GoviEx Uranium (TSXV: GXU) is initiation arbitration proceedings with the ICSID Convention against the Republic of Niger for revoking its mining permit for the Madaouéla project, blocking the development of one of the world’s largest uranium projects.
In July, Niger’s military leaders, which came into power in 2023, announced the decision while the Niger Council of Ministers also issued three decrees withdrawing the mining permit and abrogating the decrees granting the permit.
This, according to GoviEx, has triggered the “arbitration clause” in the Mining Convention signed in 2007 between the company and the past regime, which it says is governed by Nigerien law, and that the revocation of the mine permit constitutes a breach of the state’s obligations under the both the mining and civil codes.
While the company had attempted to settle its dispute with the state amicably, including through initiating a local administrative recourse before the Niger President, the state has shown no willingness to engage and reach an amicable settlement, GoviEx stated in a press release Monday.
The uranium developer also said that the company, alongside its Nigerien subsidiary, is entitled to be reinstated in its rights to the Madaouéla project and/or be awarded monetary compensation as a result of the state’s conduct in relation to the project.
Shares of GoviEx Uranium traded flat on Monday at C$0.06 apiece, for a market capitalization of C$41 million ($29 million). The stock had dropped to a 52-week low of C$0.05 earlier this year following the announcement of the permit withdrawal.
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.
The feasibility study also estimated an after-tax net present value (at 8% discount) of $140 million and an internal rate of return of 13.3%. The initial capital cost is projected at $343 million.
GoviEx said that the withdrawal of their rights to the project would have a negative impact on the economic and social development of the region, as it was forecast to create up to 800 jobs over its projected mine life, with substantial royalty payments and taxes payable to the state.
The company had initially planned to commence production in 2025, subject to financing. Over the past year, it had already received expressions of interest in excess of $200 million in project funding.
