Aura Energy has secured a key piece in the puzzle to move its Tiris uranium project towards production, an on-off financing agreement of $ 20 million.
The financing under the agreement with Curzon Uranium Trading, based in London, is an important part of the construction financing of the Tiris Uranium Project and paves the way for obtaining the full financing package. Curzon, who currently holds a diversified portfolio of uranium customers around the world, has already drawn on this late project construction and production finance.
In particular, it secures the necessary financing without further diluting the interests of the shareholders.
This agreement follows Aura Energys (ASX: AEE) recent resource upgrade of 10% for the Tiris project in Mauritania to 56 million pounds of uranium oxide.
The financing agreement provides that the interest charge will be paid in uranium concentrate and is a modification of the original agreement that the company entered into with Curzon in January 2019.
This gives Aura Energy the opportunity to enter into additional purchase financing agreements and face potentially higher uranium prices.
“We are pleased to have entered into the Offtake funding agreement with Curzon as it perfectly positions Aura Energy with a project with low capital and operating costs, a funding agreement and an on-off agreement to get Tiris Uranium into production quickly,” said the Chairman Martin Rogers.
“The sentiment about uranium and nuclear energy is changing rapidly among investors and we see significant potential to expand our resources, our production throughput and to enter into additional purchase financing agreements.
“The impact of a possible doubling in electricity demand over the next three decades, coupled with the pressure to decarbonise our electricity sector, could prove enormous for uranium.”
The prices of uranium futures contracts rose last week with the medium term The September 30 price indicator rose $ 8 a pound to $ 43.57 a pound, suggesting that recent spot price increases may be real.
This is thanks to the switch to CO2-free energy, which is expected to result in annual growth of 2.6% for nuclear energy or a total of 56% by 2040.
Tiris uranium project
Tiris is an advanced stage project that Uran’s Curzon boss Bram Vanderelst described as “a compelling, low-cost, low-investment project in an attractive mining continent and region,” reasons that led to the expansion of funding to Aura.
In the company’s updated final feasibility study, the company estimated capital expenditures to be a very palatable $ 74.8 million and cash costs of $ 25.43 per pound of U3O8, which is well below current prices.
These low costs are due to the flat ore body, soft material, no crushing grinding and an innovative processing step that reduces the volume of material to be processed.
The project will produce 12.4 million pounds of U3O8 over 15 years with a four year payback period.
Net present value after tax and internal rate of return, both measures of expected profitability of a project, are estimated at $ 79.9 million and 22%, respectively, using an assumed price of $ 60 / lb. However, these numbers are only based on 20% of the Inferred Resource, so the potential for expanding the project and increasing revenue is significant.
Both the environmental permit and development permit for the proposed mine are in place and production is expected to begin 18 months after full funding.
Tiris also has the potential for exploration discoveries, resource and production expansions.
With a number of tailwinds in the uranium market, performance is expected to continue through Christmas.
1) a uranium supply deficit;
2) a decade of underinvestment in the offering;
3) improving the political mood; and
4) Potential for increasing demand.
Aura Energy has the highest leverage of its domestic competitors on an improving uranium market.
This article was developed in collaboration with Aura Energy, a Stockhead advertiser at the time of publication.
This article does not constitute financial product advice. Before making any financial decisions, you should consider independent advice.