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Offtake agreement for Tiris uranium

Thursday, 31 January 2019

Aura Uranium has signed a binding offtake agreement with London-based Curzon Uranium Trading Limited for up to 30% of production at its Tiris uranium project. The project, in Mauritania, north-west Africa, is expected to start up next year.

Offtake agreement for Tiris uranium — Mining bulk samples at Tiris (Image: Aura)

The offtake agreement covers the sale of 800,000 pounds U3O8 (308 tU) of uranium production at fixed prices, with a further 1.8 million pounds available to Curzon as options at fixed and market pricing. According to Australian company Aura, the average price of the agreement of over USD44 per pound U3O8 is "comfortably above" Tiris' total operating cost. Current spot market uranium prices are around USD29 per pound.

The fixed pricing volumes under the new agreement will account for between 15% and 30% of the project's anticipated 1 million pounds U3O8 per year production, Aura said. The extendable agreement covers a seven-year period from the start of production.

Aura Executive Chairman Peter Reeve said the offtake agreement provided the company with a "strong level of certainty" over its revenue stream from the fixed prices while "retaining its exposure to the upside in uranium price" through the option volumes at market prices. "Aura believes this is both constructive and prudent for a company such as Aura early in its development phase," he said.

The government of Mauritania in December granted Aura an exploitation licence for the project, including a negotiated government interest in the project of 15%. The company expects to start construction later this year. However, a definitive feasibility study which had been expected to be released in February 2019 will now be delayed by at least eight weeks following an "unexpected outcome" relating to the leach phase that may impact materials handling for certain ore types, Aura said today in its latest quarterly report.

The Tiris project comprises several tenements with shallow calcrete deposits on the Reguibat Craton in the north of the Mauritania, close to Algeria and Mali in the Sahara desert, with total mineral resources of 52.8 million pounds U3O8. The definitive feasibility study is for a simple "truck and shovel" mine up to 5 metres deep on the eastern deposit feeding a USD45 million plant, with production at about 400 tU per year over 15 years from 2020.