Aura Energy's Tiris Uranium Project: Exploring New Production Targets
AEE (AEE) Share Update December 2024 Thursday 12th
Aura Energy Explores Expansion Opportunities at Tiris Uranium Project
Aura Energy Limited has announced potential expansion plans for its Tiris Uranium Project in Mauritania, aiming to boost production capacity and extend mine life.
Instant Summary:
- Potential increase in production from 2Mlbs to 4Mlbs of U3O8 annually.
- NPV increase to US$544M with a 45% IRR for Option 1.
- Expansion could be funded from project cash flows.
- Next steps include securing project funding and updating Ore Reserve estimates.
Expansion Overview
Aura Energy Limited is evaluating opportunities to expand its Tiris Uranium Project in Mauritania, with potential production increases outlined in their recent ASX release. The company is considering accelerating production in the third year of operation, aiming to enhance the project's economic viability.
The current base case involves a 4.1Mtpa mining rate to produce approximately 2Mlbs of U3O8 annually. However, Aura is exploring scenarios that could increase the mining rate to 6.25Mtpa or 8.2Mtpa, potentially boosting annual production to 3Mlbs or 4Mlbs of U3O8, respectively.
Economic Implications
The analysis indicates that the 6.25Mtpa scenario (Option 1) offers the most favorable economic outcomes, with an NPV of US$544M and an IRR of 45%. This scenario would allow for a payback period of approximately 2.5 years, with high-margin cash flows over the mine's life.
The expansion options leverage only 27% of the total Tiris East Inferred Mineral Resources, suggesting room for further growth. The project could be funded from its cash flows, reducing the need for external financing.
Next Steps
Aura Energy plans several steps to progress the Tiris Uranium Project, including securing project funding through debt, strategic investors, or equity. The company will also focus on securing additional offtake contracts, confirming water supply and infrastructure, and engaging with EPCM contractors for project development.
The final investment decision is anticipated in the March quarter of 2025, following the completion of the Project Execution Plan and an update to the Ore Reserve estimate.
The potential expansion at Tiris could significantly enhance Aura Energy's production capacity and financial performance. The improved NPV and IRR suggest a robust economic outlook, which could positively influence investor sentiment and the company's stock price. However, the reliance on inferred resources introduces some risk, as further exploration is needed to confirm these resources.
Investor Reaction:
Analysts are likely to view the expansion plans favorably, given the potential for increased production and improved project economics. However, investors may remain cautious until further exploration confirms the inferred resources, and project funding is secured.
Conclusion:
Investors should closely monitor Aura Energy's progress on the Tiris Uranium Project, particularly the upcoming investment decision and exploration results. With the global demand for uranium expected to rise, Aura's strategic expansion could position the company well for future growth.