Langer Heinrich mine to restart

ASX-listed Paladin Energy, the majority shareholder in Langer Heinrich uranium mine (LHM) in Erongo, on Tuesday announced its decision to to return the mine that has been in a state of care an maintenance since 2018, to production.

Due to the pressure of poor global uranium prices, the mine ceased production in May 2018 and more than 300 workers were retrenched. The Australian mining company stated that its board has made the decision to return LHM to production with first volumes targeted for the first quarter of 2024. “With the strength of the company’s uranium offtakes and the continuing strong uranium market fundamentals, Paladin has made the decision to return the globally significant Langer Heinrich Uranium Mine to production. The Langer Heinrich Mine remains a low risk, robust, long-life operation that is poised to take advantage of the improving uranium market conditions and deliver sustainable value creation for all our stakeholders," said Paladin CEO Ian Purdy.

According to Purdy the decision to restart production at the LHM is supported by strong uranium market fundamentals and continued progress on uranium marketing activities including the execution of a binding contract for the tender award announced in March. This award entailed an offer to supply uranium concentrates to a subsidiary of Duke Energy, a leading Fortune 150 North American power utility and was an important step forward in returning LHM to production.

Purdy said that the increase in the capital required to restart operations reflects a combination of recent inflationary pressures and the bringing forward of key work packages to ensure the long term reliable supply of power and water to site.

Engineering, procurement, and construction contractor ADP Group was appointed by Paladin to restart the mine. The restart scope of work will focus on general repairs and refurbishment required to return the existing process plant to operational readiness, coupled with the delivery of process upgrades to increase throughput capacity and operational availability.

There will also be a mobilisation of the project workforce, which is "well advanced" with current activities focused on detailed engineering and design for process upgrades, material and equipment purchasing and the preparation for the commencement of construction works, according to the announcement statement.

Total project capital expenditure has increased to about N$1,87 billion on a 100% project basis, primarily driven by recent inflationary pressures across the project supply chain, brought forward power and water infrastructure works and increased owners team costs. The bringing forward of key utility infrastructure work packages to ensure the stable and reliable provision of water and power over the 17-year life of operations.

Paladin has committed to provide 100% project funding, if required, via priority loans to be repaid in priority to all outstanding shareholder loans. The Langer Heinrich Mine’s minority shareholder, CNNC Overseas Uranium Holding Limited (25% ownership), are yet to finalise their funding decision. "With N$2,8 billion in unrestricted cash as at 30 June, Paladin is well positioned to deliver first production from the LHM, pursue further uranium marketing activities and advance the global exploration portfolio," the company stated.

In his recent state of the region address, Erongo governor Neville Andre said that in spite of the Covid-19 pandemic experienced over the last two years, uranium exploration and mining continued to produce strong results and additional assets. The uranium spot price started a steep increase to above US$50 (N$792) in September 2021. It has since retreated to the current US$ 45.50 (N$720). "This price is still too low for the development of many projects. It is, nevertheless, hoped that what we are experiencing is a typical breakout price action, with a number of retracements before the resumption of the uptrend," the governor said.