Lotus Resources (ASX:LOT) - Reviving Uranium Mine to Seize Sector Momentum

Interview with Keith Bowes, MD of Lotus Resources Ltd.

Our previous interview: https://www.cruxinvestor.com/posts/lo...

Recording date: 25th January 2024

Lotus Positions for Uranium Resurgence Through Timed Mine Restart

With uranium prices now over $100/lb, more than triple recent lows below $30/lb, Lotus Resources sees fresh potential in restoring production at its previously operating Kayelekera uranium mine in Malawi. Shut down in 2014, Kayelekera has extensive historical data that de-risks projections of smoothly and profitably restarting operations. Lotus bought the mine in 2019 aiming to eventually benefit from recovering uranium market dynamics. That long-expected recovery now appears underway.

Targeting production restart by end 2025, Lotus is moving rapidly on technical and funding fronts. Updating past studies supports a 15-month post-FID timeline to refurbish facilities and enable the first new uranium output. Lotus’ leadership explains “With higher prices...there could be even higher prices 2026-2029...so we are focused on getting Kayelekera operating by end 2025” to fully capitalize on tightening supplies industry-wide.

Kayelekera carries modest $35M capital costs thanks to existing infrastructure. Higher prices also expand debt capacity which allows optimizing the project financing mix. Lotus sees far greater scope for debt now versus past assumptions. This lowers costs while reducing dilution. Added financing sources come from utilities newly willing to discuss upfront uranium purchase prepayments to guarantee future supply.

Crucially, Lotus enjoys a first-mover advantage over scores of competing projects. As management assessed, many overly optimistic plans likely “lack substance”. Kayelekera's real operational track record de-risks its commercial restart proposition. This engenders confidence in both product buyers and investors. Starting in 2025 while widespread deficits emerge gives Lotus priority customer access and best prices. Scarcity favors early responders - so reliable execution is key.

With fundamentals aligning neatly - low costs, solid production platform, advantageous timing, financing upside - Lotus offers investors well-timed leverage as uranium enters a pronounced recovery cycle. Past success positions the company for future outperformance. Kayelekera's swift reboot may propel Lotus shares higher as dramatically improving sector economics take hold through mid-decade.

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