GoviEx initiates arbitration against Niger in uranium permit dispute

GoviEx Uranium (TSXV: GXU; USOTC: GVXXF) is going to arbitration with Niger for revoking its permit on the feasibility-stage Madaouéla project, one of the world’s largest uranium developments.

Niger’s military leaders, which came into power last year, said in July they were rescinding the permit. The West African country used to be one of the leading suppliers of uranium to Europe before the coup. Last week, it seized French state uranium company Orano’s Somair mine. 

GoviEx says revoking its permit triggered an arbitration clause in the mining convention signed in 2007 between the company and the former government. The agreement is governed by Nigerien law, so the move is a breach of the state’s obligations under the both the mining and civil codes, GoviEx argues. 

World Bank

The arbitration, seeking to get the permit back and undisclosed compensation, is filed through the World Bank’s International Centre for Settlement of Investment Disputes. But a timeline wasn’t immediately clear from a GoviEx release on Monday. 

“The state has shown no willingness to engage with the companies (GoviEx and its local subsidiary) to reach an amicable settlement,” the project developer said. 

GoviEx had tried to appeal to Niger’s president in a local administrative recourse without success, it said. 

Shares of GoviEx Uranium traded flat on Monday at 5.5¢ apiece for a market capitalization of $41 million. The stock had dropped to a 52-week low of 4.5¢ when the state revoked the permit.

Junta belt 

The dispute is another example of resource nationalism in one of the world’s poorest regions, the Sahel in West Africa, which is 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 the Atlantic Ocean to the Red Sea. 

With the recent recovery in uranium prices, the Madaouéla project was poised for development and the company had started to advance despite the political changes in Niger since the coup d’etat of July 2023.

Months before the coup, the project had reached its feasibility stage, with the technical report outlining a 19-year operation capable of producing 50.8 million lb. of uranium oxide (U₃O₈), or 2.67 million lb. annually. The project is anchored by one of the largest uranium resources in the world, with 100 million lb. of U₃O₈ in measured and indicated resources, plus inferred resources of 20 million lb. of U₃O₈.

US$343M capex

The feasibility study also estimated an after-tax net present value (at 8% discount) of US$140 million and an internal rate of return of 13.3%. The initial capital cost is forecast at US$343 million.

GoviEx said that the withdrawal of their rights to the project would have a negative impact on the region’s economic and social development. It has forecast the mine could create up to 800 jobs over its projected life, with substantial royalty payments and taxes to the state.

The company had initially planned to commence production in 2025, subject to financing. Over the past year, it received expressions of interest of more than US$200 million in project funding, it said.