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Uranium Offtake Agreement

Offtake agreements are essential for many mining companies, especially those that focus on critical and industrial metals. Here`s why. In March 2020, Orano indicated that it wanted to ensure the continuity of uranium production in northern Niger, so that Somair`s production is expected to continue for ten years or until the imouraren project resumes. Mauritania – The agreement with Curzon covers the sale of 800,000 pounds of fixed-price uranium production, with an additional 1.8 million pounds of production, which is available as a fixed-price and market-priced option volume. Aura Energy, listed as ASX/AIM, has signed a binding revenue loss agreement with London-based nuclear fuel trading company Curzon Uranium Trading for the sale of its uranium production from the uranium project in Mauritania. Uranium Aura has signed a firm acquisition agreement with London-based Curzon Uranium Trading Limited for up to 30% of production under the tiris uranium project. The project in Mauritania, in north-west Africa, is expected to begin next year. SinoU and China`s ZTE Energy Corporation have established a uranium exploration joint venture near the Azelik mine. Oranins SOMAIR and COMINAK were laid off until the end of 2013 and were both suspended in mid-December 2013 for maintenance until negotiations on the renewal of the licence were completed. The government of Niger wants a new agreement based on the 2006 Mining Act, which increases royalties from 5.5% according to the 10-year licence to 12-15%, depending on profits.

However, the current low uranium prices have limited the economic room for manoeuvre to raise taxes and negotiations have continued. The mines were put back into service at the end of January 2014 as part of a government decree. While taketake agreements have many benefits for both producers and buyers, it is important to note that there are also risks associated with them. Still puzzled? Here is a simple breakdown of how offtake agreements work: off-take agreements in the uranium sector often include periods of five to seven years. A recent example is the agreement by Curzon Uranium Trading Limited to purchase 800,000 U3O pounds ₈ from Aura Energy`s Tirus Uranium Project at a fixed price of CAN44 per pound sterling. The agreement was reached on January 29, 2019 and expires at the end of 2025. Conventional radiometric sorting treatment and the use of ablation technology is expected to produce 1040 tU/year over 21 years, with potential for resource development. Ablation applies a physical process of grain-sized donations to ore sludge. The start-up capital cost is expected to be $359 million and operating costs are expected to be $24.50/Lb U3O8 or $31.50, including royalties. The cost of the project is based on a uranium price of USD 70/lb.

Fixed price volumes under the new agreement will account for between 15 and 30% of the expected production of 1 million pounds U3O8 per year, Aura said. The renewable contract is for a period of seven years from the start of production. Tiris` planned production is about 1 million u3O pounds per year₈ and, above all, the fixed price volumes of this agreement represent between 15 and 30% of production.