Lotus Resources Secures Offtake Deal for Kayelekera Uranium Project

Lotus Resources

Uranium Offtake Agreement Strengthens Project Viability

Lotus Resources (ASX:LOT) has signed a binding contract with North American power utility PSEG Nuclear for the sale and purchase of natural uranium concentrates from the Kayelekera Uranium Project in Malawi. The agreement covers the offtake of 1.6 million pounds of triuranium octoxide (U3O8) between 2026 and 2029.

PSEG Nuclear, a subsidiary of Public Services Enterprise Group (NYSE:PEG), operates three nuclear generating units in southern New Jersey. This deal marks a significant step in securing long-term buyers for uranium from Kayelekera, further enhancing the project's financial stability.

Power Supply Infrastructure Secured for Kayelekera

In addition to the offtake deal, Lotus has signed two agreements with the Electricity Supply Corporation of Malawi (ESCOM) to connect Kayelekera to the national power grid. Under these agreements, Lotus will finance, design, and construct a new transmission line and substation infrastructure, which will be transferred to ESCOM upon completion. The project is expected to receive grid power by 2026.

ECG Engineering has been appointed to manage the power supply project. The scope includes:

• Extending the Karonga Substation 66kV bus
• Installing a new 66kV line feeder bay and secondary systems
• Constructing a 45km, 66kV transmission line
• Developing a new Kayelekera Substation

The estimated cost for this Powerline Project remains aligned with the US$20.6 million ($33 million) budget outlined in the accelerated restart plan. Lotus is also assessing the feasibility of integrating a battery energy storage system to enhance energy reliability.

Project Timeline and Market Context

Kayelekera is fully funded, with first uranium production scheduled for Q3 2025. Between 2009 and 2014, the project produced 11 million pounds of U3O8 before being placed on care and maintenance due to low uranium prices.

Currently, uranium futures are around US$64 per pound, the lowest in 18 months, reflecting an ample supply and uncertain demand. The spot price of uranium stood at US$64.35 per pound as of April 1, 2025.

Managing Director Greg Bittar emphasized the importance of the recent agreements, stating, "Together, these arrangements cover the design and construction of a new transmission line and substation infrastructure connecting the Kayelekera site to an upgraded substation in Karonga and the provision of electricity to the mine."