding to his multicultural background having lived much of his life in Asia immersed in the mineral exploration industry, providing him a unique insight into China’s requirement of clean energy.
In 2012, as the company transitioned from exploration to development, Govind appointed Daniel Major as CEO. Mr. Major is a mining engineer who graduated from the Camborne School of Mines in the UK. Daniel’s career spans over 30 years in the mining industry with a solid track record that includes: production and planning at Rio Tinto’s Rossing Uranium Mine in Namibia and chief planning engineer for the development of Amplat’s Mogalakwena mine. Other leadership roles include Chief Executive and later Non-Executive Chairman of Basic Element Mining and Resource Division in Russia, responsible for 8% of global ferro-molybdenum production, and leadership positions in several Canadian-listed mining companies with exploration and production assets in Canada, Russia and South America.
GoviEx has built a strong shareholder base including some major players in the uranium mining and nuclear energy industry. In 2008, Cameco, the world's largest publicly traded uranium company became a shareholder, investing US$28 million and is currently a 6% shareholder. In 2014, when GoviEx became a publicly traded company Toshiba converted their US$60 million loan to equity. Toshiba, parent company of Westinghouse, is one of the world's leading suppliers of nuclear technology, and represents about one half of the global reactor construction. In 2015, Ivanhoe Industries, majority owned by Robert Friedland, an international financier, a major player in the junior mining industry, and the founder of Ivanhoe Mines, acquired a 10% stake in GoviEx. In 2016, Denison Mines acquired a 25% shareholding in exchange for its advanced African projects. These A-list institutions, together with management and the Board, currently own approximately 64% of GoviEx’s common shares outstanding.
GoviEx’s acquisition of Denison’s African projects has transformed the company into an advanced African uranium champion with a clear pipeline of three advanced, large-scale development projects, two of which are fully licenced.
GoviEx has one of the largest total resource bases amongst its peers with 197Mlb U3O8, with Madaouela in Niger having 117Mlb, Mutanga in Zambia reported at 49Mlb and 31Mlb at Falea in southern Mali. Within this, global Measured and Indicated resources are 124Mlb.
Figure: Total Mineral Resource (Mlb U3O8)
With over US$220m invested in its projects to date, GoviEx presents a compelling value as its current market cap is less than US$30 million despite a strong development pipeline of projects with advanced metallurgical test work and engineering studies having been completed on its three principal development projects.
GoviEx’s acquisition strategy has targeted well-established and pro-mining jurisdictions such as Mali and Zambia, which are major gold and copper producers respectively, as well as Niger, which is the 4th largest uranium producer globally (uranium exports account for up to 70% of Niger’s annual exports). Given the pedigree of these mining jurisdictions, GoviEx’s projects are located in regions with excellent infrastructure and access to skilled, mining labour.
GoviEx has two fully-licenced uranium projects ready for development. As the market has taken note of, permitting uranium mines is a very difficult task, taking up to 20 years in Canada.
While current uranium market conditions are resulting is multi year low prices, with the uranium spot price around US$20/lb and the long term price, that accounts for 80% of uranium sales, at US$32/lb, the forecast move to a supply deficit around 2020 has market analysts forecasting uranium prices to exceed US$65/lb U3O8.
GoviEx’s corporate strategy has been to systematically de-risk the Madaouela project since discovery while building a portfolio of advanced African uranium projects with the strategic acquisition of Denison’s African projects. Management is taking a long-term approach to structuring financing for the development of its project portfolio with an initial sounding of global debt markets returning a positive result for Export Credit Agency (ECA) covered debt project financing for Madaouela. “A systematic and integrated process to structure Madaouela’s project financing has begun, including dialogue with ECAs, commercial banks, uranium off-takers and, potentially, strategic equity investment at the project level,” stated Mr. Major.
Despite holding one of the largest uranium resources of its peer group, and two fully permitted uranium projects in recognized mining districts with substantial infrastructure GoviEx, is currently trading at a 76% discount to the development peer group average. GoviEx trades at $0.18 per lb. of U308 in the ground versus the average development stage uranium company trading at $1.00 per lb. in the ground.
Govind added, “GoviEx is working hard towards its intended goal of producing uranium before the end of 2020. One of the few companies of its size capable of making that transition, because of the combination of one of the world’s largest uranium resources, good costs and grades, diversification through the African continent, two mining permits and an A-list of shareholders with significant stakes add to the uniqueness of the GoviEx story.”
For more information about GoviEx Uranium Inc., please visit: www.goviex.com
The company paid consideration to SNN or its affiliates for this article.
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