Interview with Daniel Major, CEO of GoviEx Uranium (TSX-V:GXU)

It's interesting hearing the very different takes on the Nuclear Fuel Report from uranium explorers, producers and developers around the world. The US uranium companies have enthused over it, but what about GoviEx?

GoviEx is a uranium exploration and development company focussed on its African uranium properties. The aim is to become a significant uranium producer via exploration and development of its flagship permitted Madaouela Project in Niger, its permitted Mutanga Project in Zambia, and its Falea Project in Mali.

Major wasn't surprised by the report. He's conscious of the lack of detail; specifically, how will the buying be orchestrated and at what price? He also remarks it will only really benefit 2 or 3 players because of the volumes being spoken about. He believes the remainder of the document is geopolitical: America VS Russia & China. He thinks there should have been more in the report to support the US reactor fleet. 'We've ended up with some nice policies for a few uranium producers but not a lot else'. Major thinks America will need to spend much, much more money if it is to stand a chance of breaking the China/Russia uranium monopoly.

While Major thinks COVID-19-induced tightening in uranium supply has forced the utility companies to come into the market a little sooner than they have planned, he sees the big American utilities making large orders and claims they are currently the biggest buyers. Is this the beginning of normal utility buying habits making a comeback? Major appears much more pragmatic than some uranium speculators we've spoken to: he doesn't think anyone should be expecting uranium to go US$50/lb any time soon.

Major thinks that Kazatomprom didn't originally realise the scale of the coronavirus problem. Their quite initial announcement was followed by them announcing they'd be 10Mlbs down for the year, and this saw a big reaction in the uranium market. Cameco's comeback could be put on ice for even longer because of fears about the second wave of COVID-19. Cameco could still be offline for several months. That's a lot of material being taken out of the market. How will the uranium price continue to react?

Major is of the opinion that the utility company's contract books are well-covered for the rest of 2020, but become uncovered by 30-40% by 2021/2022. However, utility companies are not going to wait until then. They will be buying much sooner but nobody knows when. Major is also of the opinion that inventories have been nearly fully depleted.

GoviEx is carrying on with its revised PFS at Madaouela, having reformatted their FS because of a number of key changes. Much of this was to do with metallurgical test work in Africa. The Niger lockdown is over at the end of the week, so Major expects to complete the assay results soon after. The PFS back in 2015 was all about maximising NPV, but used US$70/lbs as the price environment. The modified PFS this year is about showing Madaouela is as cost-effective as Cameco's McArthur River uranium mine in a slightly lower price environment, sub-US$50/lbs. The project has been simplified, so it will be presented to banks as an open-pit operation.

GoviEx has been planning to utilise proprietary ablation technology, but Major is aware that the bank's technical analysis of the technical processes at Madaouela will reveal a heightened technical risk because nobody has used the technology successfully before.

After touching on the security situation in the Sahel (West Africa), Major talks numbers. In February, GoviEx raised C$2.5M, which will cover the company through to completion of the PFS at a burn rate 30% lower than usual. Major expects the new, improved PFS to be out by Q2. Then the company will look towards conducting its second raise.  

Company page: https://www.goviex.com/

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