Lotus Resources scoping study demonstrates potential to restart Kayelekera Uranium Project in Malawi

Lotus Resources Ltd (ASX:LOT) has completed a scoping study for Kayelekera Uranium Project in Malawi, Africa, which demonstrated its capacity to be one of the first operations to globally restart uranium production to meet a growing supply shortfall. Kayelekera’s existing infrastructure and mineral resources represent a considerable advantage, providing for a low restart capital expenditure and significant long-term production. The study assessed two scenarios: Scenario 1: 8-year life of mine, producing 16.4 million pounds of uranium with average head grade of around 900ppm uranium; and Scenario 2: 14 years life of mine, producing 23.8 million pounds with treatment of stockpiles from year 8 (average head grade around 680ppm uranium). Summary of production and cost data.  Lotus is working to identify and optimise opportunities to improve the operation and expand the resource base through targeted exploration activities to support an extension of the mine life. To this end, several opportunities that could reduce operating costs, extend the life of mine or optimise production rates have been identified. These opportunities form the basis of a five-stage process for the restart of Kayelekera, as follows: Develop the programs of work to verify the activities, cost estimates and timeframe required to restart the operation; Investigate potential to implement new technologies in the circuit front-end, focused on upgrading the ore feed grade and/or rejecting high acid consuming gangue minerals; Identify further process improvements to reduce operating costs, with a focus on resin-in-pulp circuit, acid recovery options, yellow cake dryer, tailings disposal and power supply options; Complete a Restart Feasibility Study (RFS), with a revised mining schedule incorporating results from programs above; and Complete further detailed design work to increase the level of confidence in engineering design and cost estimates of the RFS. This work will be undertaken while Lotus continues to maintain project asset integrity through its care and maintenance program and engages with the Government of Malawi to ensure that the permits required for a restart of operations are in place. Discussions with offtakers A total of 10.9 million pounds of uranium was produced, marketed and delivered from the Kayelekera Project to the nuclear fuel market globally during the period from 2009 to 2014. Charts 1-3 show the composition of sales from Kayelekera during this production period. Kayelekera’s product was delivered without product specification issues at all three western conversion facilities in the United States, Canada and France operated by Honeywell, Cameco, and Orano, respectively. This confirmed Kayelekera’s yellow cake as a quality product, fully acceptable for conversion, enrichment and nuclear fuel fabrication. Nuclear utilities cover their fuelling needs through long-term contracts, which tend to last from between three and 10 or more years in duration. On average, no more than 10% of utility requirements are left open to spot purchasing. Given the length of these contracts, it is typical to engage in supply contracting discussions with utilities and other nuclear fuel market participants long before production at a uranium mine commences. The company’s engagement with likely offtakers who understand Kayelekera product is a central element of the Lotus' strategy to position the project for an efficient and cost-effective restart of operations.