Paladin Energy has completed the sale of its 85 per cent interest in the Kayelekera uranium mine in Malawi to Lotus Resources.
ASX- listed Lotus Resources is set to gain the stake in Kayelekera by way of its subsidiary, Lily Resources, while the remaining 15 per cent is retained by the Malawi Government.
The transaction is valued at $5 million, of which Lotus has paid $200,000 in cash and the remaining to be issued in Lotus shares.
Kayelekera is Malawi’s largest uranium mine and produced 10.9 million pounds of high-grade uranium between 2007 and 2014.
The mine has been in care and maintenance since 2014 due to the sustained low uranium spot price.
Once uranium prices start offering sufficient incentive to restart production, Kayelekera is expected to produce approximately three million pounds a year.
Paladin’s chief operating officer Ian Purdy said the company would use the resources from the sale to further develop its Langer Heinrich uranium operation in Namibia.
“The completion of the sale is a positive step forward for Paladin and one which will deliver significant financial benefits to the company. We can now prioritise our efforts and resources on maximising the value of our world class Langer Heinrich operation,” he said.
“We are also pleased to be a major shareholder of Lotus Resources and look forward to their future success in adding value to the Kayelekera mine in Malawi.”
Paladin has a 75 per cent stake in the Langer Heinrich uranium mine in Namibia, which has a production capacity of five million pounds per annum.
Lotus has an option to acquire a further 20 per cent interest in the Kayelekera mine from Lily Resources in the future.
The company announced on Friday that it had already raised $4.5 million for the acquisition.