GoviEx Uranium, Niger pause Madaouela dispute

[Ben Graham]

GoviEx Uranium (TSXV: GXU) and the Niger government have agreed to extend a break in international arbitration over their Madaouela project clash by another six months.

While the two sides are willing to find a solution, the extension doesn’t guarantee the talks will lead to a definitive agreement, GoviEx said in a release on Thursday. If a resolution can’t be reached during the extended period, arbitration proceedings under the Washington-based International Centre for Settlement of Investment Disputes (ICSID) might continue.

The dispute is rooted in Niger’s military government revoking GoviEx’s permit for Madaouela in July last year after it failed to meet mine start conditions set by the regime. The company has been working on Madaouela since 2007 and had a framework agreed with the previous government. GoviEx then launched arbitration proceedings against Niger last December through the ICSID to get the mining permit back.

Sahel mining woes

The rift reveals the realities of resource nationalism in the Sahel region of West Africa, which is also beset with dictatorships in neighbouring Mali and Burkina Faso.

Juntas, in bids to stem Islamic terrorism and reapportion wealth from agreements with Western mining companies, run a belt of countries across Africa from Guinea on the Atlantic Ocean to Sudan on the Red Sea. One of the highest profile examples of military regimes seeking advantage concerns Barrick Mining (TSX: ABX; NYSE: B). It has encountered numerous difficulties with the Mali government over the last two years.

In addition to GoviEx, French state-owned uranium miner Orano has also faced challenges from the Niger government, which took control of its Somair mine last December and in June announced plans to nationalize it. The government also withdrew the mining permit for Orano’s Imouraren project last year.

Canadian miner Global Atomic (TSX: GLO) by contrast, has managed to maintain support from the government and its Dasa uranium project is currently in the construction stage.

Mid-tier contender

Previous to the permit dispute, GoviEx had advanced Madaouela to the feasibility stage, and its 2022 study outlined a mid-tier project in deposit size and grade by global rankings. That study gave Madaouela a 19-year mine life with total production of 50.8 million lb. uranium oxide (U₃O₈), an after-tax net present value (at an 8% discount) of $140 million and an internal rate of return of 13.3%. Initial capital costs are forecast at $343 million.

GoviEx had planned to start production this year, subject to financing.

Zambia uranium pivot

Meanwhile, GoviEx last month entered the Australian capital market by combining with ASX-listed shell company Tombador Iron (ASX: TI1) in a proposed reverse takeover. It continues to advance with that bid, with the eventual goal of creating ASX-listed uranium developer Atomic Eagle that would focus on advancing the Muntanga project in Zambia.

Muntanga could support a 12-year life with average annual production of 2.2 million lb. of U3O8, at operating costs of $32.20 per lb., according to a feasibility study released in January. The project’s after-tax net present value is estimated at $243 million, with an internal rate of return of 21% and a 3.8-year payback period.

GoviEx shares were down 9% to C$0.05 apiece on Thursday morning in Toronto, for a market capitalization of C$51.1 million.