Lotus Resources Limited, owners of Kayelekera Uranium Mine has secured an agreement with Mercuria Energy Group in a deal that will see the latter providing $30 million funding to support Kayelekera’s production activities.
Mercuria is a geographically diversified global commodity trader operating in more than 50 countries and with three major trading regions in Europe, Asia Pacific, and America.
According to the company’s update, the non-binding off-take agreement, which is likely to become binding, will also make Mercuria responsible for marketing of three million pounds of Lotus’ uranium over 30 months.
Reads the update in part: “Under the term sheet, Mercuria will also provide a prepayment framework of up to $30 million to Lotus, to be accessible from the point at which uranium is onboard at the port dispatch. The facility cost is based on a financing fee equivalent to Secured Overnight Financing Rate plus margin per annum.”
According to Lotus, the funding will provide significant additional working capital flexibility to progress the Kayelekera project, but it is still being documented and Mercuria is expected to finalise it in the next two months.
The deal comes at a time the Uranium miner reportedly paused production due to the Middle East conflict induced acid supply disruptions and delays to complete its acid plant which is likely going to affect the company’s ability to meet its initial offtake obligations.
“At present, Lotus has obligations to deliver 1.01 million pounds of Uranium in 2026. Given limited ability to deliver into those off-take obligations, Lotus continues to engage with its customers to defer delivery of a significant proportion of those deliveries into 2027,” it said.
Earlier, Lotus signed a four-year binding contract for the sale and purchase of 600 000 pounds (about 272 000 kilogrammes) of Kayelekera uranium with an American power utility company, Curzon which will run between 2026 and 2029.
Geologist Ignatius Kamwanje described the off-take agreements signing and raising of Kayelekera funding as a plus for Malawi at a time the economic situation is worsening and needs an urgent boost.
“We should look at it that people will get employment, infrastructure development will improve, especially in Karonga and the forex supply will improve when the mine achieves full operation and steady state production,” he said.
In an earlier interview, mining expert Grain Malunga said the progress at Kayelekera Mine was impressive and a major boost to the economy as it is poised to improve the sector’s contribution to gross domestic product (GDP).
Before Kayelekera Uranium Mine closed in 2014 for care and maintenance in the wake of dipping global uranium prices, the mining sector’s contribution to the gross domestic product stood at 10 percent, but over the years, the contribution has dropped to below one percent.
Lotus Resources Limited currently had four binding sale arrangements of up to 3.8 million pounds of uranium.
In July 2024, Lotus Resources Limited signed a mining development agreement with the Malawi Government which, among others, saw Lilongwe owning 15 percent stake in the mine.
Mining, alongside agriculture, tourism and manufacturing are touted as key drivers to spur Malawi’s economic growth.
