PERTH (miningweekly.com) – Malawi’s Minister for Natural Resources, Energy and Mining has given ASX-listed Paladin Energy consent to divest of its 85% stake in the Kayelekera uranium project.

Paladin in June struck an agreement with Lotus, a subsidiary of Hylea Metals, to divest of 65% its interest in the project for A$5-million, made up of A$200 000 in cash and A$4.8-million worth of Hylea shares. Paladin will also receive a 3.5% royalty on revenues derived from future production at Kayelekera, capped at A$5-million.

Kayelekera Resources will acquire a further 20% interest in the project, with the Malawi government retaining its 15% interest.

Kayelekera was idled in 2014 on the back of low uranium prices. The project includes a 1.5-million-tonne-a-year processing facility and is estimated to host some 28.7-million pounds of uranium oxide.

Lotus on Friday told shareholders that following the acquisition, the company would formulate a detailed operating strategy for the Kayelekera project, looking at re-engineering certain of the production and mining processes to reduce the overall capital expenditure and operating expenditure of the mine.

A care and maintenance review was due for completion in the first quarter of next year, while the re-engineering study will also start in the first quarter of 2020.

“We believe Kayelekera is a world-class uranium asset. The mine is fully permitted and includes significant plant and infrastructure. Kayelekera hosts a high-grade uranium resource with an existing openpit mine and demonstrated excellent recoveries while it was in production,” said Lotus MD Simon Andrew.

“Lotus believes the near-mine and regional exploration potential is significant. Numerous radiometric anomalies have been identified over the broader project region. Although several have been tested previously, targets remain open in the Mwankeja South, Livingstonia and Chulumba prospects, based on untested radiometric anomalies as well as structural targets in the Nthalire areas.”

Lotus is hoping to complete handover of the Kayelekera site by the end of the first quarter of next year, with the companies awaiting the contractual consent from the Minister for Natural Resources, Energy and Mining and the Minister of Finance, Economic Planning and Development.