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Aura Energy Share Price Plunges Following $10m Financing For Uranium Project

Sam Boughedda trader
Updated 7 Oct 2021

Aura Energy's share price plunged Thursday after entering into a $10 million offtake financing agreement with commodities company Curzon Uranium Trading.

AIM-listed Aura Energy said it will use the funds for working capital for late-stage project construction and production commencement at its Tiris uranium project in Mauritania.

The agreement includes an additional up to $10 million facility at the lender's sole discretion. Thus, the potential maximum available is $20 million.

The offtake financing agreement includes the uranium offtake agreement executed with Curzon in January 2019 and a new financing agreement.

The uranium offtake agreement executed with Curzon in January 2019 provided for the sale of 800,000 pounds of uranium production at fixed prices, 750,000 pounds at market-linked pricing, and with a further 1.05 million pounds of uranium production available to Curzon as optional volumes at fixed and market pricing.

Commenting on the offtake financing agreement, Aura Chairman, Martin Rogers, said: “Sentiment towards uranium and nuclear power is shifting rapidly amongst investors and we see considerable potential to expand our resource, production throughput and undertake further offtake finance agreements.

“The implications of a potential doubling in electricity demand over the next three decades, along with pressure to decarbonise our power sector could prove huge for uranium.

“With the DFS capital estimate recently updated with 2021 global conditions, Aura has a current and accurate capital estimate, providing a clear path to near term production with known costs and overheads, as we fast track the Tiris Uranium Project towards first cashflow.”

The current offtake agreement with Curzon is for up to 15% of the proposed production, allowing Aura Energy to undertake additional offtake finance agreements.

Aura Energy shares have plunged 16.65% to 12.9p following the announcement. However, its shares are up 149% for the year to date.

Should you invest in Aura Energy shares?

Aura Energy shares are traded on the London stock exchange's AIM market (the alternative investment market), which is the submarket specifically for smaller companies. AIM stocks are attractive to investors as they have tax advantages and smaller companies have the potential to benefit from rapid growth. But are Aura shares the best buy? Our stock market analysts regularly review the market and share their picks for high growth companies

Sam is a trader and lead stock market writer at AskTraders. After starting his career in the forex market, Sam now focuses on stocks, specifically consumer staples.