Paladin Energy continues to focus on reducing cash expenditure and maximising the value of the strategically significant Langer Heinrich operation.
Given the developments that have occurred after Paladin’s December quarterly update the Company provides the following business activity update.
The Company announced on 13 March 2020 the completion of the sale of its 85% interest in Paladin (Africa) to Lotus Resources (65%) and Lily Resources (20%).
Paladin will hold the interest on trust, pending receipt of the final in-country approvals. Importantly, the sale of Kayelekera reduces Paladin’s forecast cash expenditure by approximately US$5 million per annum.
The completion of the sale is a positive step forward for Paladin and one which will allow the Company to prioritise its efforts and resources on maximising the value of the Langer Heinrich operation.
Langer Heinrich optimisation study update
In October 2019 the Company announced the results of a pre-feasibility study to optimise the restart of the Langer Heinrich operation.
The Company continues to refine its restart plans and expects to update the market further, including extensive guidance on key economic parameters, during Q4 FY2020.
Langer Heinrich remains a strategically important, proven operation with a historic production capacity of 5.2Mlb pa.
Uranium production was suspended, and the operation transitioned into care and maintenance in May 2018.
The existing infrastructure and mine development at Langer Heinrich provide an opportunity for a rapid restart of operations and delivers a lower incentive price for restart than greenfield mine development projects.
The operation is in ‘mining-friendly’ Namibia and holds all the required permits for restart.
Paladin is well positioned to be an early mover in a recovering uranium market, however, the Company will only consider a restart of the Langer Heinrich Mine when it secures a uranium term-price contract with sufficient tenure and value to secure an appropriate level of return to stakeholders.
Cash expenditure and balance sheet
Paladin currently has an estimated unrestricted cash balance of US$35 million, after Kayelekera sale costs.
Following the sale of the Kayelekera Mine on the 13 March 2020, Paladin’s total cash spend for FY2021 is forecast to reduce by approximately US$5 million to less than US$10 million pa.
The Company’s senior debt has been in place since 25 January 2018. The balance of the debt at the end of February 2020, including accrued interest, was US$138 million.
The debt is repayable on 25 January 2023 and the Company expects to continue accruing interest (10%) for the remainder of the term.
Board and management
Over recent months, the Company has significantly restructured its Board and Executive Management Team to provide the technical and commercial skill set necessary to lead the Company going forward.
The Company has previously announced the following changes:
- Cliff Lawrenson appointed Non-Executive Chairman
- Peter Main and Peter Watson appointed Non-Executive Directors
- Ian Purdy appointed CEO
The CEO has now finalised his Executive Management Team as follows:
- Michael Drake appointed COO (previously GM Business Development and Projects
- Anna Sudlow, as CFO
- Gary Stoker appointed Principal Uranium Marketing Consultant (previously GM Sales and Contracts for Paladin)