Aura Signs Uranium Offtake Deal for Tiris Project

Aura Energy (ASX:AEE) has closed a binding offtake agreement with Curzon Uranium Trading for uranium oxide (U3O8) from its Tiris project in Mauritania.

The freshly inked deal is for the sale of 800,000 pounds of U3O8 at fixed prices, and offers a further 1.8 million pounds of uranium production to Curzon as option volumes at fixed and market pricing. The seven-year deal begins upon the start of production, and is extendable by mutual consent.

Tiris is expected to produce 1 million pounds of U3O8 annually and, according to Aura, the agreement’s fixed pricing volumes account for 15 to 30 percent of production.

The average price of the agreement is over US$44 per pound of U3O8 as opposed to the current spot price of US$29 per pound, which Aura says is “comfortably” above Tiris’ operating cost.

“The completion of this agreement comes after many months of negotiation and clearly positions Aura closer to producer status. This agreement provides Aura with a strong level of certainty over the revenue stream from the fixed prices and excellent upside via the option volumes at market prices,” Aura Executive Chairman Peter Reeve said in a statement.

The uranium asset is currently in the definitive feasibility study (DFS) stage, with Aura anticipating the start of construction this year and production in 2020.

“With the DFS nearing completion and initial construction anticipated this year, the milestone that this agreement represents is undoubtedly significant. Also significant is the fact that the parties have come to an agreement in which Aura retains its exposure to the upside in the uranium price over the life of the Tiris project,” Reeve added.

A scoping study for Tiris was released in 2014, and it indicates the project will produce 11 million pounds of uranium over an initial 15-year mine life. The project is expected to have a capital cost price tag of US$45 million with an average operating cost of US$30 per pound of U3O8.

Aura’s other primary asset is its Häggån vanadium and battery metals project in Sweden, which the company says has the potential to be a major supplier to critical metals users in Northern Europe.

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Securities Disclosure: I, Olivia Da Silva, hold no direct investment interest in any company mentioned in this article.