Lotus Resources Ltd (ASX: LOT) shares aren't going anywhere on Tuesday.
Before the market open, the uranium developer released its quarterly update and then requested a trading halt.
Quarterly update
Let's first start with the company's quarterly update.
Lotus Resources had a busy period and made big steps towards commencing production at the Kayelekera Uranium Project in Malawi.
Management notes that the Kayelekera front end engineering design (FEED) program was completed post quarter end, positioning it for an accelerated restart.
It estimates that the time to first uranium production has reduced to 8-10 months by phasing the completion of non-essential site infrastructure to after first uranium production. In addition, initial restart capital expenditure to first uranium production reduced to US$50 million.
During the quarter, Lotus Resources also secured two conditional uranium offtake arrangements with tier 1 counterparties.
One is a binding agreement with Curzon Uranium to buy 700,000 pounds of uranium from 2026-29, and provide US$15m unsecured loan facility. It also has an option for an additional 100,000 pounds per annum from 2030-32. The other arrangement is a non-binding term sheet with PSEG Nuclear to buy 800,000 pounds of uranium from 2026-29.
But the good news doesn't stop there. The quarter also saw a mine development agreement (MDA) signed with the Government of Malawi and the release of the Letlhakane scoping study.
Letlhakane is another uranium project in Botswana. That scoping study has a base case 15-year Life-of-Mine (LoM) producing 3 million pounds per annum, with upside to a 22-year LoM.
Combined with positive industry developments, such as tech giants turning to nuclear power, this has led to Lotus Resources shares rallying over 30% since this time last month.
Why are Lotus Resources shares in a trading halt?
At the end of the quarter, Lotus Resources had an unaudited cash balance of $25 million, exclusive of restricted cash of $14.4 million.
It seems that management decided that this wouldn't be enough to fund its future plans and has requested a trading halt this morning so that it can launch a capital raising.
The request states:
The trading halt request is pending an announcement regarding a capital raise. Lotus Resources anticipates that the trading halt will be lifted on or before market open on 24 October 2024 by provision of an announcement regarding the capital raise.
No details have been provided for how much the company is seeking to raise nor at what price.
It is also worth noting that Lotus Resources recently popped up on the most shorted shares list. This capital raising could give short sellers an opportunity to close out positions and move on. Though, time will tell if that's the case.
