By Marcel CHIMWALA
ASX-listed Lotus Resources says its negotiations with the Malawi Government for a Mine Development Agreement (MDA) are advancing.
MD for Lutus Keith Bowes says in the Company’s quarterly activities report that the process has included a benchmarking exercise undertaken with an independent expert to advise the Malawi Government on comparable fiscal regimes in other African countries with established mining industries and /or uranium production.
“This agreement will set the fiscal regime in which the Project will operate and is required before the Company can make its Final Investment Decision (FID),” says Bowes.
He says the Company is currently engaged with the lawyers appointed by the Malawi Government to assist it in finalising the MDA.
Meanwhile, Lotus continues to engage with multiple electricity utilities regarding potential offtake agreements, including participating in formal Request for Proposals (RFPs) with a number of these utilities and other off-takers, which is an important part of the FID decision and financing discussions.
“We have also noted, particularly with the European utilities, a strong focus on suppliers Environmental, Social and Governance (ESG) credentials as these companies look towards net-zero carbon emissions in their supply chains and geopolitical diversity in their supply,” said Bowes.
In the quarter under review, Lotus through an expert consultant prepared a roadmap to achieving the Power Implementation Agreement along with the Power Supply Agreement with the Electricity Supply Corporation of Malawi (ESCOM) to connect power from the national grid to the mine site.
The arrangement will provide the mine with access to cheaper power, a critical component of the lower operating costs reported in the Company’s Definitive Feasibility Study (DFS) for the mine.
“As reported in our DFS, it is also recognised that the Malawian grid power, being sourced predominantly from hydro, is considered “green” in nature and ensuring this source as a major component of our power mix fits with our low carbon strategies,” says Bowes.
During the quarter, Lotus also continued with exploration work at the Milenje Hills prospect which is located 2km to the north of Kayelekera deposit.
Following a review of the 2022 exploration program, Bowes says the Company is undertaking the analysis required to determine the additional programs of work needed to better define the potential of the rare earths present in the Milenje Hills prospect.
Several of the samples from the 2022 exploration returned Total Rare Earth Oxide (TREO) grades greater than 15% which are considered exceptionally high.
“Notwithstanding this, more detailed analysis is required to better understand the controls, formation and extent of the mineralisation prior to undertaking any new drill programs,” he says.
The Company also continued exploration work at the Chilumba Prospect which lies approximately 80km southeast of the Kayelekera Uranium Mine. Combined with the Company’s Livingstonia tenements, this area covers 300km2.
Lotus reported on the inaugural exploration program at Chilumba consisting of 1,140 metres of drilling in 7 reverse circulation (RC) holes (3 vertical and 4 angled) that were designed to test surface radiometric anomalism that had been identified by previous explorers.
“The Company continues to review the opportunity to undertake additional drilling of the mineralised areas identified and to follow-up up on the interpreted north-westerly tending channel that was identified,” says Bowes.
The uranium spot price has remained resilient during the quarter with the price trading in a narrow range of US$50-51/lb in the last month and trading up ~5% for the year indicating relative strength compared to other commodities which on average have traded down by almost 6.5% over the same period.