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Robert Friedland Watch: Son Govind makes the case for GoviEx Uranium (C.GXU)

Peter Kennedy Peter Kennedy, Stockhouse
0 Comments| July 24, 2014

This week’s Sprott-hosted natural resource conference in Vancouver turned out to be something of a family affair for Robert Friedland, the international mine financier, who is currently focused on metal projects in Africa.

As expected, the 64-year-old Ivanhoe Mines Ltd. (TSX: T.IVN, Stock Forum) founder gave a rousing speech on Wednesday, telling investors that global urbanization and the need to control pollution will inevitably boost demand for copper and platinum, a key ingredient in catalytic converts.

As Friedland was giving his speech, Ivanhoe was moving to target an underground orebody at the Kamoa copper project in the Democratic Republic of Congo, which currently ranks among the world’s largest undeveloped copper discoveries.

On Thursday, it was son Govind Friedland’s turn to take the spotlight as he spoke for 30 minutes about GoviEx Uranium Inc. (CNQ: GXU, Stock Forum) and its uranium project in Niger, an African country located in the Sahara Desert.

At the age of 39, Govind is clearly a chip off the old block.

Click to enlarge

A graduate of the Colorado School of Mines, he gained early experience in geology working in Myanmar, Indonesia and Canada, eventually winding up at the Voisey’s Bay nickel discovery in Labrador, a find that was initially funded by his father’s company Diamond Fields.

He is currently Executive Chairman and a 20% shareholder of GoviEx, which recently raised US$1.6 million from an initial public share offering that was priced at $2.15 a share. At the same time, the junior redeemed a US$60.3 million convertible bond held by Toshiba, by issuing 28.4 million million Class A common shares to the Japanese electronics conglomerate.

Proceeds are earmarked for “business opportunities,” including the company’s flagship Madaouela uranium project in northern Niger, which Friedland described as one of the highest grade uranium projects in Africa.

Friedland opened his speech by extolling the virtues of Niger, and offering up a quote from his father, who had told his audience the previous day that “investors are like shoals of fish.”

The challenge, he said, is to determine when the tide is going to turn and to invest just before that happens.

“We have a project that is going to benefit from the growth in the price of uranium that everyone expects,’’ Govind Friedland said.

However, when it was put to him that analysts at Scotia Capital – a Canadian investment firm—recently lowered their uranium price forecasts to reflect an outlook that they described as “bleak,’’ Friedland agreed that investors may have to be patient.

Uranium has been in a slump since the Fukushima Daiichi nuclear disaster in March, 2011, an event that resulted in a meltdown of three of the plant’s six nuclear reactors, following an earthquake and tsunami that killed nearly 16,000 people. Scotia has dropped its price forecast to $32 a pound from $35 for 2014 and to $38 from $47 in 2015, mainly on the back of excess supply and limited near term required demand.

In a research report, Scotia Capital said the uranium price is tracking a 9-year low, partly because utilities are mostly purchasing uranium on a discretionary basis, and efforts to restart select nuclear reactors in Japan have been thwarted over the past few months.

“Everything has been taking longer than expected in Japan because of emotional attachment and politics,’’ Govind said. However, he believes it’s only a matter of time before the reactors are brought back on line.

Govind said his father does not hold shares in GoviEx.

However, the U.K.-based executive said he has taken a leaf from his dad’s playbook by recognizing the need for mining companies to make every effort to be good corporate citizens.

In keeping with that line of thinking, the company has imposed a 100% Niger employment policy at Madaouela.

“They [the employees] think of us as a Niger company, not a bunch of white people who are stealing their treasure,’’ Govind said.

GoviEx shares were unchanged at $2 Thursday, leaving a market cap of $115.6 million, based on 57.8 million shares outstanding.

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