“I do not think anyone in Nigeria needs persuading of the need for urgent action on the environment. Desertification in the north, floods in ... the centre, pollution and erosion on the coast are enough evidence. For Nigeria, climate change is not about the perils of tomorrow, but what is happening today,” President Muhammadu Buhari said during the UN Climate Change Conference (COP26) in October. And today means Nigerians are finding it increasingly hard to afford basic food items.
Mining finance specialist Endeavour Finance will advise on the debt portion, which will account for about half the amount being sought, Major says. The equity component will be considered after the debt is secured, he adds. The company is also in discussion with utilities in Europe and North America with a view to an off-take agreement.
Niger is the world’s fifth-largest producer of uranium and supplies about 8% of world demand. The metal is used in nuclear reactors and also has medical, industrial and defence applications. The company’s Madaouela project is located about 10km south of Arlit in north-central Niger. GoviEx plans to complete its bankable feasibility study in the second quarter of 2022.
Uranium was first discovered in Niger in 1957 by France’s Bureau de Recherches Géologiques et Minières, which was looking for copper. Niger became independent from France in 1960 and the country’s first commercial uranium mine began operating in 1971. Major describes Niger as “very stable” and sees little risk of resource nationalism.
The country’s mining code has rarely been altered, and the government of President Mohamed Bazoum, elected in February in the country’s first democratic transition, is “very pragmatic”.
The country’s sporadic extremist Islamic insurgency is far from the company’s operations, and GoviEx has been able to “comfortably” operate in the country since 2007, he adds.
Prices per pound of uranium have increased this year from around $30 to $50. Major expects prices to rise further in coming years as the world faces a “massive supply deficit”. The world’s uranium’s mines are currently supplying about 128m pounds of uranium per year, while demand for power generation stands at 191m pounds, he says. The industry needs prices at around $50 to $60 per pound to be able to build mines, he adds.
- Prices will be underpinned by the fact that older uranium mines in Canada and Niger are running out of supplies and will close in the next five years, Major says.
- Greater global acceptance of nuclear power will provide further support, he argues, pointing to the UK government’s budget announcement that it will spend up to £1.7bn ($2.3bn) on the Sizewell C nuclear station.
- “Politically, nuclear has undergone a complete shift” since Japan’s Fukushima nuclear accident in 2011, he says.
GoviEx owns 80% of the Madaouela project, and 100% of a project at Mutanga, about 200km south of Lusaka, in Zambia. The company bought the Zambian project from Denison Mines in 2016. GoviEx has mining permits in Niger and Zambia, and also owns 100% of the Falea uranium project in Mali.
Raising funds will be crucial for the future of the Vancouver-based company, which as yet has no revenue but faces ongoing costs. Losses in the first six month of the year the rose to $5.9m versus $3.9m a year earlier. GoviEx, which also trades on the OTCQB Venture Market in the US, was using up cash at a rate of $581,000 a month in the first half of the year and had a cash balance of $8m at the end of August.
- Niger accounts for “most of the pounds in the ground” in terms of resource, but the “very easy mining methodology” in Zambia means that Mutanga may eventually come a close second in terms of commercial value, with Major saying a 60-40 revenue split between the operations may eventually emerge.
- The Zambian operations are scheduled to follow the start of commercial production in Niger, which is scheduled for 2025.
- That is not due to any technical constraints, but the junior miner cannot launch the two projects at the same time, Major says.
GoviEx is betting that the world won’t change its mind again on nuclear power.
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