Officials from Lotus Resources, among others, during the signing of the mine development agreement (MDA). Credit: Lotus Resources.

Lotus Resources has entered an MDA with the Government of Malawi, ensuring a stable fiscal regime for the Kayelekera uranium mine.

This ten-year agreement marks a significant step in the mine’s redevelopment.

It outlines key fiscal terms, legal protections and non-fiscal government support for the development and operation of the Kayelekera mine.

The stability period of ten years guarantees no adverse changes to the fiscal regime. The royalty rate is set at 5%, with a corporate tax rate of 30%.

Tax losses from the acquisition are included, offering protection from disputes on tax refunds and the ability to restructure historical loans and tax losses on a tax-neutral basis.

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The current Resources Rent Tax (RRT) in Malawi, deemed unsuitable, will not apply to Lotus. Instead, the government proposes an alternate tax linked to uranium prices, granting Lotus a waiver until this is effective.

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Additionally, a community development agreement commits 0.45% of project revenue to community initiatives.

Lotus’s immediate priorities include finalising offtake negotiations with a pre-payment component for project financing and completing the front-end engineering design (FEED) programme.

The company will also work on securing project financing.

Orimco, Lotus’s debt advisor, has identified potential financiers.

Lotus will also finalise a power supply and power implementation agreement with Malawi’s electricity utility, ESCOM.

Lotus managing director Keith Bowes said: “It has been a timely conclusion to these negotiations as we have seen increased demand for the Kayelekera product from a number of utilities, which coincides with the current perceived shortages and strong prices in the market.”

Lotus holds an 85% stake in the Kayelekera Uranium Project, which produced around 11 million pounds of uranium between 2009 and 2014.

The project was closed in 2014 to preserve its longevity amid a decline in uranium prices.