GoviEx signs uranium development deal in Niger
GoviEx Uranium Inc. [GXU-TSX; GVXXF-OTCQB] said Friday July 19 that it has signed definitive agreements with the Republic of Niger to finalize the commercial terms that could pave the way for the joint development of GoviEx’s flagship Madaouela uranium project.
“Today’s announcement marks a major milestone paving the way forward for further development of Madaouela with our Nigerian partners,” said GoviEx Executive Chairman Govind Friedland.
Govind is the son of Singapore-based mine financier Robert Friedland.
“We believe the outlook for the uranium market is positive. The finalization of the agreements represents a key step for GoviEx and Niger as we further develop the mine permitted Madaouela Project and it continues to illustrate the constructive environment that GoviEx has experienced operating in Niger since 2007,” said GoviEx CEO Daniel Major.
“Our work on the feasibility study continues as we focus on improving the project economics with confirmation test work currently under way targeting the reduction of operating and capital costs,” Major said.
GoviEx shares advanced on the news, rising 6.25% or $0.01 to 17 cents on volume of 242,050. The shares are trading in a 52-week range of 12 cents and 25 cents.
GoviEx is focused on the exploration and development of its African uranium properties. Its principal objective is to become a significant uranium producer via the continued exploration and development of its mine-permitted Madaouela Project, its mine-permitted Mutanga Project in Zambia and Falea Project in Mali.
Based on GoviEx’s 2015 integrated development plan, Madaouela represents a proposed base case envisioning a 2.69 million pound per year U3O8 yellowcake production rate over an 18-year mine life, and total production of 45.6 million pounds of U3O8 with forecasted cash operating costs of US$24.49 a pound, excluding royalties.
On July 15, 2019, spot uranium was trading at US$26.15/lb.
The company’s shareholders include Cameco Corp. [CCO-TSX, CCJ-NYSE], Denison Mines Corp. [DML-TSX], and privately-owned Ivanhoe Industries.
News of the definitive agreements comes after GoviEx recently said it has received a letter signed by the Honourable Hassan Braze Moussa, Minister of Mines, Republic of Niger, supporting a commercial framework reached between GoviEx and the government of Niger during previous meetings.
The commercial understanding agreed in the support letter positioned GoviEx to advance the Madaouela Project as a fully permitted uranium project, currently with 50.54 million pounds of U3O8 in probable mineral reserves.
GoviEx said the key commercial terms agreed to in principle between the government and GoviEx needed to be finalised in definitive agreements.
The key terms of the definitive agreements are as follows:
A Nigerien operating company to be named Compagnie Miniere Madaouela SA is to be incorporated by the company into which the Madaouela mining permit is to be transferred.
The government will receive an additional working interest of 10% in the Madaouela Project for US$14.5 million. That is in addition to its 10% free carried interest provided under the 2006 Niger mining code.
GoviEx will retain a right of first refusal to acquire the government’s 10% working interest in the project on any proposed sale by the government.
GoviEx’s existing mining permit will be expanded to include previous mineral resources discovered by GoviEx in the Agaliouk permit.
The expansion of the Madaouela 1 Mining Permit will add a further 5.96 million pounds of U3O8 in the measured and indicated categories.
GoviEx will be granted nine-year permit terms for its Madaouela 2, 3, and 4 and Anou-Melle exploration permits, which had reached the end of their exploration periods under the 2006 Niger mining code. These renewals allow GoviEx to maintain its highly prospective mineral exploration potential alongside its mine development program for the Madaouela Project.
The government has agreed that the payment of surface rights required under the Niger Mining Code with respect to the Madaouela 1 Mining Permit shall be deferred, without interest, penalties or fees, from the period commencing January 1, 2019, until the earlier of the date GoviEx closes a financing for construction of the mine for the Madaouela 1 Mining Permit, or three years from the incorporation of the Madaouela Mining Company.