The support of uranium sector specialists for a major $25 million funding round at next-cab-off-the-rank Lotus Resources shows the massive global interest in LOT’s progress at the world famous Kayelekera uranium project in Malawi.

Kayelekera is one of the largest uranium projects in the world currently on care and maintenance, producing 11Mlbs of U3O8 equivalent a year between 2009 and 2014, making it the fourth largest global asset on care and maintenance.

A DFS last month by Lotus (ASX:LOT) confirmed its huge potential, with an ore reserve of 15.9Mt at 660ppm U3O8 for 23Mlbs backing a 10 year mine life, producing 2.4Mlbs annually over its first seven years.

As a restart project leveraging over US$200 million of investment in infrastructure, the mine would have a low capital cost of just US$88m and capital intensity of US$37/lb, with cash and all in sustaining costs (AISC) of just US$29.1/lb and ASIC of US$36.2/lb in its first seven years.

All very attractive metrics to specialist uranium investors, who’ve piled in to back LOT to the hilt.

Strong endorsement

It is a strong endorsement of Lotus’ plans to redevelop the mine, with a final investment decision expected to make it the next to be approved to take advantage of what is an increasingly bullish outlook for nuclear power, uranium and uranium equities.

“We are very pleased to have received such strong support for the Placement which will enable us to progress offtake negotiations with the various utilities and project funding during a period of significant support for nuclear energy globally,” Lotus managing director Keith Bowes said.

“In particular, the demand received from global sector specialists during the bookbuild provides significant validation for the Company’s restart strategy and underscores the value of the project as one of the nearest term producers globally.

“I’d also like to thank our existing shareholders for their strong, ongoing support, and welcome all our new shareholders aboard. We look forward to providing further updates on our activities in the coming weeks and months.”

Priced at a 9.1% discount to Lotus’ 5-day VWAP of $0.264 and 2.6% to its 10-day VWAP of $0.246 a share, the $25m at $0.24 raising will give Lotus a healthy $28 million in unrestricted cash as it edges towards an FID to Kayelekera.

The proceeds will be used with existing cash to progress the development of Kayelekera including finalising the Mine Development Agreement (MDA), advancing offtake negotiations, Front End Engineering Design (FEED) and project financing.

It will also provide general working capital for at least 18 months into 2024 and fund the final instalment of a rehabilitation bond repayment due to former owner Paladin Energy in March 2023.

If an FID can be made by the end of this year, first production at Kayelekera could come as soon as the first quarter of 2024, with shipments to utilities from the second quarter of that year.




This article was developed in collaboration with Lotus Resources, 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.