Lotus Resources moves closer to completion of restart DFS for Kayelekera uranium mine

Lotus Resources ASX LOT restart DFS Kayelekera uranium mine Malawi
Lotus Resource plans to release the Kayelekera restart DFS in August.

Lotus Resources (ASX: LOT) is nearing completion of a definitive feasibility study for the restart of the Kayelekera uranium mine in Malawi and the delineation of an inaugural resource for the Livingstonia satellite deposit.

In its June quarterly report, the company said it had completed the design and technical work for the DFS and is working on cost estimations and final reviews.

The document will build on the results of a project scoping study completed in 2020 and is expected to be released in August.

Livingstonia resource

During the three months ending June, Lotus announced a mineral resource estimate for Livingstonia of 6.9 million tonnes at 320 parts per million for 4.8 million pounds uranium oxide.

The figures increased the company’s global mineral resource estimate to 49.4Mt at 475ppm uranium oxide for 51.1Mlb.

It follows an increase in the Kayelekera resource estimate in March to 46.3Mlbs at 500ppm uranium oxide.

Livingstonia is located approximately 90km from the Kayelekera mine and is not included in the production strategy used in the restart DFS.

Lotus said the deposit has potential to become a satellite operation once the Kayelekera resource has been depleted.

Management visit

In May, Lotus’ senior managers visited Malawi to advance negotiations for an updated mine development agreement which will set the project’s fiscal regime and define restart operating requirements.

The nation’s government recognised that Kayelekera and Malawi will be competing on the global stage for investment, which will deliver benefits to the local economy including the generation of significant amounts of foreign currency through future opportunities.

Previous owner Paladin Energy (ASX: PDN), which operated the mine between 2009 to 2014, had negotiated a mine agreement with the Malawi Government and agreed to hand over 15% project equity.

Lotus is seeking a similar set of conditions and has acknowledged the government will retain its 15% stake.

The company is continuing to work with a government-appointed steering committee to advance the negotiations.

Power supply

During historical operations, Kayelekera’s power supply came from onsite diesel generators, however Lotus has deemed this to be too costly for the restart and not aligned with its carbon-free strategy.

In May, the company met with Malawian electricity utility ESCOM to negotiate a permanent connection to the national grid.

ESCOM indicated 4 megawatts would be available at the Karonga substation, which could be combined with a 2.5MW steam turbine (to be fitted to the onsite acid plant) and a possible solar/battery energy storage system to cover the site’s power needs.

Lotus said approximately 90% of electricity on the national grid would come from “green” sources such as hydroelectric power generation and biofuels and would significantly reduce the company’s carbon footprint.

Cash balance

As at 30 June 2022, Lotus had an unaudited cash balance of $4.9 million exclusive of $14.6 million restricted cash.

The balance decreased $3.6 million on the $8.5 million recorded for the March quarter.

During the June quarter, Lotus spent approximately $400,000 on exploration and geotechnical drilling, $1.5 million on the restart DFS and $1.5 million on Kayelekera’s care and maintenance (including water treatment).

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