GoviEx Uranium (TSXV: GXU) is in talks with Niger’s military leadership to prevent the potential loss of its Madaouela project license if the mine isn’t operational by July 3. This news led to a significant drop in the company’s shares.
On Friday, GoviEx stock plummeted nearly 25% to C$0.095 per share, marking its lowest point in four years and valuing the company at C$82.9 million. Over the past year, the shares reached a high of C$0.22.
The current government, which seized power in a coup last July, controls the largest uranium producer in Africa after Namibia and holds a 20% stake in Madaouela. GoviEx stated there’s a possibility the junta might revoke its mining permit.
In a statement, the company expressed its dedication to advancing the project and collaborating with the Niger government to find a solution that aligns with the law while safeguarding its rights. “Although the outcome of these talks is uncertain, GoviEx is committed to exploring every viable option,” the company added.
Based in Vancouver, GoviEx is seeking over $200 million in debt financing for the estimated $343 million project. The company reported that lenders are currently conducting due diligence. It has completed preliminary site work, including constructing an access road, and plans to establish both open-pit and underground mines with a lifespan exceeding 20 years.
With an anticipated annual output of nearly 2.7 million pounds, Madaouela could elevate Niger from its current seventh-place position among uranium producers to surpass Russia, according to the World Nuclear Association.
The project boasts proven and probable reserves of 5.4 million tonnes grading 0.87 kg per tonne uranium oxide (U3O8) and 123.1 parts per million molybdenum, as per a 2022 feasibility study. The study projected a production of 50.8 million pounds of U3O8 over the mine’s life, with uranium and molybdenum prices at $65 and $11 per pound, respectively.
Since then, spot uranium prices have risen to around $90 per pound and molybdenum to approximately $20 per pound. GoviEx Executive Chairman Govind Friedland highlighted Madaouela’s vast resources and emphasized the company’s cooperation with governments and local communities for mutual benefit.
Friedland stated, “Our commitment to the country remains unwavering, and we will utilize all available means to ensure project development continues.” Additionally, GoviEx is progressing with the Muntanga uranium project in Zambia and plans to release a feasibility study in the latter half of this year. Last January, the company sold its uranium-silver-copper Falea project in Mali to African Energy Metals (TSXV: CUCO) for C$5.5 million in cash and shares.
