Lotus Resources Ltd (ASX:LOT) has signed an agreement with Kayelekera Resources Pty Ltd (KRPL) to exercise its right to acquire an additional 20% of the Kayelekera Uranium Project in Malawi.
Following the completion, the company’s interest in Kayelekera will increase to 85% while the remaining 15% is held by the Government of Malawi.
The company has reached an agreement with KRPL to exercise its buy-out right to acquire all of KRPL's shares in Lily Resources Pty Ltd - the incorporated joint venture between KRPL and Lotus.
The exercise of the buy-out right follows a recommendation from an independent committee of the company’s board, formed to manage the implementation of the exercise of the right.
“An important milestone”
Lotus chairman Michael Bowen said: “Kayelekera is one of only a small number of uranium projects with a demonstrated track record of operations, having operated successfully from 2009 to 2014 when it produced almost 11 million pounds of uranium oxide.
“Consolidating the ownership of Kayelekera is an important milestone for the company as it positions for a recommencement of operations in an improving uranium price environment.
“With work on the Re-Start Feasibility Study progressing, the increase in ownership comes at a time when the uranium price and sentiment in the industry is improving due to an impending supply deficit.
“As a proven uranium producer, Lotus is well placed.”
Terms of buy-out
Under the terms agreed with Kayelekera, Lotus will issue 226.4 million Lotus shares to KRPL as consideration for the acquisition of KRPL’s interest in Lily.
The acquisition of KRPL’s interest in Lily, which is conditional on the approval of Lotus shareholders, is an equity-only transaction, thereby maintaining the company’s cash reserve.
A general meeting of Lotus shareholders is expected to be held in the June quarter.
The company’s market cap is approximately A$142.5 million and shares today have been as much as 3.5% higher to A$0.155.