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LONDON (Alliance News) - Aura Energy Ltd on Tuesday said it has signed a "significant" uranium sale agreement for its Tiris project in Mauritania.
Shares were up 2.5% on Tuesday morning at a price of 1.02 pence each.
The Australian miner has signed the binding off-take agreement with Curzon Uranium Trading Ltd for uranium produced in future from Tiris.
Curzon is a London-based trader with a particular focus on triuranium octoxide, a compound of uranium, engaging with small to medium sized junior miners.
The deal covers 800,000 pound of uranium at fixed prices, with a further 1.8 million pounds available to Curzon as options at fixed prices.
The average price, Aura said, is above USD44 per pound of triuranium octoxide compared with a current spot price of approximately USD29 per pound.
This is "comfortably" above Aura's total operating cost, the company added.
Tiris is expected to produce around 1 million pounds of triuranium octoxide per year, and the fixed pricing volumes account for between 15% and 30% of output.
"This will ensure Aura remains strongly exposed to the potentially higher uranium prices Aura expects in the future," the company said.
"Aura has also included the ability to claw back certain option volumes at its election should the price warrant this action."
Aura is currently completing a feasibility study at Tiris, and it hopes to have production started by 2020.
Executive Chair Peter Reeve said: "The completion of this agreement comes after many months of negotiation and clearly pushes Aura ever more closely 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. With the price exceeding USD44 per pound for this agreement Aura believes this is both constructive and prudent for a company such as Aura early in its development phase.
"With the feasibility study nearing completion and initial construction anticipated this year, the milestone that this agreement represents is undoubtedly significant," Reeve continued.
"Also significant is the fact the parties have come to an agreement in which retains its exposure the any upside the uranium price offers Aura over the life of the Tiris project."
