Fully-Funded Uranium Developer Racing Toward Q3 2025 Production

• Lotus Resources is restarting uranium production at its Kayelekera project in Malawi, targeting first production in Q3 2025
• The company is fully funded through a recent equity raise and debt facilities to take it into production and cash flow positive in early 2026
• Lotus is confident it can produce uranium at an all-in sustaining cost of $45/lb, providing robust margins compared to current long-term contract prices around $80/lb
• The company has already secured uranium offtake agreements and is in advanced discussions to contract over 50% of its production
• Lotus is also advancing its greenfield Livingstonia project in Botswana which offers significant resource upside potential

As the world seeks cleaner energy solutions to combat climate change, nuclear power is experiencing a resurgence. Driving this nuclear renaissance is the need for reliable, emissions-free baseload power to complement intermittent renewable energy sources. With this renewed focus on nuclear energy, investors are taking a fresh look at uranium miners positioned to capitalise on rising demand and prices.

Lotus Resources (ASX:LOT) is an emerging uranium producer on the cusp of production at its flagship Kayelekera project in Malawi.

Fully-Funded to Production 

A key consideration for resource investors is a company's ability to fund its projects through to production. Lotus Resources has approximately US$135 million in available liquidity between cash and facilities. After accounting for capital expenditure, pre-production costs, and corporate expenses, the company expects to maintain a healthy liquidity buffer of about US$45 million. This buffer will help support operations during the ramp-up phase when costs may be higher due to reliance on imported sulfuric acid and before grid power connection is established.

As Lotus Resources Managing Director Greg Bittar explained:

“We've covered the capital from the equity raise, with our starting January cash number building up with these undrawn facilities - we have about US$135 million available liquidity between cash and facilities. Then you take out the capital profile, the pre-production non-capital expenditure, and even allowing for corporate costs, we're still sitting at a liquidity buffer of about US$45 million, which we think allows for the ramp-up pounds to be produced at a higher cost because we don't have the grid connection and we're importing sulfuric acid. That gives us that four to five month window before we see cash flow.”

Interview with Managing Director, Greg Bittar

First Mover Advantage 

Timing is everything in commodity markets. Lotus is on track to be one of the few new uranium producers to enter production this cycle, with first production targeted for the third quarter of 2025. This positions the company to take advantage of the growing supply deficit as demand from nuclear utilities continues to rise.

As an early mover, Lotus will be able to capture market share and secure long-term contracts with utilities looking to lock in supply. Greg noted that Lotus is already making headway on this front, stating: 

"As recently as several weeks ago, we announced a second term sheet where we doubled the number of pounds to one of our utility customers. So there's a complete disconnect between the contracting term market and the vagaries of this peculiar spot market."

Compelling Project Economics 

The Kayelekera project boasts strong economics, underpinned by a large resource base of uranium and competitive operating costs. The 2022 definitive feasibility study outlined a 2.4 Mlbs per annum operation over an initial 10 year mine life at all-in sustaining costs of $44/lb.

At current long-term contract prices of around $80/lb, Kayelekera generates operating margins of approximately $35/lb. On an annual production profile of 2.4 Mlbs, this translates to $70-$80 million of operating cash flow per year. Importantly, these cash flows are supported by a low-cost grid power connection that will significantly reduce energy costs compared to the previous diesel power operations.

Significant Contracting Progress 

Underpinning Kayelekera's economics are Lotus' offtake agreements with major nuclear utilities. The company is confident of signing term sheets for roughly 35% of production from 2026-2029 with fixed priced contracts escalating from delivery. Discussions are also advancing on market-related contracts, providing both cash flow certainty and spot price upside exposure. Greg commented,

"I can see us quickly getting to 35% of our production from '26 to '29 - so over those four periods, 35% with these fixed price escalated delivery contracts. We are engaged and actively pursuing market-linked contracts, so we'll take a slightly lower floor, get some spot exposure up to a nice ceiling well comfortably above 100. "

Exploration & Resource Upside 

While the near-term focus is squarely on restarting production at Kayelekera, Lotus offers investors significant exploration upside. The company's Livingstonia project in neighboring Botswana contains a substantial uranium resource of 4.8 Mlbs with the potential to support large-scale, long-life production.

Lotus is continuing to advance Livingstonia, with a focus on optimising the mining approach for the relatively deep resource and investigating opportunities to reduce acid consumption to improve project economics. Drilling is also planned to expand and upgrade the current resource, which remains open.

Additionally, Lotus has begun evaluating near-mine and regional exploration potential around Kayelekera in Malawi. The company will allocate capital to exploration once Kayelekera is in production and generating cash flow.

"The spot market as you say has done something - it's been falling on very weak volumes. It's not a reflection of the market we'll be selling into or that we're targeting through our contracts. The long-term price has been very stable at around $81 a pound."

The Investment Thesis for Lotus Resources

• First mover advantage as one of the few new producers this cycle, targeting production in Q3 2025
• Fully-funded through equity raise and debt facilities, with $45 million liquidity buffer
• Significant contracting progress with 35% of production from 2026-2029 under term sheets
• Robust project economics - $70-80 million annual operating cash flow at $80/lb uranium prices
• Strong exploration upside at Livingstonia in Botswana (4.8 Mlbs resource) plus regional targets
• Experienced management team with track record of developing and operating uranium projects
• Exposure to the structural supply deficit and rising uranium prices required to incentivise new production

Macro Thematic Analysis

The global energy transition is accelerating the push towards cleaner power sources, reigniting interest in nuclear energy as a reliable, emissions-free complement to renewables like wind and solar. This structural shift is underpinning a new bull market in uranium as demand from utilities outpaces available supply.

Despite a recent pullback in the uranium spot price, the long-term fundamentals for the nuclear fuel remain robust. However, mine supply has fallen short of that total in recent years due to persistent underinvestment following a prolonged bear market.

Exacerbating this supply shortfall are major supply cuts from the world's largest producers, Cameco and Kazatomprom, along with shrinking secondary supplies. These cuts have helped to work off excess inventories, bringing the market back into balance.

At the same time, a wave of new reactor builds, restarts, and life extensions are expected to boost uranium demand in the coming years. China alone is targeting a 3-fold increase in nuclear capacity by 2035, while other growth markets like India, Russia, and the Middle East accelerate their nuclear power programs. Developed economies are also turning to nuclear to meet ambitious decarbonisation goals, with countries like France, the UK, and Japan pushing to restart idled capacity and extend reactor lifespans.

As Lotus Resources' Greg Bittar sums it up:

"There's more to come on the demand front. I think what we need to do is get into production in the third quarter, and then we can step out and think a little bit more boldly about the future plans beyond Kayelekera."