May 31st, 2023 | 08:15 CEST
Bright prospects - GoviEx Uranium, Cameco, Uranium Energy
Table of contents:
Advantages clearly evident
Of course, many people still remember the terrible events at Three Mile Island in 1976, Chernobyl in 1986 and Fukushima in 2011. But the technology has advanced significantly in recent decades to provide a much higher level of nuclear safety. It is considered the safest source in the world in 2023 compared to both fossil and renewable energy sources. One of the advantages why the international community is backing carbon-free power generation via nuclear energy is its small land footprint.
Although nuclear power produces enormous amounts of carbon-free electricity, it generates more on significantly less land than any other source. For example, an average 1,000-MW nuclear power plant in the US requires about 2.6 sq km of land. To produce the same amount of electricity, wind turbines require 360 times more land area, and photovoltaic systems take up 75 times more space. To visualize this, it would take more than 3 million solar panels to produce the same amount of electricity as a typical commercial reactor or more than 430 wind turbines. Moreover, because of the high energy density of the uranium required, a uranium fuel pellet the size of a gummy bear generates as much energy as 1t of coal, 149 gallons of oil or 481.38 cubic metres of natural gas.
Since the start of the war of aggression and the looming energy crisis, there has been a change in thinking, which is likely to bring about a turning point not only in the uranium market. The primary goal of Western governments is now to minimize their dependence on Russia and China. And it is precisely in the procurement of uranium oxide that the USA's dependence on countries like Kazakhstan or Russia is enormous. While the United States bought more than 45 million pounds of uranium in 2021, making it the world's largest consumer, domestic production was a tiny 21,000 pounds of uranium oxide U3O8. Domestic production is thus not even remotely sufficient to meet the needs of the country's nuclear power plants. Based on data from the World Nuclear Association, the largest imports came from Kazakhstan (35%), Canada (15%), Australia (14%), Russia (14%) and Namibia (7%).
North American companies benefit
The primary beneficiaries of the government programs are domestic uranium producers such as Cameco, Uranium Energy and exploration companies like GoviEx Uranium. Canadian mining company GoviEx is on its way to becoming an African producer, with a substantial resource inventory of over 130 million pounds of U3O8 in measured and indicated categories and 89.3 million pounds in the inferred category. GoviEx holds two prospective properties, the Madaouela Project in Niger and the Muntanga Project in Zambia, which have all major mining permits.
The Madaouela project hosts one of the largest uranium resources in the world, with 100 million pounds of uranium oxide in measured and indicated mineral resources, plus inferred resources of 20 million pounds. This is backed by the government of Niger, which itself owns 20% of the property. Production is expected to start here in 2025. The 2022 feasibility study yielded a net present value, after deducting 8% tax, of USD 140 million at an internal rate of return of 13.3%. With a mining rate of 2.60 million pounds per year and an expected mine life of 19 years, there would be the potential to produce 50.8 million pounds of uranium oxide.
The feasibility study is underway at the Muntanga project in Zambia and is expected to be expanded after the successful 2022 drilling program to allow for detailed engineering design and construction. At the Dibbwi East deposit on Muntanga, a 15,500 m infill drilling program has been carried out aimed at converting the current 29 million pounds of U3O8 from inferred to indicated resources. In the coming weeks, GoviEx Uranium plans to provide an update on its mineral resource estimate.
Daniel Major, CEO of GoviEx, commented: "Our continued progress at the Muntanga uranium project reflects our commitment to responsible and sustainable development in Africa. With the completion of our ESIA and Feasibility Study scheduled for 2024, we are well positioned to advance this project towards near-term production."
The Canadians secured about CAD 15 million for further exploration and engineering work via a previously announced buy-deal private placement. In the wake of the corporate action, GoviEx's share price fell to a new low for the year at CAD 0.125 but is in a strong long-term support area.
While Germany is disarming concerning nuclear energy, more and more reactors are being built in Western industrialized countries. Policymakers, especially in North America, are promoting the uranium industry, which should benefit current and future producers like GoviEx Uranium enormously.
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