Australia-based mineral exploration firm Lotus Resources has signed an agreement with Kayelekera Resources to increase its ownership stake in the Malawi-based Kayelekera uranium project to 85%.

Lotus will exercise its option to acquire a 20% stake in the project through the purchase of all Kayelekera Resources’ shares in Lily Resources, which is a joint venture between Kayelekera Resources and Lotus.

Lotus, as a consideration, will issue 226.4 million of its shares to Kayelekera Resources to acquire the latter’s interest in Lily Resources.

The remaining 15% interest in the Kayelekera project is held by the Government of Malawi.

Lotus chairperson Michael Bowen said: “Kayelekera is one of only a small number of uranium projects with a demonstrated track record of operations, having operated successfully from 2009 to 2014, when it produced almost 11-million pounds of uranium oxide.

“Consolidating the ownership of Kayelekera is an important milestone for the company as it positions for a recommencement of operations in an improving price environment.

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“With work on the restart feasibility progressing, the increase in ownership comes at a time when the uranium price and sentiment in the industry are improving due to an impending supply deficit. As a proven uranium producer, Lotus is well placed.”

Last year, Paladin Energy divested its complete stake in the Kayelekera uranium project to Lotus Resources and Lily Resources.

Through the deal, Lotus Resources acquired a 65% stake while Lily Resources acquired a 20% stake in the project.

The project is located in northern Malawi, 52km west of the provincial town of Karonga and 12km south of the main road.