Study assesses economics of restarting Kayelekera mine

The study concluded that the restart of Kayelekera would require a "low" total initial capital cost of USD50 million due to mine's existing infrastructure, including a 1.4 million tonne per annum processing facility, on-site acid plant and accommodation camp.

The scoping study assessed two production scenarios, both of which assumed 97% of production from the Measured and Indicated Mineral Resource category. It defines a base case scenario comparable to the previous Kayelekera operation that produced about 11 million lbs U3O8 equivalent, but assumes a lower nominal throughput of 1.4 million tpa to ensure the process is acid self-sufficient.

Two scenarios were considered: treating only high-grade material and treating the medium-grade stockpiles at the end of the life of mine. The first scenario considered an eight-year life of mine, producing 16.4 million pounds U3O8 with average head grade of about 900 parts per million U3O8. The second scenario considered a 14-year life of mine, producing 23.8 million lbs U3O8 with treatment of stockpiles from year-8 (with an average head grade of about 680ppm U3O8).

Under the first scenario, production costs would be USD33 per lb U3O8 during years 2-6, with average annual production of 2.4 million lbs U3O8. The company said multiple opportunities were identified to further reduce these costs, including: upgrading of feed materials; improved options around power supply; acid recovery; and, optimised tailings disposal options.

"Lotus' restart scoping study clearly demonstrates Kayelekera has potential to be one of the first operations globally to recommence uranium production to meet the impending and growing shortfall in supply," said Lotus Managing Director Eduard Smirnov. "Kayelekera's existing infrastructure and mineral resources gives Lotus a significant advantage, providing for a low restart capital expenditure and significant long-term production."

He added, "The study is an important milestone on our path forward, as we work to achieve further technical advancements aimed at reducing Kayelekera's operating costs and optimising production rates prior to commencing a restart feasibility study."

Paladin permitted, constructed, commissioned and operated the open pit mine at Kayelekera until it was placed on care and maintenance due to consistently low uranium spot prices. The mine produced 10.9 million pounds of uranium (4193 tU) from 2009 to 2014. The mine has 31 million pounds U3O8 of remaining resources.

Paladin completed the sale of its 85% interest in Paladin (Africa) Ltd to Lotus Resources (65%) and Lily Resources Pty Ltd (20%) in March. Lotus - formerly Hylea Metals Limited - holds 76.5% of the shares in Lily with Kayelekera Resources Pty Ltd holding 23.5%, giving Kayelekera Resources Pty Ltd an indirect 20% interest in the Kayelekera project. The remaining 15% of shares in Paladin (Africa) Ltd are held by the Malawi government.