GoviEx Letter to Stakeholders and Market Comments
Against this backdrop GoviEx continued its focus on preparing the Madaouela Project in Niger for future development. GoviEx signed definitive agreements with the Republic of Niger (the “State”) in July 2019, whichresulted in the incorporation of our local operating mining company with the State as our partner holding a 20% equity interest in the local operating mining company. As part of our agreement with the State, GoviEx settled all outstanding tax claims and historical mining permit acquisition costs on the Madaouela 1 mining permit. In addition, the State agreed to defer the payment of future area taxes for up to 3 years from the incorporation of the local operating mining company.(1)
At the same time the State agreed to re-shape the Madaouela 1 mining permit to include an additional 5.96 million pounds (Mlb) U3O8 in the Measured and Indicated categories, and agreed to issue new 9-year exploration permits for approximately 1,547km2of exploration area contiguous to our Madaouela 1 mining permit.(1, 2)
Over the year our feasibility study consultants SRK Consulting (UK) Ltd (“SRK”) and SGS Bateman (Pty) Ltd (“SGS”) have been focusing on options that have significantpotential to improve the feasibility of the Madaouela Project. They are targeting areas that will reduce both operating and capital costs relative to thecurrent technical report on the Madaouela Project(3)while at the same time reduce technical risk, with a focus on improving overall project economics. Metallurgical test work is ongoing to verify initial results, and we anticipate being able to provide an update on the project economics during the first half of 2020.
GoviEx completed a financing in April 2019 for gross proceeds of C$3,502,000(4)and in addition received over US$1.0m from Linkwood Holdings Pte Ltd. as part of itsrepayment ofthe US$2.75m loan provided by GoviEx.(5)These funds have enabled the Company to advancekey aspects of the Madaouela Project including continued engineering and project optimization,as well as the advancement of primary corporate objectives related to the projectwith particular reference to our definitive agreement with the State noted above.
GoviEx expects our main value driver, the uranium commodity price,to improve through 2020 as the impact of the current supply deficit, expected removal of political uncertainty in the USA, and increase in producer buying to meet contract commitments impacts buyer actions in a positive manner. GoviEx will continue to advance its projects in a responsible, safe and sustainable manner, consistent with past practices.
We continue focusing on our strategy to position the Company at the forefront of our peers to take advantage of anticipated market changes to incentivize new production. Our near-term goals are to deliver technical studies that synthesise the last 5 years ofimprovements in our resources, planned operations and process design that have the potential to reduce capital and operating expenses and improve resulting project economics.
We thank you for the support during these “bottom of the cycle” years and look forward to a market on the upswing.
Govind Friedland & Daniel Major
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