GoviEx Uranium Inc. (TSXV: GXU) has been dealt a significant blow with the a decision by the government of the Republic of Niger to revoke the company’s rights over the perimeter of the Madaouela mining permit.
The announcement, communicated via a letter from the Minister of Mines, signifies that the Madaouela permit area has now been placed in the public domain. GoviEx contends that this decision does not adhere to the stipulated withdrawal procedure outlined in Niger’s mining code.
In a statement released by GoviEx, the company emphasized its commitment to transparency and ongoing engagement with government officials and stakeholders. However, GoviEx also declared its intention to challenge the withdrawal through national or international legal avenues if necessary.
“We are committed to maintaining transparency and continuing our engagement with government officials and stakeholders,” stated GoviEx, underscoring its readiness to defend its rights. This development is a significant setback for GoviEx, which has been active in Niger since 2007, completing an extensive 650,000-meter drilling campaign to define what is now recognized as one of the largest uranium mineral resources globally.
Following the news, shares of GoviEx Uranum fell as much as 41% on trading day.
In April, the local government imposed a strict deadline on the company to start mining operations by July 3, 2024, or risk losing the permit entirely.
GoviEx Uranium is not alone in facing license revocations from the Niger government; French nuclear fuel producer Orano also had its license revoked for operations at the Imouraren mine, one of the largest uranium deposits in the world. This action reflects the rising geopolitical tensions and shifting alliances in Niger, particularly as the ruling junta, which seized power in a coup last July, seeks to distance itself from its former colonial ruler, France, and foster closer ties with Russia and other nations.
Orano acknowledged the revocation, stating it “takes note of the decision by the Niger authorities” excluding it from the Imouraren mine, which holds an estimated 200,000 tonnes of uranium. Earlier this month, the French company had begun preparatory work at the site to meet the Nigerien government’s deadline of June 19.
However, despite these efforts, Niger’s Ministry of Mines issued a final notice on June 11, stating that Orano’s development plan did not meet the authorities’ expectations, resulting in the permit withdrawal.
Madaouela Project
GoviEx has made substantial progress on the Madaouela Project, navigating through periods of historically low uranium prices and culminating in the publication of a comprehensive feasibility study in late 2022. The recent upswing in uranium prices had positioned the Madaouela Project for further development. The company had advanced despite the political upheaval in Niger following the coup d’état last year.
Over the past year, GoviEx has seen significant financial interest, with expressions of interest exceeding US$200 million for project-related debt finance. Additionally, the company initiated social and environmental due diligence with a prospective lender, updated its environmental and social impact assessment, commenced front-end engineering designs, and began initial ground works, including access road construction and initial exploitation activities.
In June, GoviEx received its radiological certificate, a regulatory milestone required before commencing mining operations.
The withdrawal of the Madaouela mining rights is anticipated to have far-reaching economic and social repercussions for the region. With an initial capital expenditure forecasted at US$343 million, the project was set to create approximately 800 jobs over its projected 20-year lifespan. Additionally, the project was expected to contribute substantially to the national economy through royalty payments and taxes.
“GoviEx believes 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,” the company stated.
Despite this setback, GoviEx remains active in the uranium sector with its diversified portfolio. The company continues to advance its mine-permitted Muntanga Project in Zambia, with plans to publish its feasibility study in the latter half of 2024.
GoviEx Uranium last traded at $0.085 on the TSX Venture.
Information for this story was found via Sedar and the sources mentioned. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
