Malawi, Lotus Resources, seal MDA deal for Kayelekera uranium mine

The government of Malawi has sealed a mine development agreement (MDA) with Lotus Resources to for redevelopment of the Kayelekera uranium mine.

Kayelekera uranium mine is an open cast uranium mine 52 kilometers west of the regional administrative and commercial centre Karonga in Malawi, Africa and was the country’s largest mine. Production at the mine has been paused since February 2014, due to a fall in global uranium prices

Mine development agreement

The MDA encompass a ten-year agreement stability period guaranteeing no adverse changes to the fiscal regime on the mine. It will feature a royalty rate set at 5% and a corporate tax rate of 30%. The MDA will also cover legal protections such as inclusion of tax losses from the acquisition, offering protection from disputes on tax refunds and the ability to restructure historical loans and tax losses on a tax-neutral basis.

In Malawi, the current Resources Rent Tax (RRT), which has been deemed unsuitable, will not apply to Lotus Resources. Instead, the government is proposing an alternative tax structure linked to uranium prices, and Lotus will be granted a waiver from the RRT until this new tax structure is implemented. Additionally, Lotus Resources has committed to a community development agreement, allocating 0.45% of the project’s revenue to community initiatives.

Lotus’s immediate priorities include finalizing 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, with Orimco, Lotus’s debt advisor, having identified potential financiers. Additionally, Lotus will finalize a power supply and power implementation agreement with Malawi’s electricity utility, ESCOM.