Lotus resources (ASX:LOT) Post A-Cap Merger:
Prior to merging with A-Cap Energy in 2023, LOT comprised or their Kayelekera uranium mine based in Malawi, Africa. Which has an MRE of 42.5 mt @ 500 ppm for 46Mlbs U3 O3. After merging with A-Cap Energy LOT now has a MRE of 318.3 mt @ 344 ppm for 241.5Mlbs U3 O3.
LOT have undertaken a $30m share placement (100m shares issued) in FY24 which is aimed at advancing the restart of their Kayelekara mine and development of the Leathakane mine in Botswana (A-Cap merger). This takes total shares outstanding to 1.8bn. LOT are targeting a restart of Kayelekera mine by late 2025. Which according to LOT will require $88.0m of upfront capital to restart the mine. Which they intend to fund via debt and have appointed a debt advisor to assist with this process. Further announcements are expected in FY24.
The Kayelekera mine has a 10-year LOM with planed production of 19.3Mlbs U3 O3 at up to 2.4Mlbs pa. LOT are planning to update the scoping study at their Leathakane mine in FY25. In which LOT are planning to improve on the previous economics and resource grade of the mine.
Once in production, LOT are planning to use some of the proceeds from the Kayelekera mine to help fund the development of the Leathakane mine and thereby increasing the overall production profile of the company beyond the10-years of the Kayelekera mine.
LOT have the potential to be a long-term low-cost uranium producer but there is a lot of work and capital to be done and spent before this occurs. For the rest of FY24, I am happy to buy another parcel of shares on any weakness in LOT’s share price, based on the current circa 40c share price. Then I will wait for the restart of Kayelekera and the updated scoping study for Leathakane in CY2025, before deciding to deploying more capital or not.
