Firstly, in GoviEx’s upcoming DFS, we expect a Molybdenum byproduct credit of approximately U.S. $340 M, which may lower Direct Operating Costs.* Secondly, we previously calculated estimated All-in Costs of ~$50/lb. We have since raised our estimated True All-in Costs by 7% to $53.37/lb. Finally, until the official release of the DFS, for our investment purposes, the results below supersede former results.
|Long-Term Price Case||$70/lb. U308 & $12.38/lb. MoO2|
|Madaouela Mineral Resources (M&I, + Agaliouk)||116,720,000 lbs.|
|Madaouela Probable Mineral Reserves||60,540,000 lbs.|
|Fully-Diluted Market Cap||$70,405,610|
|Average Annual Production||2,690,000 lbs.|
|True All-in Costs (FCM Estimate)||$53.37/lb.|
|Direct Operating Costs||($1,686,000,000)|
|Corporate Taxes (30%)||($559,139,538)|
|Niger Working Interest (10%)||($93,929,200)|
|Niger Carried Interest (10%)||($84,536,280)|
|Net Income (GoviEx Stake, LoM)||$761,436,720|
|Projected Book Value per Share||$1.19/sh.|
|PMCV10 (Projected Market Cap Valuation at 10%)||$1.28/sh.|
|Cost to Acquire||$0.45/lb.|
|Total Cost to Build & Operate||$53.37/lb.|
|Total Acquisition Cost||$829,150,920 ($1.30/sh.)|
|Deep Value Grade||A|
|Market Cap Valuation per Resource Lb.||$0.45|
|Share Price Valuation by Resources in the Ground ||.24 lbs. ($5.87)|
|Value of Resources (M&I) ||$3,759,064,000|
|Resource Valuation as a Percentage of Market Cap||2%|
|Theoretical Market Cap Valuation||$375,906,400|
|Theoretical Future Market Cap||$1,078,420,000|
|Theoretical Market Cap Growth||1,432% ($1.68/sh.)|
Notes: All Values in U.S. Dollars
GoviEx Uranium remains a Deep Value Proposition, as its present Market Cap is valued at roughly an 80% discount to what we consider fair value (~$376 M).
*We have some concerns about whether or not processing Molybdenum is a net positive, however; we think that byproduct credits that result from two additional stripping steps may come at an unnecessary cost. We also are not convinced that implementing Black Range Minerals’ (Western Uranium) Ablation Technology is the wisest approach to mineral processing.
What would we do differently? A lot. It may happen that some of our concerns are addressed in the DFS, but we’re going to very quickly describe what we believe is a cheaper and more effective milling & processing approach, albeit less sophisticated. We 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.
Our overriding fear is that mine-plan sophistry usurps simplicity in the upcoming DFS. Consequently, until our fears have been assuaged, our expectations for GoviEx have been tempered. There’s no reason to get cute, which was the case in the 2015 PFS. Our hope is that there is a zealous dedication to developing an engaged and competent workforce committed to quality, thrift and minimal downtime, as opposed to hiring a dispassionate workforce that is soon alienated by a process that is undercut by hidden breakpoints.