Lotus Resources launches into a Definitive Feasibility Study (DFS) for the  Kayelekera uranium project, which is positioned for a rapid restart as uranium prices boom.

Kayelekera is a proven uranium operation in Malawi, having successfully produced 11Mlbs over five years.

It shut down in 2014 due to sustained low uranium prices and was placed on care and maintenance. That means Lotus can ostensibly get into production quickly once prices improve to a certain level.

The DFS – the most advanced of all project studies — follows strong results from multiple technical studies being undertaken by Lotus Resources (ASX:LOT), which show an opportunity to significantly improve on the scoping study released in October last year.

This scoping study was based on real operating data from previous operations (2009 to 2014) and as such, provided an accurate estimate of potential production rates and costs, the company says.

It confirmed low initial capital expenditure of $US50M — due to Kayelekera’s existing infrastructure — and C1 production cost of US$33/lb.

This is well below current spot prices, which are US$40/lb and growing fast.

Lotus believes it can improve on these numbers in the DFS.

Individual technical studies ‘have been impressive’

The study will incorporate results from multiple technical studies (power supply, ore sorting, acid recovery and tailings) that have demonstrated the potential for reduced operating costs and increased production compared to the scoping study.

Ore sorting test work results indicate “a significant step change for the project”, with results seeing grades increase by up to 100% when compared to the feed sample, with high recovery (up to 92%).

Ore sorting provides the option to increase production rates and convert lower marginal grade ores that could extend the mine life, Lotus says.

Studies also indicate a mix of power supply options – incorporating connection to the national grid, solar power and energy recovery from the acid plant – will be the most reliable and cost-effective option for Kayelekera.

This could see power cost materially reduced compared to historical operations at Kayelekera and reduced CO2 emissions, it says.

The currently preferred tailings storage option is to maximise storage in the existing facility and then co-dispose of tailings and waste rock in the depleted open pit.

This option would reduce the life-of-mine capital cost compared to the scoping study.

And then there’s acid consumption, historically a significant component of the total operating costs (~14% C1 costs).

By reducing acid consumption through ore sorting, an installed nano-filtration plant and improved recirculation, the company can improve margins even further.

The DFS is due for completion mid-2022.

Results from the individual technical studies have been impressive, and already indicate significantly improved production rates and/or operating costs compared to the October scoping study, Lotus managing director Keith Bowes says.

“The most notable technical study so far has been the ore sorting work, a technology not available when Kayelekera was previously in production,” he says.

“This aspect alone could see annual production rates more readily increase to the original nameplate of 3Mlbs per annum and this level achieved on a more consistent basis.

“There is also scope to extend the mine life through conversion of marginal ores into higher grade ores.”

Together with the findings of other technical studies, Lotus is confident that a material reduction in operating costs can be achieved, Bowes says.

“The company looks forward to keeping shareholders updated through the year, in what will be a very busy second half to 2021.”

 

 

 

This article was developed in collaboration with Lotus, 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.

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