Lotus Resources (ASX:LOT) has completed a Definitive Feasibility Study (Restart DFS) for the restart of its Kayelekera Uranium Project in Malawi.
With the Restart DFS now complete Lotus Resources reports it is continuing its work with the Malawian government to secure a Mine Development Agreement that will support the project financing.
At the same time the company 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.
Lotus notes that this work will be undertaken in parallel with our work on securing funding for the restart.
The project, currently on care and maintenance, is a past producing asset having delivered about 11 million pounds (Mlbs) uranium between 2009 and 2014, before its closure due to a sustained low uranium price.
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.
Cash costs are US$29.1/lb and All-In Sustaining Cost (AISC) of US$36.2/lb during the first 7 years of production (after ramp-up).
Commenting on the Restart DFS, Lotus Managing Director Keith Bowes said: “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.
The results of the Restart DFS clearly put Kayelekera in this category and this provides a 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”
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.”
Lotus notes that 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).
The company said that this is an ‘excellent’ achievement given current inflationary pressures.
While the number is higher than that originally announced in the Scoping Study, it 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 (this is, before stockpile treatment commences) now sit at US$29.1/lb U3O8, within the second quartile costs for current and planned uranium producers.
Mr Bowes adds: “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.”
The Kayelekera Uranium Project is located in the Karonga District of northern Malawi, 650km north of the national capital of Lilongwe.
Following the company’s acquisition of the project in 2020, a Restart Scoping Study was
completed in October 2020 which identified the key drivers for the project economics all of which have been incorporated into this Definitive Feasibility Study (Restart DFS).
Images: Lotus Resources Ltd
