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Paladin Energy Ltd still considering US$175 million cash injection

Published: 10:10 14 Nov 2016 AEDT

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Paladin owns 75% of the low-cost Langer Heinrich.

Paladin Energy Ltd (ASX:PDN) is still negotiating the transaction that proposes a 24% interest in the flagship Langer Heinrich uranium mine be sold for US$175 million.

Paladin owns 75% of the low-cost Langer Heinrich, the world’s fourth largest open pit uranium mine, located in Namibia.

The definitive agreements contemplated in the previously announced non-binding term sheet for the potential sale of a 24% interest have not yet been executed.

It is unlikely the transaction will close by the end of the December quarter and discussions with the potential buyer, CNCC Overseas Uranium Holdings Ltd, are ongoing.

The sale of an interest in Manyingee uranium project located in Western Australia is now expected to close late in March quarter 2017 or early in the June quarter.


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).


September quarter highlights

Paladin 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.

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.

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.

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