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GoviEx Uranium Inc has filed a prospectus for an initial public offering with the Securities Commissions of Ontario and British Columbia and plans to use the net proceeds to pay for an environmental and social impact assessment as well as a pilot plant for its Madaouela uranium discovery in Niger.
It also plans to repay a US$30 million bond held by Toshiba Corporation by issuing about 29 million Class A common shares.
Madaouela-a project GoviEx describes in its prospectus as being situated “in the heart of” Niger’s uranium producing district-is within 10 km of the Somair and Cominak uranium mines, which are partially owned and operated by Areva.
The advanced-stage exploration property is made up of seven contiguous tenements called Madaouela I, II, III, IV, Anou Mellé, Agaliouk and Eralrar. The company holds exploration permits for five of the tenements and says it has applied for, and expects to receive, exploration permits for Agaliouk and Eralrar as well.
GoviEx has conducted most of its exploration and development drilling on seven deposits on the Madaouela I and Agaliouk tenements called Marianne/Marilyn, Miriam, MSNE, Maryvonne, MSCE, MSEE, and La Banane. (The MSEE and La Banane deposits are wholly situated on the Agaliouk tenement, however, so if Niger does not issue permits for Agaliouk, the resource numbers for those two deposits will be lower.)
Currently the seven deposits’ measured resource totals 9.62 million tonnes grading 1.08% U308 for 22.92 million pounds of contained U308, and indicated resources of 22.63 million tonnes grading 1.51% U308 for 75.30 million pounds of contained U308.Inferred resources add 7.47 million tonnes averaging 1.46% U308 for 24.10 million pounds of U308.
GoviEx says it has identified additional targets including extensions at Miriam northwest, MSNE, and La Banane, as well as MSEE. The company also states it has “significant exploration potential in greenfields locations in Madaouela II, III, IV, Anou Mellé and Eralrar, subject to approval of the Eralrar exploration permit.”
A technical report on the project completed by SRK envisioned a base case production rate of 2.53 million pounds of U308 annually over an eighteen-year mine life, the prospectus states.
At a long-term uranium price of US$70 per lb. U308 (including the recovery of about 590 tonnes of molybdenum dioxide, or MoO2, at a sales price of $11.00/lb), the technical report calculated the project would have an after-tax net present value of $251 million at an 8% discount rate, and an internal rate of return of 21.9% including royalties and by-product credits.
“Management believes, and SRK concurs, that the Madaouela uranium project is sufficiently attractive from a technical and economic perspective that it justifies pursuit by GoviEx toward further reserve definition, feasibility study, and completion of the environmental and social impact assessment and project development,” the prospectus states.
The technical report estimated initial capital costs of $339 million, life-of-mine capital costs of $646 million, and cash operating costs of US$26.39/lb. U308, excluding royalties and US$33.10 per lb. U308 including royalties.
According to GoviEx, Niger has been exporting uranium since 1971, its 2006 mining law “encourages foreign direct investment,” and “the country’s permitting process is transparent.” Under the country’s mining code, upon the conversion from an exploration license to a mining license, the company is expected to transfer to the Niger government 10% of the shares of the company that holds the mining license. The government also has the option to purchase an additional 30% equity interest at fair market value.
The prospectus notes that “infrastructure in the vicinity of the Madaouela project includes power lines connecting the nearby town of Arlit to the state-owned Sonichar coal mine and power station, and an asphalt road to Agadez and on to Niamey, Niger’s capital city.”
The company plans to offer a minimum of 697,674 and a maximum of 2,325,581 Class A common shares priced at $2.15 per share for proceeds of between $1.5 million and $5 million.
Daniel Major, the company’s chief executive officer, did not respond to an emailed request for comment on the offering before presstime.
Govind Friedland, the company’s executive chairman and the son of mining magnate Robert Friedland, graduated with a degree in geology and geological engineering (with a focus on exploration geology) from the Colorado School of Mines in 2000.
Prior to forming GoviEx Uranium, Friedland provided business development services for over half a decade to Ivanhoe Mines and Ivanhoe Energy throughout the Asia Pacific.
Between 2007 and 2011 and as chief executive of GoviEx, Friedland raised about $100 million to fund acquisitions, finance exploration and pursue other corporate initiatives focused on the company’s uranium assets in Niger.
Friedland also co-founded Ivanhoe Industries, the parent company of I-Pulse Inc., a hi-tech company providing innovative solutions for mining, oil and gas, and advanced manufacturing sectors based in Toulouse, France.
