Lotus Resources Planning to Restart Uranium Production

• Lotus Resources owns the Kayelekera uranium mine in Malawi, which produced uranium from 2009 to 2014. Lotus acquired this asset in 2020.
• The company recently completed a feasibility study and is now considering a final investment decision.
• To prepare for the potential restart of the asset, Lotus raised $25 million, which covers corporate costs, care and maintenance, and potential early works on site. This funding also acts as a buffer in case the uranium price doesn't increase as quickly as expected.
• Lotus Resources believes in being proactive and prepared for swift action when uranium prices rise, rather than waiting for the ideal price point.
• The company's strategy focuses on advancing projects, securing contracts, and ensuring they are ready to quickly restart production when market conditions are favorable.
• They emphasize their advantage as a previous uranium producer when negotiating with utilities.

Poised to Restart Uranium Production in Malawi

Lotus Resources is well-positioned to quickly restart uranium production at its past-producing Kayelekera mine in Malawi, potentially making it one of the first uranium projects to come online amid a looming supply shortfall. With uranium demand steadily rising and mine supply falling, a price spike seems inevitable. Lotus offers investors a near-term production opportunity that could yield significant returns.

Interview with Managing Director Keith Bowes

Strong Economics Supported by Robust Feasibility Study

In August 2022, Lotus announced results from a feasibility study on Kayelekera showing low operating costs of $32/lb U3O8 and pre-production capital of $120 million over a 12-month construction period. With uranium prices expected to rise above $60/lb in coming years, Kayelekera promises very healthy margins. The study confirmed a 10-year mine life with an average annual production of 3.3 million pounds U3O8, along with significant expansion potential.

Rapid Restart Plan Advancing

Lotus has laid out a strategy to fast-track the restart of Kayelekera by beginning early works and ordering long-lead items before making a final investment decision (FID). The company raised A$25 million in August to fund these near-term activities and remain on track for a potential FID by the end of 2022 or early 2023. Lotus aims to be among the first projects ready to supply the market when prices reach target levels. The experience of having operated Kayelekera from 2009 to 2014 gives investors added confidence.

Strong Management Team Executing Clear Strategy

An experienced leadership team led by Managing Director Keith Bowes is advancing Kayelekera on multiple fronts to ensure a smooth and timely restart. The team's strategic focus extends across technical de-risking, securing sales contracts, permitting, project financing and more. Lotus has engaged with utilities in North America, Europe and Asia to position itself at the front of the uranium contracting queue.

Ideal Position to Capitalize on Uranium Market Deficit

With uranium demand increasing and mines closing, a large supply deficit is imminent. Kayelekera is poised to help fill the gap before most other projects can get off the ground. Major Asian nuclear growth, rising demand for small modular reactors, uranium inventory drawdowns and the security of supply concerns highlighted by the Ukraine crisis are all converging to create a very compelling setup.

Location in Stable Mining Jurisdiction

Malawi has operated successfully as a uranium and other mining jurisdiction for many years, with Lotus noting a supportive government and excellent infrastructure. Located in central southern Africa, Malawi provides advantages over less stable regions. Kayelekera also stands out with its established site, existing facilities and skilled local workforce.

Significant Upside PotentialIn addition to the base case 10-year mine life, Lotus sees strong potential for expanding production after the initial phase. The company is also reviewing options to improve recoveries and lower costs further. With higher uranium prices and resource expansion likely over the long term, Kayelekera offers significant upside. Lotus also owns exploration projects prospective for uranium and other metals in Canada's Athabasca Basin.

Capital Position Enables Execution

Lotus has assembled a strong capital position, ending June 2022 with A$32 million in cash plus the recently completed A$25 million raise. This provides funds for early works, long-lead items, final acquisition payments and working capital right through to the FID and full project financing phase. Lotus has demonstrated it can access equity funding to move Kayelekera forward.

Key Takeaways:

• Near-term producer with a clear path to restart former mine
• Robust economics at feasible uranium prices
• Playing a key role in filling the looming uranium deficit
• Ideal location in a proven Malawian uranium district
• Experienced team advancing multiple work streams
• Exploration upside both at Kayelekera and in Canada
• Well-funded for activities leading up to FID

With its rapid restart strategy for a low-cost production center amid a positive uranium supply-demand imbalance, Lotus Resources presents an opportunity for substantial shareholder returns as the Kayelekera mine comes back online in a rising uranium price environment. The company appears to tick all the boxes: the right project, the right team, the right plan and the right positioning to capitalize on the coming uranium market upcycle.

The Investment Thesis for Lotus Resources

Leverage to Rising Uranium Prices

As an emerging producer, Lotus offers leverage to increase uranium prices expected over the next several years. As prices rise from current low levels towards and beyond $60/lb, Kayelekera's margins and cash flows will expand significantly. Investors could see a substantial share price upside.

Near-Term Catalysts

With several key milestones approaching in the next 6-12 months, including the FID, project financing and construction, Lotus offers investors clear upcoming catalysts that could drive share price gains upon positive announcements.

Increasing Investor Attention

As uranium market conditions improve, early-stage developers like Lotus tend to enjoy re-ratings as generalist investors take notice. Lotus could experience greater investor interest and buying as the uranium narrative becomes more mainstream.

Takeover Potential

As a reasonably priced restart project with solid economics, Kayelekera could attract takeover interest from a larger uranium mining company looking to add lower-cost pounds to its portfolio. Investors could benefit from any takeover premium.

Proven Jurisdiction

Malawi's long-standing support for uranium mining de-risks the investment substantially compared to projects in newer, less stable jurisdictions. Investors have greater certainty about the business environment.

Summary

Lotus Resources offers investors an opportunity for outsized returns through share price appreciation driven by rising uranium prices, near-term catalysts, increasing investor attention and takeover potential in a favorable mining jurisdiction. The coming period could see exciting developments for Lotus investors.