Valuable Stock Alert: 1 Commodities Giant with Valuable Hidden Assets

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Global atomic (TSX: GLO) is a Toronto-based company that offers a unique combination of cash-flow zinc concentrate production and high-grade uranium development. The company operates two businesses, an Electric Arc Furnace Dust Business (EAFD) and a Uranium Business.

Lucrative commodity companies

Global Atomic’s EAFD business acquires electric arc furnace dust from steel mills and recycles it through a furnace to produce high quality zinc oxide concentrate which is sold to zinc smelters around the world. The company is a market leader in EAFD recycling, capturing approximately 50% of the European EAFD market with facilities located across Europe and Asia.

The company’s uranium business holds six mining agreements and related exploration permits in the Republic of Niger covering an area of ​​approximately 730 square kilometers. Uranium mineralization has been identified on each of the permits, the most significant discovery being the Dasa deposit, discovered in 2010 by Global Atomic geologists through local field exploration.

High quality zinc production

Under the terms of the Company’s shareholders agreement, management fees and sales commissions from exploration permits are distributed to Global Atomic. The net income from the sale of concentrates, less funds required to finance operations, is distributed in the form of dividends. The company’s joint venture arrangements currently own and operate an EAFD processing plant in Turkey, which processes EAFDs obtained from electric arc steel producers.

The company’s plant in Turkey includes a Waelz furnace that is 55 meters long and 3.6 meters in diameter. The zinc content of EAFDs available in the region ranges from 25% to 30% and is processed in the furnace to produce a concentrate grading 68% to 70% zinc which is sold to zinc smelters. The production of such high quality zinc is valuable to Global Atomic.

Expansion and modernization of the plant

In the second quarter of 2018, the Board of Directors of Global Atomic decided to proceed with a plant expansion and modernization project. Equipment purchases were launched in 2018 and construction of the site took place during 2019, so that the old factory was closed at the end of January 2019 and the new factory became operational in September 2019.

The overall cost of this expansion and modernization program was approximately $ 26.6 million, in line with the budget estimate of $ 26 million. As a result of this project, plant throughput was increased and unit operating costs decreased. Through the wholly owned subsidiary of Global Atomic, the company conducts exploration activities for uranium.

Potentially valuable reserves

The Dasa project is 100% owned by Global Atomic and is part of a larger set of projects in Niger in which the company has an interest. The company has not yet determined whether the Dasa project contains economically recoverable reserves. The economic recoverability of mineral properties, including capitalized exploration and evaluation expenses, depends on the existence of economically recoverable mineral reserves, the ability of the company to obtain the necessary financing to complete exploration and development. profitable mining properties and future production. or proceeds from their disposal.

Despite these risks, Global Atomic appears to have several valuable assets that could be worth multiples of the current share price.

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This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a premium Motley Fool service or advisor. We are Motley! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer, so we’re posting sometimes articles that may not conform to recommendations, rankings or other content. .

Silly contributor Nikhil kumar has no position in any of the listed securities.

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