Niger’s government revoked GoviEx Uranium‘s (TSXV: GXU; US-OTC: GVXXF) mining licence after it failed to start the Madaouela mine, one of the world’s largest projects for the nuclear fuel, by the Wednesday deadline the ruling junta imposed months ago.
GoviEx said Thursday it may challenge the licence decision nationally and internationally, though it wasn’t immediately clear where the company would plead its case. The licence withdrawal “does not follow the procedure prescribed under the applicable mining code,” it said in a release.
Shares in GoviEx tanked, closing nearly 30% lower on Thursday in Toronto at 6¢ apiece, edging up from a 52-week-low of 5¢ during the day. The company’s market value is $45.9 million.
GoviEx was trying to secure some US$200 million in debt financing to complete the project in the year since Niger’s military leaders assumed power in a coup on July 26. A 2022 feasibility study estimated Madaouela would cost US$343 million to build. Production over the life of mine is forecast at 50.8 million lb. of uranium oxide (U3O8), or nearly 2.7 million lb. a year.
The company said in April it was facing the early July deadline.
Regional impact
GoviEx also said Thursday that the government’s decision to withdraw the mining rights for the Madaouela project will have a negative impact on the economic and social development of the region.
According to the World Nuclear Association, Niger is a top-10 uranium producer and the second-largest producer in Africa. The ruling government currently has a 20% stake in GoviEx’s Madaouela project, which contains one of the largest uranium resources globally.
The company said it aims to publish a feasibility study this year on its Muntanga project in Zambia, which already has a mining permit.
Madaouela development
GoviEx first began operations in Niger in 2007, and since then has completed 650,000 metres of drilling to define its resource and advance the project through periods of low uranium prices.
Madaouela could host proven and probable reserves of 5.4 million tonnes grading 0.87 kg per tonne U3O8 for 12.3 million lb. of U3O8, according to the feasibility study.
GoviEx had started social and environmental due diligence with a prospective lender in the past year, updated its environmental and social impact assessment, and begun front-end engineering designs and initial ground works, including the construction of an access road.
As recently as last month, the company received its radiological certificate, which is a regulatory requirement prior to starting mining operations.
Niger’s moves
Since January, Niger has temporarily suspended the granting of new mining licences and also ordered an audit of the industry. Madaouela now represents the second high-profile uranium project that the self-appointed government has taken away.
In June, French miner Orano lost its permit for the Imouraren project. That project, also containing one of the world’s largest reserves, was awarded its permit in 2009, but the company put it on hold pending favourable market conditions.
The price of uranium roughly doubled from last July until January, when it peaked around US$106 per lb. as nations ramped up support for nuclear energy to replace fossil fuel power generation. Since then, the price has fallen to US$85 a lb., though still around a threshold industry leaders say is needed to propel mining projects.
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