Explorers with exposure to Namibia uranium deny they’re in trouble

Nick Sundich, May 31, 2023

The Namibia uranium industry has faced jitters this week with government threats to nationalise some of its national resources.

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Is Namibia uranium Tanzania 2.0?

Long term resources investors would remember sudden changes to Tanzania’s Mining Act by the Tanzanian government in 2017 that provided for (among other things) a free-carried 16% stake in all projects and the right of the government to tear up contracts retrospectively. This hit the sentiment around several graphite stocks with projects in Tanzania.

Investors fear uranium in Namibia could be the next case study of government intervention. Namibia’s mining minister was quoted by Bloomberg stating that ‘local ownership must start with the state’ and calling for a minimum equity percentage that would be free-carried. This followed on from comments he made in early March that high levels of foreign ownership was ‘untenable’.

Uranium stocks say there’s nothing to see here

Several uranium stocks were sold off over these fears, including Paladin (ASX:PDN), which owns 75% of the Langer Heinrich mine that it is trying to restart after 5 years of hiatus, Deep Yellow (ASX:DYL) and Elevate Uranium (ASX:EL8).

All denied that they were not aware that there would be a change in government laws – at least for now. Elevate in particular noted that it regularly engaged with the government and that past experienced showed that the country valued foreign investment by the mining industry. Deep Yellow noted that it already had 5-10% of its projects already owned by local Namibian equity partners.

If a free-carried stake comes to fruition, it wouldn’t be the end of the world, but it would dilute shareholder value – but without any additional capital.

While such changes would be bad news for uranium stocks with projects in Namibia, it’s not so bad for companies with projects elsewhere, like Boss Energy (ASX:BOE) and Berkeley Energia (ASX:BKY). Shares in those companies actually rose this week!