Paladin narrows FY net loss
To lower output amid low price environment
TSX- and ASX-listed miner Paladin Energy on Wednesday announced that it was working on a proposed plan to reduce mining and mill throughput at the Langer Heinrich Mine (LHM), in Namibia, with processing plant feed coming from stockpiled low- and medium-grade ores.
Paladin said the revised mine plan effectively shifted higher-grade ore processing into later years when uranium prices were expected to be higher. For fiscal 2017, the average feed grade will be reduced to between 550 ppm and 570 ppm, from the previous internal company budget of 700 ppm.
The change will reduce finished uranium oxide (U3O8) output by between 1 million and 1.5 million pounds a year over the next two years. However, Paladin said the requirement for less movement of mined material on site during the period reduced cash operating costs more than any lost revenue.
Using Paladin’s internal assumptions, the initiative will generate about US$40 million (N$564 million) of cumulative incremental operating cash flow for the 2017 and 2018 financial years. The proposed LHM mine plan adjustment requires a number of third-party consents and Paladin intends to initiate the plan in a phased approach over the next three months.
FY2016 RESULTS
Paladin Energy has narrowed its net loss for the year ended June 30, to US$122 million (N$1.7 billion), from US$267.8 million (N$3.8 billion) a year earlier, as lower sales were offset by an 11% drop in C1 unit costs.
Core profit, as measured by the company’s earnings before interest, taxes, depreciation and amortisation (Ebitda) came in at US$24.8 million (349.7 million), compared with the underlying loss before interest, taxes, depreciation and amortisation of US$20.9 million (N$294.7 million) a year earlier. Paladin attributed the improved performance to cost reduction initiatives that were implemented during the year.
C1 unit cost of production for the year was at a record low of US$25.88 (N$364.91)/lb. LHM, the company’s only current operating mine, produced 4.76-million pounds of U3O8 for the year, down 5% from 2015.
Sales revenue decreased by 7% year-on-year to US$184.9 million (N$2.6 billion), as a result of a 9% decrease in sales volumes, but partially offset by a 2% increase in the realised sales price. The average realised uranium sales price for the year was US$37.75/lb of U3O8, compared with the average TradeTech weekly spot price for the year of US$33.19/lb.
Taking into account the proposed revised LHM mine plan, Paladin expects to produce between 3.8-million and 4 million pounds of U3O8 in the 2017 financial year, at a C1 cash cost of US$19/lb to US$22/lb.
Paladin, which owns 75% of the LHM, in July announced that it had signed a nonbinding term sheet to sell a 24% stake in the mine to a global nuclear power industry participant for US$175 million. If concluded, Paladin will hold 51% of Langer Heinrich and continue to be the operator of the mine. During the year, Paladin’s Kayelekera mine, in Malawi, remained on care and maintenance, with activities on site focused on the water treatment programme.
MINING WEEKLY
Paladin said the revised mine plan effectively shifted higher-grade ore processing into later years when uranium prices were expected to be higher. For fiscal 2017, the average feed grade will be reduced to between 550 ppm and 570 ppm, from the previous internal company budget of 700 ppm.
The change will reduce finished uranium oxide (U3O8) output by between 1 million and 1.5 million pounds a year over the next two years. However, Paladin said the requirement for less movement of mined material on site during the period reduced cash operating costs more than any lost revenue.
Using Paladin’s internal assumptions, the initiative will generate about US$40 million (N$564 million) of cumulative incremental operating cash flow for the 2017 and 2018 financial years. The proposed LHM mine plan adjustment requires a number of third-party consents and Paladin intends to initiate the plan in a phased approach over the next three months.
FY2016 RESULTS
Paladin Energy has narrowed its net loss for the year ended June 30, to US$122 million (N$1.7 billion), from US$267.8 million (N$3.8 billion) a year earlier, as lower sales were offset by an 11% drop in C1 unit costs.
Core profit, as measured by the company’s earnings before interest, taxes, depreciation and amortisation (Ebitda) came in at US$24.8 million (349.7 million), compared with the underlying loss before interest, taxes, depreciation and amortisation of US$20.9 million (N$294.7 million) a year earlier. Paladin attributed the improved performance to cost reduction initiatives that were implemented during the year.
C1 unit cost of production for the year was at a record low of US$25.88 (N$364.91)/lb. LHM, the company’s only current operating mine, produced 4.76-million pounds of U3O8 for the year, down 5% from 2015.
Sales revenue decreased by 7% year-on-year to US$184.9 million (N$2.6 billion), as a result of a 9% decrease in sales volumes, but partially offset by a 2% increase in the realised sales price. The average realised uranium sales price for the year was US$37.75/lb of U3O8, compared with the average TradeTech weekly spot price for the year of US$33.19/lb.
Taking into account the proposed revised LHM mine plan, Paladin expects to produce between 3.8-million and 4 million pounds of U3O8 in the 2017 financial year, at a C1 cash cost of US$19/lb to US$22/lb.
Paladin, which owns 75% of the LHM, in July announced that it had signed a nonbinding term sheet to sell a 24% stake in the mine to a global nuclear power industry participant for US$175 million. If concluded, Paladin will hold 51% of Langer Heinrich and continue to be the operator of the mine. During the year, Paladin’s Kayelekera mine, in Malawi, remained on care and maintenance, with activities on site focused on the water treatment programme.
MINING WEEKLY
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