Aura Energy signs offtake contract, increasing Tiris uranium prices by 70pc

Aura Energy signs off on restructured offtake agreement that pays more for uranium produced at its Tiris project
Deal increases future contract prices by 70% to US$74.75/lb and increases NPV and IRR by US$22m and 2% respectively
Offtaker Curzon Uranium now a new long-term shareholder in the company

Special Report: Aura Energy has improved the economics of its flagship Tiris uranium project in Mauritania after signing a restructured offtake deal that materially improves the price of produced uranium.

Under the revised agreement with experienced uranium trader Curzon Uranium, which was first announced in April this year, Aura Energy (ASX:AEE) has secured a 70% bump in future contract prices to US$74.75/lb ($113.35) U₃O₈, more than double its expected US$34.50/lb production cost, on 150,000lb of yellowcake to be sold annually over seven years.

Another 150,000lb will be sold each year to Curzon at a 4% discount to the prevailing spot price.

This has increased Tiris’ net present value and internal rate of return – both measures of profitability – by US$22m to US$388m and by 2% to 36% respectively when compared with the front end engineering design (FEED) study economics delivered in February 2024.

Aura Energy will now issue Curzon with 29.9 million shares priced at 18c each as payment for the US$3.5m restructuring fee. These shares will be escrowed until first production.

In addition Aura has also made a US$3.5m (A$5.4m) private placement to Curzon of 29.9 million shares at 18c each. Half of these shares will be escrowed until the earlier of June 30, 2025, or the company making a final investment decision on the project.

Separately, the company will issue Curzon with 5.98 million unlisted options exercisable at 20c and expiring on September 1, 2025.

“We are pleased to conclude the value accretive offtake restructure and we welcome Curzon – a leading global trader in uranium – as a new significant long-term Aura shareholder and partner for the development of the Tiris uranium project,” managing director Andrew Grove said.

“Curzon’s deep market insights and extensive networks will be of significant benefit to the development and successful operation of the Tiris uranium mine and will therefore be of enormous benefit to all Aura shareholders and stakeholders.”

Fully permitted for development

The offtake restructure follows on the heels of AEE securing the final approvals needed for developing Tiris with the National Authority for Radiation Protection, Safety and Nuclear Security issuing the authorisation to develop, mine and produce uranium oxide concentrate on July 12.

Notably, this places no limits on the volumes of future uranium production, which will allow considerable flexibility for the operation including the potential for future expansion of the initial production rate beyond 2Mlbpa U₃O₈.

Along with the formation of an interministerial committee to facilitate and support the development of Tiris, the company now has a clear path towards FID for the project, which has a contained resource of 91.3Mlbd U₃O₈.

Tiris has a Capex of US$230m with payback in 2.5 year and has plenty of upside growth potential through further exploration.

This article was developed in collaboration with Aura Energy, a Stockhead advertiser at the time of publishing.

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.