$GVXXF : GoviEx Uranium — Independent Economic Analysis

Long-Term Price Case$70/lb. U308 & $12.38/lb. MoO2$70/lb. U308
Flagship ProjectMadaouelaMutanga
Mineral Reserves60,540,000 lbs.30,050,000 lbs. (FCM Estimate)
Shares Outstanding474,420,000474,420,000
Market Cap$86,818,860$86,818,860
Average Annual Production2,690,000 lbs.2,400,613 lbs.
LoM21 Years11 Years
Payable Product56,725,980 lbs.26,406,740 lbs.
True All-in Cost (TAIC) $53.37/lb.$56.43/lb.
Gross Revenue$3,954,300,000$1,848,471,800
Total Operating Costs($1,686,000,000)($960,000,000)
Molybdenum Credit$339,930,406
Operating Profit$2,174,431,535$833,017,646
Income Taxes($559,139,538)($291,556,176)
Niger Working Interest (10%)($93,929,200)
Niger Carried Interest (10%)($84,536,280)
Total Capital Costs ($676,000,000) ($183,000,000)
Net Income$761,436,720$358,461,470
Net Profit Margin19%19%
Absolute Cost Structure76%81%
MTQ Score (Higher is Better)0.30.2
True Value$2.36/sh.
True Value Discount (TVD)95%
Madaouela & Mutanga
Cash Flow Multiple5x10x
Annual Cash Flow$77,311,018$77,311,018
Future Market Cap$386,555,090$773,110,180
Future Market Cap Growth661%1,422%
Target$0.81/sh. $1.63/sh.
Cash Flow Multiple5x
Annual Cash Flow$44,734,700
Future Market Cap$223,673,500
Future Market Cap Growth340%

Notes: All Values in U.S. Dollars. As of 30 December 2020, GoviEx trades at roughly 2x projected annual Madaouela cash flow at current spot rates. We think a target of U.S. $0.31, with an implied probability of 28%, is achievable if the dollar continues to weaken in 2021.

I have concerns about whether or not processing Molybdenum is a net positive; I think that byproduct credits that result from two additional stripping steps will come at an unnecessary cost. I also am not convinced that implementing Black Range Minerals’ (Western Uranium) Ablation Technology is the wisest approach to mineral processing.

What would I do differently? A lot.

It may happen that some of my concerns are addressed in the DFS, but I’m going to very quickly describe what I believe is a cheaper and more effective milling & processing approach, albeit less sophisticated. I believe a well-engineered milling & processing plan could substantially lower Operating Costs, perhaps by as much as a third.

  • Crushed underground ore needs to be crushed still further to between 0 and 250 mm.
  • Reduce crushed ore to between 0-550 μm in an autogeneous mill.
  • Feed leaching tank at a rate of up to 100 t/h.
  • Add sulfuric acid, nitric acid, sodium nitrate and water (Ditch Cyanex 600 extractant).
  • Recycle nitric acid from absorption tower to leaching tank to provide 85% of oxidant requirement.
  • Cure pugged ore for 3 hours on conveyor system.
  • Repulp with water in 5 successive tanks at 149 degrees F.
  • Wash pulp and filter on series of two-filter bands.
  • Send pregnant solution from filter Series 1 for clarification.
  • Extract solvent and uranium from pregnant solution with 5-stage Mixer-Settler System A.
  • Solvent stripping in Mixer-Settler System B.
  • Send uranium solution to Uranium Precipitation.
  • Add sodium carbonate to remaining stripped solvent in order to eliminate molybdenum and impurities.
  • Magnesia milk added to uranium solution.
  • Thickening, filtration, drying, and packaging of 75% MgU2O7.

This process will result in recoveries of ~93%. It’s not sophisticated, but it will lower the LoM operating costs in an impactful way.

My overriding fear is that mine-plan sophistry usurps simplicity in the upcoming DFS. Consequently, until my fears have been assuaged, expectations for GoviEx have been tempered.

In addition, in order for GoviEx to improve its projected Net Profit Margin, it needs substantially higher uranium prices. Even the Long-term Price Case of $70/lb. U308 used here is probably too low. There are too many unknowns that could negatively affect the operation when producing with paper-thin margins.

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