August 27, 2021
Lotus Resources Ltd. (ASX:LOT, BUY, A$0.22 target, David A. Talbot) reported results from the second round of ore sorting testwork from its 85%-owned Kayelekera project in Malawi, which has further improved the results seen in round one (read more). The second round included optimizations on testing compared to the first round, including the use of a combination of sensors as well as reduced crush sizes. While uranium grade doubled as it did in phase one, recoveries increased from 86% to 92%. Ore sorting has the potential to increase annual production and extend LOM through the utilization of lower grade ore that previously was not economic. These results will be incorporated into the upcoming Feasibility Study expected next month. An increase in recovery rates is viewed positively and we emphasize that the company is not starting the Kayelekera project from scratch. It is currently working from a low capex restart PEA of US$50M. We also anticipate several ongoing modifications to the project to help improve capital and operating costs, including the use of ore sorting, tailings management, grid power access, acid plant optimization and recycling, and other items. Lotus’ lower risk and near-term production potential of about 2.5M lb pa (uranium prices pending) has it trading ahead of peers with a P/NAV of 0.79x vs. peers at 0.64x. Read more
