Lotus Resources ups uranium resource in Malawi with purchase of 6Mlb deposit

Lotus Resources (ASX: LOT), which is working to reopen the mothballed Kayelekera uranium mine in Malawi, has increased the size of its other project in the central African country, adding 6 million pounds of uranium oxide for an outlay of US$25,000 (A$33,850).

That equates to US$0.004 per pound (A$0.0054/lb), against a spot futures price overnight hitting US$46.50/lb (A$62.74/lb)— up 16.25% in one session — and now bounding closer to the US$60/lb (A$80/lb) figure widely quoted as a trigger for global new mine development to begin.

The newly-acquired Livingstonia project lies 90km southeast of Kayelekera and directly along trend from Lotus’ Livingstonia North project in northern Malawi.

Livingstonia is hosted in the prospective Karoo-equivalent sedimentary sequence which is also host to the main deposit associated with Kayelekera, the company said.

Potential for satellite uranium production

Drilling at the northern end of the Livingstonia deposit is a continuation of mineralisation into Livingstonia North.

The new Livingstonia ground has a historical inferred resource of 8.3 million tonnes at 325 parts per million uranium oxide.

Lotus managing director Keith Bowes said the consolidated ground now covers 187sq km in an area he describes as “highly prospective, yet poorly explored”.

“There are multiple walk-up, drill-ready targets across our Livingstonia tenements,” he added.

At the boundary of the Livingstonia project, an airborne radiometric survey indicates mineralisation continuing into Lotus’ existing ground.

This area will be the basis for the first phase of exploration beginning later this year, Mr Bowes said.

This will open up the prospect of the Livingstonia area becoming a future satellite operation to Kayelekera, he added.

Multiple exploration targets

Lotus said there are “multiple” exploration targets across the newly acquired holding as shown by historical drilling.

Reverse circulation drilling will test a number of high priority targets including the strike extensions into Lotus’ existing ground.

Kayelekera was formerly owned by Paladin Energy (ASX: PDN) and it produced 10.19Mlbs of uranium between 2009 and 2014 until continuing low uranium prices forced Paladin to place the mine on care and maintenance. Paladin owns 13% of Lotus.

During that time, 4.5Mlbs was sold to utility customers and the remainder to nuclear fuel market intermediaries. In all, 63% of Kayelekera output was sold under multi-year contracts.

Lotus is expecting annual production of 3Mlbs.

Kayelekera was discovered in 1982 by the Central Electricity Generating Board of Great Britain, but the project was abandoned in 1992 due to the then-poor uranium output.

In 1998 Paladin acquired control of Kayelekera and open pit development began in June 2008.