Uranium miner ponders financing options, power

Lotus Resources Limited, managers of Kayelekera Uranium Mine in Karonga, says it is discussing financing options for the project’s final investment decision.

In its quarterly activities report for the period ending December 31 2022, the firm said this can be fast-tracked on the back of the mining development agreement (MDA), Electricity Supply Corporation of Malawi (Escom) agreement and off-take negotiations.

Lotus Resources Limited further said post-completion of the definitive feasibility study in August 2022 has been focusing on completing the negotiations with the Government of Malawi on the MDA that will set the fiscal regime in which the project will operate and will be required before the final investment decision can be made.

Reads the report in part: “The focus for the company during early 2023 will be the finalisation and sign-off of the MDA with the Government of Malawi and its lawyers and continued discussions with utilities.

“The company also intends to build its relationship with various non-North American utilities and other potential buyers who may offer higher pricing mechanisms [due to the origin of product from Kayelekera]. Assuming successful outcomes on the MDA, Escom agreement and off-taker, a final investment decision will be assessed.”

In September last year, the firm said it had raised Australian $25 million (about K17 billion) in capital, adding that first production will start in 2024.

However, the company said the timing for the restart of the mine is primarily dependent on the uranium price and the economic terms with which it can sign long-term off-take agreements with the utilities.

The uranium spot prices, while off the recent high in April of $65 per pound, has increased by 14 percent during 2022 and has held at around $50 per pound for most of the second half of the year despite the global challenges, indicating a strong level of support for this as a base from which to launch to new highs.

Mining expert Grain Malunga said that once the mining agreement is signed this year, Lotus will start mobilising resources for recommencement of mining operations.

“The timing will depend on the government concluding the agreement and continued favourable uranium price,” he said.

Earlier, Ministry of Mining said they were finalising negotiations on the MDAs with a number of companies while others were conducting mining feasibility studies.

The agreement shows that from September 1 2021, the company was supposed to commence substantial on-site mine development within 18 months and commence substantial mining production 60 months from the date the licence was agreed upon.

Natural Resources Committee of Parliament chairperson Welani Chilenga is on record as having expressed worry with delays at Kayelekera, wondering why Malawi has to wait up to 2026 to start production.

In a statement, Ministry of Mining said the country will have to wait a little longer to see resumption of uranium mining at Kayelekera as the Attorney General’s (AG) office was vetting MDAs between the government and the miners.