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Paladin Energy achieves record low uranium C1 cash cost for September quarter

Published: 11:45 19 Oct 2016 AEDT

paladin-energy_uranium-plant-production-757
Paladin's strategy is to become a major uranium mining house

Paladin Energy Ltd (ASX:PDN) has achieved a new record low quarterly C1 cash cost of US$16.45 per pound of uranium produced at the Langer Heinrich mine in Namibia.

This is significantly lower than guided C1 cash costs of US$20-22 per pound and down 38% from the June quarter C1 cash cost of US$26.60 per pound.

Production at the flagship Langer Heinrich mine was up 16% on the June quarter to 1.29 million pounds of uranium oxide.

The average selling price for the quarter was US$25.19 per pound uranium, well above the record low C1 cash cost.

Paladin owns 75% of Langer Heinrich, the world’s fourth largest open pit uranium mine.


September quarter results

Highlights from Langer Heinrich during the September quarter include:

-  U3O8 production 1,293,117 pounds, up 16% on last quarter;
- New record low quarterly C1 cash cost of production of US$16.45 per pound (vs guidance of US$20-22 per pound)
- Ore milled of 949,906 tonnes, up 13% on last quarter;
- Average plant feed grade of 704ppm U3O8, up 5% on last quarter;
- Overall recovery of 87.7%, down 2% on last quarter; and
- Previously announced reduced mining plan to be implemented in the December quarter.

The company’s second mine, Kayelekera, continued to be treated and discharged successfully during the quarter.

Paladin held cash and cash equivalents of US$27.6 million at the end of the September quarter.

The company also continues to progress the previously announced proposed sale of a 24% interest in Langer Heinrich Mine for US$175 million and the Manyingee project transaction.

A write-down reduced the current medium and low grade ore stockpiles to zero value, therefore this quarter’s C1 cash cost of production no longer include these non-cash inventory costs.


Background

Paladin is a uranium production company with two mines in Africa and projects in Australia and Canada with a strategy to become a major uranium mining house.

The Langer Heinrich mine in Namibia is Paladin’s flagship project having commenced production in 2007.

Langer Heinrich is a calcrete uranium deposit being mined through a conventional open pit with a project life of 20 years.

The Stage 3 expansion is complete with production at 5.2 million pounds per annum. Studies are underway for a further expansion.

The company’s second mine, Kayelekera, is located in the African country of Malawi and was placed in care and maintenance in May 2014 after opening in 2009.

Paladin owns a number of pipeline uranium deposits and projects located in Australia and Canada.

Paladin also holds an 82.08% interest in Summit Resources Ltd (ASX:SMM).


Analysis

Paladin continues to show it can operate Langer Heinrich to be sustainable in a low-price uranium market evidenced by significantly beating C1 cash cost guidance for the September quarter.

C1 cash costs for the December quarter have been guided by the company to remain in the US$17-19 per pound range.

By minimising operating, corporate and administrative costs and preserving the long-term life of mine plan, Paladin is positioning itself for a sustainable future.

As costs continue to decrease, Paladin is increasing its leverage to an increase in the uranium price.

During August, the New York Public Service Commission announced the implementation of a Clean Energy Standard requiring that 50% of New York’s power should come from clean and renewable sources, including nuclear, by 2030.

Paladin is guiding its cash and cash equivalents balance to remain in the range of US$25-35 million for the December quarter.

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