Lotus Resources DFS Ranks Kayelekera Uranium Project Among World’s Least Capital Expensive Developments
A definitive feasibility study on restarting Lotus Resources’ (ASX:LOT) Kayelekera uranium project in Malawi ranked it as one of the lowest capital-cost projects of its kind in the world.
He also confirmed that the project has the capacity to resume production within 15 months once a final investment decision has been made.
The study is supported by an ore reserve estimate of 15.9 million tonnes at 660 parts per million for 23 million pounds of uranium oxide.
The uranium produced in the mine plan is based on 96% reserves and 4% inferred resources.
A short drive to restart will result in an average production of 2.4 Mlbs of uranium oxide per year for the first seven years of a 10 year lifespan.
Lotus is now focused on accelerating engagement with nuclear power utilities, establishing financing options and securing off-take agreements to support restart.
Call for investors
Managing Director Keith Bowes expected the study’s findings to please investors.
“Having an asset with low technical risk and low restart capital that can start production quickly are key characteristics that investors look for in a mining project,” he said.
“The results of the restart study clearly place Kayelekera in this category and provide us with the opportunity to leverage some of the strongest fundamentals in the uranium industry for many years.”
Key features of the study include attractive capital and operating costs, which take into account the current high inflation environment, while ensuring that Lotus can significantly reduce its carbon footprint.
Initial upfront capital costs remain one of the lowest in the industry, both from an overall perspective (US$88 million) and from a capital intensity perspective (US$37 per pound of annual output).
This includes $35.8 million for plant and infrastructure that was not previously considered in the scoping study but was incorporated to improve project economics and processing reliability.
The new items are an acid plant and steam turbine upgrade (costing $15.3 million), a nanofiltration upgrade ($1.5 million), a connection to the national grid ($13 million) and an upgrade of the front-end processing circuit to incorporate the ore. sorting ($6 million).
“This is an excellent achievement given the current inflationary pressures,” Bowes said.
“The numbers are higher than in the scoping study, but include items that are critical to lowering our operating costs.”
Steady-state operating costs for the initial mining phase before stockpile processing begins are now $29.1/lb of uranium oxide, which Bowes said was in second quartile costs for current and planned uranium producers.
The timing of Kayelekera’s restart depends on the price of uranium and the economic conditions associated with Lotus’ long-term mining agreements.
The spot price of uranium has risen 100% over the past year, peaking at US$64/lb in April.
The research shows that the market momentum is positive, with strong underlying fundamentals pointing to continued price increases that could quickly reach the price levels needed for the project.
A final investment decision will depend on the completion of project work, extraction negotiations, a mine development agreement and financing.
Mr Bowes said a decision could be made as early as December, with first production in early 2024 and first shipment in the coming months.
Kayelekera is currently in care and maintenance and was a former major producer of uranium, delivering 11 million pounds to market between 2009 and 2014.