January 28, 2022
Lotus Resources Ltd. (ASX:LOT, BUY, A$0.40 target, David A. Talbot) announced results from its 35-hole (4,533m) RC drilling campaign at its 85%-owned Kayelekera uranium project in Malawi. The program has successfully expanded mineralization by up to ~100m beyond the limits of the southern and eastern extents of the sandstone hosted uranium deposit, with highlights of 2,541 ppm U3O8 over 2m, 829 ppm U3O8 over 3m, 919 ppm U3O8 over 3m, and 539 ppm U3O8 over 4m. Eight holes were also drilled at the Kayelekera South prospect, ~2km from the current pit, in an area comprising several radiometric anomalies. The Target 1 area returned 817 ppm U3O8 over 2m – representing the first intersection of significant uranium mineralization outside the known resource area. In our view, the results bode well for resource expansion. The average of 13 intercepts were 641 ppm U3O8 over 2.5m, which compares favourably to the resource grade of 630 ppm U3O8. The newly reported results are expected to grow the existing ~37.5M lb U3O8 deposit, with an updated resource now anticipated later this quarter. The new resource is expected to form the basis of a new mine plan for the upcoming DFS, scheduled for mid-2022. While incorporating an expanded resource and life of mine could further improve economics of this low capex project re-start (~US$50M), we believe potential cost reductions from grid power connection, acid plant optimization, a potential steam power plant, and tailings disposal reassessments could prove more impactful. Read more
