Lotus Resources Quarterly Update - September 30 2025

• First yellowcake production achieved at Kayelekera in August 2025, on schedule and within budget
• A$65 million equity placement completed alongside US$8.5 million equipment financing arrangement
• Infill drilling programme commenced at Letlhakane, targeting upgrade of inferred resources to measured and indicated categories
• Metallurgical testwork indicates approximately 70% reduction in acid consumption with 6-8% reduction in uranium recovery
• Cash balance of A$96.7 million at quarter end, excluding US$10 million restricted cash

Lotus Resources Limited (ASX: LOT) is an Africa-focused uranium company with operations in Malawi and Botswana. The company holds an 85% interest in the Kayelekera uranium mine in Malawi and 100% ownership of the Letlhakane uranium project in Botswana. Following the restart of Kayelekera in August 2025, the company now operates a producing uranium facility. The company's combined mineral resource base totals 164.8 million pounds of uranium. Kayelekera produced approximately 11 million pounds of uranium between 2009 and 2014 before entering care and maintenance.

Kayelekera First Yellowcake Production and Accelerated Restart Progress

The first yellowcake was drummed at Kayelekera in late August 2025, representing the first production at the site since it entered care and maintenance in 2014. The restart was completed on schedule and within budget. All process plant circuits and stages were commissioned during the quarter, including the mill, leaching circuits, resin-in-pulp system, elution circuit, precipitation circuit, and drying and packaging areas.

Initial production utilised ore from existing stockpiles mined prior to the asset entering care and maintenance. The plant was commissioned using lower-grade ore to reduce potential recovery losses. No substantial mining occurred during the quarter, with ore mining expected to commence in the fourth quarter of 2025 following mobilisation of the mining fleet in late third quarter. Mining activities during the period focused on ramp access, road preparation, and stockpile pad preparation.

The acid plant refurbishment continued during the quarter with completion of new foundation structures and plant installation, targeting first quarter 2026 completion. Grid connection works commenced, with completion targeted by the end of 2026. The company decoupled these activities from the processing plant works to enable earlier production using external acid supplies and existing diesel power generation. Connection to Malawi's national grid is expected to reduce power costs by US$5-6 per pound. The company is targeting steady-state uranium production of approximately 2.4 million pounds per annum during the first quarter of 2026.

Letlhakane Infill Drilling Commencement and Low-Acid Metallurgical Testwork Results

Drilling commenced at Letlhakane during the quarter, with the programme comprising up to 12,000 metres of reverse circulation drilling and 1,500 metres of diamond drilling across approximately 180 drill holes. The programme targets upgrading inferred mineral resources, which currently represent approximately 50% of the total resource, into measured and indicated categories. The primary focus areas are the Gorgon and Serule West deposits. The drilling programme is expected to take approximately four months and may be completed in two phases separated by seasonal rains anticipated between November 2025 and March 2026.

Metallurgical testwork conducted by the Australian Nuclear Science and Technology Organisation evaluated a two-stage leaching process applying high acidity only in the second stage. The testwork comprised four column leach tests under varying conditions, with results indicating approximately 70% reduction in acid consumption compared to the 2015 A-Cap Energy flowsheet, at the cost of 6-8% reduction in uranium recovery. The resulting pregnant leach solution contained acid levels below 15 g/L, enabling successful purification using ion exchange technology.

The testwork results indicate the new flowsheet removes the need for solvent extraction equipment included in the previous design. The upgraded mineral resource and metallurgical testwork will support a comprehensive pre-feasibility study scheduled for completion in the second half of 2026. 

Capital Raising and Equipment Financing Completion

The company completed an equity placement during the quarter, raising A$65 million before costs at A$0.19 per share. The placement resulted in the issue of 342,105,264 new ordinary shares and attracted participation from domestic and international institutional investors. An additional 2 million shares were issued following the exercise of nil exercise price options.

Lotus finalised binding documentation for an equipment finance facility of US$8.5 million with First Capital Bank. The facility provides financing for 70% of mobile equipment costs and 80% of light vehicles and buses, with the financed equipment serving as security. The facility has a five-year term with repayments over 54 months, including an initial six-month period without principal or interest payments. Interest is charged at either a fixed rate or floating rate of SOFR plus a margin, both currently below 10% per annum. The first drawdown of US$2.5 million was completed after quarter end. The company stated it is not pursuing additional equipment finance facilities.

The closing cash balance at quarter end was A$96.7 million, excluding US$10 million restricted cash held as environmental bond collateral. This represents an increase of A$20.8 million from the previous quarter. The company continues to evaluate other debt facilities, including working capital arrangements, and is considering inventory financing structures in light of approaching initial shipments. Net cash used in operating activities during the quarter was A$774,000, with A$40 million spent on property, plant and equipment associated with the Kayelekera restart.

Outlook

Kayelekera is progressing towards steady-state production of approximately 2.4 million pounds per annum targeted for the first quarter of 2026. Ore mining is expected to commence in the fourth quarter of 2025. The acid plant refurbishment is scheduled for completion in the first quarter of 2026, whilst grid connection works are targeted for completion by the end of 2026. At Letlhakane, the infill drilling programme will continue over the coming months, potentially in two phases depending on seasonal conditions. The pre-feasibility study incorporating the drilling results and updated metallurgical testwork is scheduled for completion in the second half of 2026.

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