Paladin Energy preparing for uranium turnaround with rapid production restart planned

Uranium producer Paladin Energy (ASX: PDN) is preparing for a rapid restart of their Langer Heinrich uranium mine. The Company has recently completed a new feasibility study, accounting for improved production capacities which has significantly lowered the cost of production compared to 2018 when the mine was last in operation. 

Intending to capitalise on a uranium market resurgence, Paladin has completed the first phase of its rapid restart feasibility study where its existing production facility could give the Company first-mover advantage when the price of uranium surpasses $30/lb. 

“Achieving production of over 5Mlb pa at a cost of under US$30/lb AISC and with a 12-month lead time on execution, were key targets of the board and executive team and will see Langer Heinrich in an enviable position when uranium prices recover,” said Paladin Energy CEO, Scott Sullivan. 

“This study continues to demonstrate the high quality and potential of the asset and provides a solid foundation for a confident and successful restart.” 

A restart of the Paladin’s Langer Heinrich mine in Namibia would cost US$80M in capital which would bring the mine back online, producing ~5.2Mlb per annum, after the 12-month restart lead time. 

Langer Heinrich has previously produced over 43.3Mlb in Namibia over its ten-year operating history where the country has a well-established uranium mining sector.

The study also identified an opportunity for Paladin to increase production to 6.5Mlb pa for an additional $30m capital expense which would bring Paladin’s cost of production down from $33/lb to $29/lb. 

Following the 2011 nuclear disaster at Fukushima, the global uranium market has lay dormant with nuclear reactors being shut down and impacting the global demand in the energy source. 

This saw the price of uranium fall from levels around $70/lb in 2011, to lows of $18/lb in 2017. 

As reactors have continued to come back online, the spot price of uranium is now stable around $25/lb with the World Nuclear Association reporting there to be 444 nuclear reactors operating globally and a further 54 under construction. 

Paladin Energy anticipates the final phase of this rapid restart feasibility study to be completed in March 2020.