Lotus Resources Limited (ASX: LOT) has received positive results from the Definitive Feasibility Study (Restart DFS) for the restart of the Kayelekera Uranium Project in Malawi.
The Restart DFS has confirmed Kayelekera ranks as one of the lowest capital cost uranium projects globally whilst also having the ability to quickly recommence production (15 months development for construction/refurbishment) once a Final Investment Decision (FID) has been made.
The company’s focus is now on accelerating engagement with the various nuclear energy utilities and securing offtake agreements with the necessary volumes and pricing mechanisms to support the restart of Kayelekera whilst also considering various financing options to fund the restart.
Highlights
Having an asset with low technical risk and low restart capital, which can quickly commence production, are key characteristics that investors look for in a mining project,” Managing Director, Keith Bowes, said.
“The results of the Restart DFS clearly put Kayelekera in this category and this provides an opportunity for the company to leverage off the strongest fundamentals for the nuclear/uranium industry in many years.
“The standout features of the Restart DFS are the low capital costs and attractive operating costs, which consider the current high inflation environment, whilst also ensuring a positive legacy as we have significantly reduced our carbon footprint, in line with the company’s ESG strategy.
“The initial upfront capital costs remain one of the lowest in the industry, both from a headline (US$88m) and an initial capital intensity perspective (US$37/lb annual production).
“This is an excellent achievement given current inflationary pressures. The number is higher than that originally announced in the Scoping Study, but includes three new items (ore sorting, grid connection and a new acid plant) which are critical for lowering our operating costs.
“The operating costs during steady state in the initial mining phase (i.e. before stockpile treatment commences) now sit at US$29.1/lb U3O8, well within the second quartile costs for current and planned uranium producers.
“I am also very pleased with the success we have had in putting together a power supply strategy that not only provides electricity at a very low US$0.106/kWh, but also reduces our power related CO2 emissions by over 70% compared to the previous operation.
“This is a key step in the company strategy towards our long-term goal of becoming a leader in ESG in the uranium sector. Additional details regarding our ESG commitment and the multiple initiatives we are undertaking will be outlined in our Sustainably Report due to be released towards the end of 2022.
“With the Restart DFS now complete the company looks forward to continuing its work with the Malawian government to secure a Mine Development Agreement that will support the Project financing and shareholder returns appropriate for the scale of investment.
“At the same time the vompany plans to increase engagement with the various nuclear energy utilities to secure offtake agreements at the necessary volumes and pricing to support the restart of Kayelekera. This work will be undertaken in parallel with our work on securing funding for the restart.
“We believe we are still in the early stages of the uranium market upcycle and are confident that the uranium price still has some way to go before it peaks. The company will look to lock in prices that ensure long term profitability and good returns for our investors.”