Australian mining company Paladin Energy has completed the sale of its majority 85 percent stake in Kayelekera Mine in Karonga to Lotus Resources Limited and Lily Resources Pty Limited, the company announced on Friday.
Paladin, which was offloading 65 percent interest to Lotus Resources Limited and the remaining 20 percent stake to Lily Resources Pty Limited, however, said it will hold the interest on trust pending receipt of the final in country approvals.
This means outstanding contractual consent to complete the sale of the Kayerekera Mine have completed.
Paladin Energy chief executive officer Ian Purdy said in a statement on Friday the completion of the sale was a positive step forward for Paladin and one which will deliver significant financial benefits for the company.
He said: “We can now prioritise our efforts and resources on maximising the value of our world-class Langer Heinrich operation in Namibia.
“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.”
The mine has been under care and maintenance since 2017, but last month the firm announced a pre-feasibility study for its restart after identifying options to reduce operating costs and maintain cost competitiveness.
The key benefits of the sale of the mine to Paladin are a significant reduction in ongoing care and maintenance costs of roughly $5 million (about K3.8 billion) per annum associated with Kayelekera Uranium Mine, a 3.5 percent royalty based on revenues derived from future production at Kayelekera, as well as the repayment of funds advanced to provide security for the $10 million (about K7.6 billion) environmental performance bond, according to Purdy.
In a separate statement issued on Friday, Lotus Resources Limited managing director Simon Andrew described the acquisition as an excellent opportunity for the company, adding Paladin has paid Lotus $2 million (about K1.4 billion) as part of planned site restoration.
The emergence of Kayerekera mine boosted economic prospects for Malawi.
Within two years after it started operations in April 2009, uranium surpassed tea, cotton and sugar to become Malawi second most important export accounting for up to 11 percent of merchandise export receipts, according to RBM figures.
But all hope is not lost as Ministry of Natural Resources, Energy and Mining Principal Secretary Patrick Matanda told Business News in Lilongwe earlier this month that Malawi government’s 15 percent stake in the mine is intact.
Kayelekera Uranium Mine, Malawi’s biggest mining venture to date, was placed on care and maintenance since February 2014 following the tumbling of global uranium prices in the aftermath of the Fukushima nuclear disaster in Japan, which forced the closure of nuclear power plants across the world.
Prior to this, uranium prices hovered around as high as $73 per pound and were expected to increase overtime, but to date, the price has nose-dived to a record low of between $20-$25 per pound, a price Paladin argued was not enough to resume production and exportation of the commodity.