GoviEx Uranium has lost its mining rights in Niger, casting a shadow over one of the world’s most significant uranium reserves. The decision by the Nigerien government to revoke the mining license for the Madaouela project not only impacts the Vancouver-based company but also signals potential disruptions in the global uranium supply chain.
On Thursday, Niger’s military leadership, which assumed control last year, officially withdrew the mining permit that was crucial for the development of the Madaouela project. This move came as a significant blow to GoviEx, which had been racing against a deadline set for July 3, 2024, to commence mining operations. The company expressed its concerns in a press release, stating that the withdrawal did not adhere to the procedures outlined in Niger’s mining code. GoviEx has indicated its intention to challenge this decision in both national and international courts.
Following this news, the company’s shares took a dramatic hit, plummeting 41.2% to a 52-week low of C$0.50 by midday, which sharply decreased its market value to approximately $28.1 million. This sharp decline reflects the market’s nervous response to the unexpected regulatory action, underscoring the precarious nature of mining investments in politically unstable regions.
The Madaouela project, located in a uranium-rich area of Niger, is one of the largest untapped uranium resources globally. The country itself ranks among the top ten uranium producers worldwide and is the second-largest in Africa. The government holds a 20% stake in the project, which further complicates the dynamics of the revocation.
GoviEx has been a prominent player in Niger’s mining sector since 2007, navigating through periods of fluctuating uranium prices and advancing the project to its feasibility stage by late 2022. According to the latest technical report, the Madaouela project is estimated to hold proven and probable reserves of 5.4 million tonnes with a grade of 0.87 kg per tonne of uranium oxide (U3O8), totaling approximately 12.3 million pounds of U3O8.
The estimated cost for developing the Madaouela project stands at $343 million, with projections suggesting a production yield of nearly 2.7 million pounds of U3O8 annually over the mine’s lifetime. Despite the political upheaval in Niger in July 2023, GoviEx had managed to progress the project, receiving over $200 million in expressions of interest for project-related debt financing. The company had also begun social and environmental due diligence with prospective lenders, updated its environmental and social impact assessments, started preliminary engineering designs, and initiated groundworks including construction activities.
The government’s decision to revoke GoviEx’s license is poised to have far-reaching effects on the economic and social development of the region. The development of the Madaouela project promised not only to boost local employment but also to foster broader economic growth through increased exports and enhanced infrastructure.
The revocation raises serious concerns about the stability of Niger’s regulatory framework and the future of international investment, which may discourage other foreign collaborations and investments in the nation’s mining industry. It also presents serious obstacles to the world’s uranium supply, particularly at a time when nations are looking for more carbon-free, sustainable energy sources, which is driving up demand for nuclear power.
