Mr. Stephen Roman reports
GLOBAL ATOMIC ANNOUNCES POSITIVE PEA RESULTS FOR DASA
Global Atomic Corp. has released the results of the preliminary economic assessment on the Dasa project, located in the Republic of Niger.
A summary of the preliminary economic assessment is provided as follows, including opportunities being explored through an alternative 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 preliminary economic assessment was to study the Dasa project as an integrated underground mining operation, processing mineralized material through an on-site mill (the Dasa stand-alone scenario) initially operating at 2,500 tonnes per day and ramping up to 3,000 tonnes per day. Highlights include:
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High-grade resource -- 69 million pounds U3O8 (triuranium octoxide) recovered at an average grade of 2,380 parts per million U3O8 over a 15-year mine life;
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Scalable production -- annual production sustained from four million pounds to seven million pounds U3O8 over the mine life;
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Low-cost operation -- all-in sustaining cost (AISC) of $28.51 per pound U3O8;
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Initial capex (capital expenditures) -- $320-million, including $141-million for an on-site mill; $467 million with sustaining capital and reclamation;
-
Significant net present value and project return at expected long-term uranium price.
NPV AND IRR -- DASA STAND-ALONE SCENARIO
Unit Uranium price (US$/lb U3O8)
$ 45.00 $ 50.00 $ 55.00
Pretax
NPV at 8% US$M $342 $539 $735
IRR (100% equity) 27% 37% 46%
Posttax
NPV at 8% US$M $172 $299 $437
IRR (100% equity) 18% 25% 32%
Note: The PEA was completed in accordance with National
Instrument 43-101 and Canadian Institute of Mining,
Metallurgy 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. Highlights (continued):
-
An alternative mine plan scenario (the alternative mining strategy), based on the July, 2017, memorandum of understanding (MOU) signed with Orano Mining, in which high-grade mineralized material is sold to Orano targeting early cash flow, identified a significant value opportunity. Highlights include:
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Fast track to cash flow -- accelerated underground development with minimal infrastructure;
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Reduced initial capital -- $35-million to start mining, no mill required;
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High-grade material -- potential to ship 360,000 tonnes annually for the five-year contract containing on average 2.8 million pounds U3O8 grading 3,698 parts per million;
-
Low-cost mining -- minimizing operating costs, $10.94 per pound U3O8 before transport and processing, indicates this is potentially profitable at low uranium prices.
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The company expects it could permit the alternative mining strategy by Q4 2019, with ramp development beginning as early as 2020.
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Management also identified the following additional value opportunities, which are currently being explored to improve overall project economics:
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Improve modelled uranium recovery with further metallurgical test work;
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Mine plan optimizations to reduce dilution and minimize underground development;
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Improve grade and increase mineral resources with further infill drilling;
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Value opportunities currently being explored are expected to be reflected in an updated feasibility study targeted for 2019.
Stephen G. Roman, president and chief executive officer of Global Atomic, commented: "The Dasa uranium project is a Tier 1 project in a proven uranium mining jurisdiction where accelerated permitting is possible. The PEA demonstrates the economic potential of the project and our agreement with Orano allows us to pursue ways to fast-track the project to early mining at current commodity prices."
PEA summary
The PEA was completed by CSA Global Pty. Ltd. with the objective to assess the economic and technical viability of uranium production at Dasa as an integrated operating facility to mine and recover a uranium concentrate on the property, referred to as the Dasa stand-alone scenario in this news release.
As a value opportunity, Global Atomic also requested CSA Global to study the alternative mining strategy, whereby the company could achieve positive cash flow with minimal upfront capital by selling mineralized rock directly to Orano as per a memorandum of understanding the company has with Orano and the company believes it represents a compelling case at current uranium prices.
Price assumptions
A uranium price of $50 per pound U3O8 was chosen for the PEA, consistent with the consensus long-term spot price estimate as reported by industry analysts.
PEA SUMMARY -- DASA STAND-ALONE SCENARIO
Input Unit Value
Mineralized material processed Million tonnes 15.9
Extraction ratio 85%
Dilution 34%
Mill head grade Parts per million 2,380
Mill recovery 84.3%
Total recovered uranium Million pounds 69.1
Mine life Years 15
Annual tonnage
(phase 1 -- first six years) Thousand tonnes per year 900
Average annual production (phase 1) Million pounds U3O8 7.0
Average annual production (phase 2) Million pounds U3O8 4.0
Capital cost
Mine development US$ millions $49.5
Mill US$ millions $141.2
Surface infrastructure US$ millions $45.4
Owner's cost US$ millions $8.7
Indirect costs/EPCM US$ millions $11.1
Contingency (25%) US$ millions $64.0
Total construction costs,
including contingency US$ millions $319.9
Sustaining capital costs US$ millions $137.2
Reclamation US$ millions $10.0
Total capital costs US$ millions $467.1
Operating cost
Mining US$ per pound $12.26
Processing US$ per pound $10.80
Transport and marketing US$ per pound $1.50
G&A US$ per pound $1.91
Total operating cost US$ per pound $26.52
Sustaining capital US$ per pound $1.99
All-in sustaining cost US$ per pound $28.51
Mineral resource
Deposit overview
Dasa is a high-grade uranium deposit located in the Tim Mersoi basin of Niger, a sedimentary basin host to a large number of uranium deposits including Orano's Cominak and Somair mines, which combined have produced over 240 million pounds of historical production. Uranium mineralization in Niger is located exclusively in the sandstone formations of the basin; however, concentration and tonnage vary widely by deposit. Dasa is unique in that it contains significantly higher concentrations of uranium, making it the highest-grade project in the basin and one of the highest-grade deposits in the world.
Mineral resource estimate
An NI 43-101 mineral resource estimate was prepared by CSA Global dated June 30, 2018, and filed on SEDAR.
Block modelling was based on the idea that Dasa would be mined as open pit to start, transitioning to underground mining in subsequent years. During the PEA process, it was determined a more optimal approach was to start ramping underground to the mineralized material. Opportunity exists to further refine the resource model that could potentially improve the underground mining assumptions.
MINERAL RESOURCE ESTIMATE
Category Tonnes eU3O8 Contained metal
(millions) (ppm) (millions lb)
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
Notes: These results are based on chemical assays and gamma probing
using an Electomind DIL 1125 gamma probe. Additional results will be
released once chemical assaying is completed on the Flank zone drill
holes currently at ALS Global in Vancouver, Canada.
(1) Mineral resources are based on CIM definitions and are
reported as at June 1, 2018.
(2) Mineral resources for pit-constrained resources are estimated
within the limits of an ultimate pit shell.
(3) Mineral resources for underground resources are estimated
outside the limits of ultimate pit shell.
(4) A cut-off grade of 320 ppm eU3O8 has been applied for
pit-constrained resources.
(5) A cut-off grade of 1,200 ppm eU3O8 has been applied for
underground resources.
(6) A bulk density of 2.36 tonnes per cubic metre has been
applied for all model cells.
(7) Rows and columns may not add up exactly due to rounding.
Grades were calculated using a comprehensive suite of chemical assays for all diamond core intervals above a cut-off of 100 parts per million (before 2014) or 300 parts per million (after 2014) as measured in downhole logging. This was calibrated against the results of the downhole logging (which occurs in all drill holes) and found to have a very good correlation. Based on this correlation representative corrective adjustments were made in areas of the high grades where sections of drill core were saturated. Chemical assays are currently being conducted at ALS Global in Vancouver, B.C., on the recently drilled Flank zone holes, which account for less than 10 per cent of total drilling on the project and will form part of the updated NI 43-101 resource to be published in a later technical report.
Mine plan
Dasa stand-alone scenario
The PEA proposes the development of an underground mine using a sublevel blast-hole retreat and backfill mining method. The mining method proposed includes the trackless short-hole development of the main decline, ramps, strike and crosscut drives as primary and secondary accesses to mineralized material on a 24-metre sublevel spacing and a 20-metre collection drive spacing. Standard trackless underground mining equipment is proposed and will comprise electrohydraulic face drilling rigs and support drilling rigs. Proposed material handling equipment will comprise diesel-powered seven-tonne loaders and 33-tonne trucks. Ancillary equipment will consist of diesel-powered modified charge-up vehicles, utility vehicles and other light vehicles. The long-hole stoping operation proposed will utilize an electrohydraulic long-hole production jumbo capable of drilling accurate holes up to 35 metres in a ring-fired pattern and will be developed on a retreat basis. Blasted material will be mucked using a teleremote-capable seven-tonne loader and loaded into either 33-tonne haul trucks or a mucking bay. It is proposed that the depleted stopes will be backfilled using a combination of waste rock from development, classified tailings and binding agents. Broken material will be transported through the ramp and main decline system to surface in 33-tonne haul trucks for dumping at either a run-of-mine pad crusher feed bin, surface stockpile or waste dump storage facility.
The PEA considered spatial distribution of the mining areas based on grade distribution and determined a two-stage phased approach is optimal for mining the Dasa resource:
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Stage 1 (years 1 to 6) -- optimize to grade by accessing high-grade areas of the deposit as early as possible, maintaining high-grade, 4,000-part-per-million-triuranium-octoxide feed at a mining rate of 900,000 tonnes per year; blending of mineralized material will be managed from stockpiles during this period to control feed grade to the processing plant;
-
Stage 2 (years 7 and beyond) -- based on the current modelled resource, grades will be blended to provide a target feed grade of 1,800 parts per million U3O8 at a mining rate of 1.2 million tonnes per year to the process plant; as additional drilling is completed, high-grade areas may continue on strike and down dip.
Considerations for the alternative mining strategy value opportunity
In this scenario, mining throughput is significantly reduced and the highest-grade stopes are mined first. Average mining output is approximately 360,000 tonnes per year and grade is similar to stage 1 of mining in the Dasa stand-alone scenario. The initial ramp infrastructure to access the first stopes is the same as the PEA mine plan.
COMPARISON OF MINE THROUGHPUT AND COSTS
Unit Alternative Dasa stand-alone Dasa stand-alone
mining stage 1 stage 2
strategy
Annual mining tonnage Tonnes 360,000 900,000 1,200,000
Grade mined Parts per million 3,698 3,790 1,784
ROM annual contained
uranium Million pounds U3O8 2.8 7.5 4.7
Processing and recovery
The metallurgical work stream to support the PEA included comminution work, leach characteristics, settling tests and mineralogy. Based on the work completed on the samples selected from the mineralized material and the review of the performance during various tests and conditions, an acid-leach/resin-in-pulp flow sheet has been suggested for the processing of the Dasa deposit. The process plant has been sized to process 1.2 million tonnes annually (3,500 tonnes per day) and to recover up to eight million pounds U3O8 on an annual basis. The plant will be run from grid power and will require seven megawatts of installed capacity. Material processed in stage 1 production (years 1 to 6) will be limited to 900,000 tonnes per year to support approximately seven million pounds of U3O8 product annually. Mineralized material processed in stage 2 production (year 7 onward) will be limited to 1.2 million tonnes per year to support approximately four million pounds U3O8 product annually.
Mineralized material from the mine is crushed to 200 millimetres and then milled to a particle size of 106 micrometres using a semi-autogenous grinding (SAG) mill. The slurry is pumped to a series of leach tanks where sulphuric acid is mixed with the slurry to leach the uranium. The slurry is then pumped to the resin tanks, where the uranium in solution is adsorbed onto the resin beads. Once the uranium has been adsorbed onto the resin, the barren slurry is then neutralized with lime and pumped to a tailings dam for storage.
The slurry resin mixture is then screened so the loaded resin can be collected into an elution column where the uranium is removed or eluted off the resin using sulphuric acid. The acidic uranium-rich solution is now pumped to the refining stage where hydrogen peroxide is used to precipitate the uranium as final uranyl peroxide (UO4), or yellowcake product. The mixture is filtered, dried and packaged in drums for export.
Acid will be generated on site; an acid consumption rate of 120 kilograms per tonne of material treated is assumed. Water will be supplied by local boreholes.
The overall process recovery is modelled at 84.3 per cent and is expected to improve with additional test work during the feasibility study.
Capital costs
Dasa stand-alone scenario
Mine development includes a 3,778-metre-long-by-6.5-metre-wide-by-4.5-metre-high ramp as the main decline. The ramp has been sized to potentially support a future conveying system alongside vehicle access. If no conveying system is needed, ramp dimensions will be reduced -- a value opportunity that will be explored.
Power will be provided through existing electricity infrastructure. A cost of $4.5-million is assumed for connection to the grid, which currently supplies power to Orano's operations in Arlit.
Other surface infrastructure includes basic infrastructure ($15.9-million), acid plant ($10-million), water purification ($5-million) and tailings facility ($8.5-million).
A 25-per-cent contingency ($64-million) was added to total construction costs.
Total construction costs in the Dasa stand-alone scenario are $319.9-million, including contingencies.
Sustaining capital of $137-million is added for provisioning of major equipment replacement and refurbishment. These items will include mechanized mining equipment and major processing plant equipment components.
Alternative mining strategy, mine only
Capital costs reduce significantly to $34.8-million (U.S.), supporting a mine camp and critical surface infrastructure required to begin mineralized rock shipments off site. Mine development is assumed to be completed by contract mining and allocated as an operating expense.
The attached table provides a comparison of costs under each scenario.
CAPITAL COSTS -- ALTERNATIVE MINING
STRATEGY VERSUS DASA STAND-ALONE SCENARIO
Alternative mining Dasa stand-alone
strategy (millions US$) scenario (millions US$)
Mine development (1) $16.0 $49.5
Mill $0.0 $141.2
Surface infrastructure $14.9 $45.4
Owner's cost $0.3 $8.7
Indirects/EPCM $0.4 $11.1
Contingency $3.1 $64.0
Total construction costs $34.8 $319.9
Sustaining capital costs $2.5 $137.2
Reclamation costs - $10.0
Total capital costs $37.3 $467.1
(1) Under the alternative mining strategy, all mine development costs
are expensed as incurred after the initial year. Approximately
$16-million of such development costs is incurred prior to mining.
Operating costs
Dasa stand-alone scenario
Mining costs of $12.26 per pound U3O8 ($53.25 per tonne) are based on an owner operator model. Ramp and access development is capitalized prior to initial production and expensed as a component of operating costs thereafter.
Process costs are calculated to be $10.80 per pound based on $46.92 per tonne of material treated with the largest consumable being reagents. The processing facility will be operated and maintained by a staff of 150 people and work on two 12-hour shifts, 365 days a year.
Costs for general and administrative include a 150-person camp and facilities.
Cash operating cost totals $26.52 per pound U3O8 ($114.96 per tonne). Including sustaining capital, all-in sustaining cost totals $28.51 per pound U3O8 ($123.59 per tonne).
OPERATING COSTS -- DASA STAND-ALONE SCENARIO
US$/t processed US$/lb U3O8
Mining $53.25 $12.26
Processing $46.92 $10.80
Transport and marketing $6.52 $1.50
G&A $8.28 $1.91
Cash operating cost $114.96 $26.52
Sustaining capital $8.63 $1.99
All-in sustaining cost $123.59 $28.51
Considerations for alternative mining strategy
Contractor mining costs (12.5 per cent) are factored into the alternative mining strategy. However, increased contractor costs are offset by higher U3O8 production due to higher-grade stopes. The net effect is lower costs on a per-pound-of-uranium basis.
COMPARISON OF MINE COSTS
Unit Alternative Dasa stand-alone
mining strategy scenario
Mining cost -- per tonne US$/t U3O8 $60.14 $53.25
Mining cost -- per pound US$/lb U3O8 $8.75 $12.26
Economic analysis
Indicative tax assumptions
An after-tax cash flow and NPV were calculated based on the following tax calculations:
-
The income tax rate in Niger is 30 per cent, and companies are provided a three-year tax exemption and benefit from accelerated depreciation on capital expenditures. All value-added tax is recoverable.
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A sliding-scale royalty is paid on revenues based on operating margin percentages as shown in the attached table.
Operating margin < 20% Royalty = 5.5%
Operating margin of 20% to 50% Royalty = 9.0%
Operating margin > 50% Royalty = 12.0%
Dasa stand-alone scenario NPV and IRR
NPV figures are calculated using an 8-per-cent discount rate and cash flows are discounted to the start of first construction.
Under Niger mining code, a Niger mining company must be established, of which the Republic of Niger is granted a 10-per-cent carried interest in the share capital. Cash flows calculated on an after-tax basis are considered attributable to the project and have not been adjusted for Niger mining company share interests.
NPV AND IRR -- DASA STAND-ALONE CASE
Unit Uranium price (US$/lb U3O8)
$45.00 $50.00 $55.00
Pretax
NPV @ 8% US$M $342 $539 $735
IRR 27% 37% 46%
Posttax
NPV @ 8% US$M $172 $299 $437
IRR 18% 25% 32%
The PEA was completed in accordance with NI 43-101 and 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.
Alternative mining strategy cash flow estimate
Total costs including mining, general and administrative, and sustaining capital are $10.94 per pound of contained uranium. Considering the alternative mining strategy generates cash flow at near-term uranium prices as forecast by industry analysts and minimal initial capital of $37-million (including contingency) to achieve first production, the company believes this scenario is potentially an economic alternative in an environment of lower uranium prices.
ALTERNATIVE MINING STRATEGY -- OPERATING MARGIN
Unit Uranium price sensitivities (US$/lb U3O8)
$30.00 $35.00 $40.00
Mineralized material shipped Tonnes/year 360 360 360
Contained U3O8 Pounds/year 2.8 2.8 2.8
Operating profit
Sales revenue US$/pound $30.00 $35.00 $40.00
Less mining cost US$/pound ($8.75) ($8.75) ($8.75)
Less G&A US$/pound ($2.01) ($2.01) ($2.01)
Less sustaining capex US$/pound ($0.18) ($0.18) ($0.18)
Total costs before transport/processing US$/pound ($10.94) ($10.94) ($10.94)
Operating margin before transport/processing US$/pound $19.06 $24.06 $29.06
Permitting and project timeline
A mining permit is required for mineral extraction, granting the holder exclusive rights of prospecting, exploration, mining and disposal of mining substances for which it was issued and without limitation as to depth. Niger has a long history of uranium development and foreign investment is viewed as a key to economic growth. The government of Niger is supportive of Dasa development and the company's strategy to bring this into production in an accelerated timeline. To meet permitting requirements, the company is targeting to deliver a feasibility study and environmental impact study by Q2 2019. The company expects the overall permitting process to take four to six months, consistent with the timeline of other uranium projects recently permitted in Niger.
Should the company elect to commence the alternative mining strategy, the company could ship mineralized material to Orano under the memorandum of understanding by 2020.
Once permitting is complete, the company expects site preparation and mine development to be completed in six months, allowing the company to access uranium-bearing rock by Q3 2020.
Opportunities to explore
The company has recognized several areas for opportunity to further enhance value at the Dasa project.
Area Opportunities to explore
Improve recoveries - Previous metallurgical test work on Dasa
demonstrated recoveries of over 90 per cent.
- Additional test work is required,
particularly from the Flank zone area of the
deposit that will be the target for early mining.
- Complete metallurgical modelling to
maximize recovery over mine life.
Optimize mine plan - Reduce dilution through improvements in the
block model resolution, grade distribution
and additional exploratory information.
- Ramp development, optimized for size
based on mining activities.
- Refine cost models with more accurate
mining parameters.
- Investigate geotechnical impacts on mining.
Grade improvements - Increasing drill density to convert inferred
to indicated mineral resources.
- Incorporate new drilling into mineral resource
model to increase tonnage and potentially grade.
Qualified person statement
The 2018 PEA was prepared and led by CSA Global. All relevant chapters of the report will be prepared by qualified persons as defined under NI 43-101. The qualified persons have reviewed and approved the technical content of this news release and confirm the numbers are an accurate reflection of the content of the NI 43-101 report being prepared. All of the qualified persons are independent of the company pursuant to NI 43-101. The technical report supporting the PEA will be filed on SEDAR within 45 days.
George A. Flach, vice-president of exploration, PGeo, is the qualified person 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 Atomic
Corp.
Global Atomic is a TSX Venture Exchange-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 square kilometres. 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 Atomic's base metal division holds a 49-per-cent interest in the Befesa Silvermet Turkey SL 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 that is and sold to zinc smelters around the world.
We seek Safe Harbor.
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