Canadian uranium company GoviEx Uranium’s two projects, the Madaouela project, in Niger, and the Mutanga project, in Zambia, are fully licensed, and the junior company is ready to start the development of these projects to improve supply to the world uranium market.
“We have made several acquisitions in the past couple of years. In 2017, we acquired a second project in Zambia that adds to the existing Mutanga project and expands our portfolio, and enables us to consider the economies of scale of having a bigger project,” says GoviEx CEO Daniel Major.
With a production life of 21 years, the Madaouela project has a preproduction capital cost of $359-million. Development of the mine is forecast to start in 2019 and it is currently expected to start production in 2021. The preliminary feasibility study for Madaouela, completed in August 2015, showed that the project could produce on average 2.7-million pounds a year of triuranium octoxide (U3O8), or yellowcake, over an initial 21-year mine life with a 94% ultimate uranium recovery rate.
The development of Mutanga is forecast to start in 2021 and is expected to be completed by 2022, while production is expected to start in 2023. Mutanga has an estimated preproduction capital cost of $121-million.
The preliminary economic assessment at Mutanga, completed in November 2017, showed that the project could produce 2.4-million pounds a year of U3O8 over an initial 11-year mine life with an 88% ultimate uranium recovery rate.
Major says the company has good working relationships with the governments of the African countries where it is developing the projects. “The governments appreciate that supporting the mines is good for economic development and that, in Zambia, diversifying from copper to other commodities, including uranium, will help create job opportunities in the mining sector.”
Major explains that the company also strategically acquired the advanced exploration-stage Falea project, in Mali, to “constructively” add to its portfolio and spread the risks – more acquisitions for the company means more capital outlay.
Major acknowledges that investing in mining has significant capital risks, which could amount to $100-million for a project even before the development of the actual mine. “The governments and communities in mining areas have to realise that there are a lot of risks associated with mining operations.”
It is only when mining companies start to make a profit that they are able to show return on investment, with regard to the capital spent to get the mine operational, he adds.
Major says mining continually competes with other industries for capital funding, and potential investors will assess business, government and political risks before investing in a project.
“Reputational and radical-change risks are some of the factors that can push investors away. “There has to be the right balance of tax regime, as well as regulatory certainty, and what we don’t like, as the mining industry, are radical changes, such as changes in mine ownership rules.”
Uranium demand is driven by nuclear energy growth, which is forecast at 3% a year on average. Globally, a higher uranium price is required to maintain current production and incentivise new production.
Major says the company is focused on the ways it can apply technology at its projects to improve their commerciality, while waiting for the uranium market to recover, so that it can quickly get into the market once uranium prices start to move upward.
“We don’t want to wait for a higher uranium price as we can do something to lower the operating costs to provide higher returns for shareholders,” he concludes.