Kayelekera Acid Plant Repairs Complete; Mercuria US$30 Million Facility Signed

Acid Plant Repairs Complete, Production Restart Imminent

Lotus Resources (ASX:LOT) has overcome a significant operational hurdle at its Kayelekera uranium mine in Malawi, completing repairs to the acid plant's sulphur furnace refractory bricks that had previously halted production. With acid deliveries now arriving on site and expected to total around 2,000 tonnes by the end of July 2026, the company is poised to restart processing operations in early August. This acid plant is a strategic asset, promising improved supply security and lower reagent costs once fully commissioned.

Production Optimisation Accelerated During Pause

Before the June 2026 production suspension, Kayelekera had shown marked operational improvements, with uranium output jumping 56% month-on-month to 73.6 thousand pounds of U3O8 in May. The temporary halt allowed Lotus to fast-track maintenance and optimisation efforts originally slated for later in the year, focusing on plant reliability, process control upgrades, and recovery enhancements. These initiatives underpin the company’s ambition to reach a steady-state annualised production rate of approximately 2.4 million pounds of U3O8 by late 2026.

Metallurgical Review Targets Improved Uranium Accounting

To bolster confidence in production data, Lotus commissioned Novamet (Pty) Limited to conduct an independent metallurgical audit covering January to May 2026. The review highlighted areas for improving sampling accuracy and measurement integrity, which Lotus is integrating into its ongoing optimisation program. Such improvements are expected to refine monthly uranium reconciliations and better differentiate actual process losses from measurement errors, enhancing transparency for investors and counterparties.

Inventory Growth and Offtake Restructuring Progress

Since restarting, Kayelekera has produced 332 thousand pounds of uranium concentrate, with 115 thousand pounds meeting specification and ready for shipment, pending export permits. The company is exploring options for off-specification material, including blending or discounting. Meanwhile, Lotus has actively renegotiated delivery commitments with customers, deferring 110 thousand pounds into 2027 and reducing its maximum financial settlement exposure for 2026 deliveries to approximately US$7 million. Negotiations continue over the remaining 700 thousand pounds of contracted deliveries.

Mercuria Commitment Letter Formalises Marketing and Financing

Lotus has reached a key milestone by signing a binding commitment letter with Mercuria Energy Trading S.A. for a marketing agreement and an inventory-backed prepayment facility of up to US$30 million. This replaces a previous non-binding term sheet, with definitive documentation expected this quarter. The arrangement will provide marketing access for up to 3 million pounds of U3O8 over 30 months, strengthening Lotus’s liquidity and working capital amid ongoing funding challenges.

Funding Uncertainty Extends Voluntary Suspension

Despite progress, Lotus remains in voluntary suspension on the ASX as it finalises a strategic funding package critical for its financial viability. The suspension has been extended to 30 July 2026 or until funding is secured, reflecting the company’s caution against uninformed market trading amid ongoing negotiations with equity investors, underwriters, and offtake parties. The outcome of these funding discussions will be pivotal for Lotus’s ability to sustain operations and capitalise on the Kayelekera ramp-up.