Energy Fuels Inc. (NYSE American: UUUU) (TSX: EFR) has entered into a Memorandum of Understanding (MOU) with the Government of Madagascar regarding the Toliara titanium, zirconium and rare earth elements project located in southwestern Madagascar.
The MOU follows the lifting of a suspension on the Toliara Project by the Madagascar Council of Ministers on Nov. 28. The lifting of this suspension, imposed in November 2019, allows Energy Fuels to proceed with project development, community programs and activities aimed at achieving a positive final investment decision (FID).
The MOU represents years of negotiations with the Malagasy Government regarding the fiscal and operational framework for the project. While the company aims for an FID in about 14 months, it will work with the Government to formalize the MOU’s terms through a “Stability Mechanism.” This mechanism may involve submitting an Investment Agreement to the Madagascar Parliament, enacting amendments to existing laws or another agreed-upon method to ensure financial and legal certainty for large-scale mining projects.
Energy Fuels President and CEO Mark Chalmers said, “As I’ve said before, I believe the Toliara Project is a ‘generational’ critical mineral project that has the strong potential to operate well beyond many of our lifetimes.” He emphasized the importance of the MOU in fostering a long-term partnership with Madagascar.
Key terms of the MOU include a 5% royalty on mining products and a commitment of $80 million in funding for development and social projects, with specific milestone payments. The company will also invest at least $1 million in community projects before FID and $4 million annually after construction begins, adjusted for inflation.
The Government of Madagascar will assist in obtaining necessary permits, certify the project under current laws and maintain legal and fiscal stability. Terms such as the royalty payments and funding commitments are contingent upon successful adoption of the Stability Mechanism and Project Certification.
Energy Fuels is updating its feasibility studies for the Toliara Project and aims to ensure the development is environmentally and socially responsible. However, the company notes there is no guarantee that the conditions outlined in the MOU will be satisfied, which could impact the project’s timeline and development.
