Paladin Energy Ltd ("Paladin" or "the Company") (TSX:PDN)(ASX:PDN) today notes that on Tuesday 13 November Paladin management provided an investor update on its conference call presenting the Company's September quarterly activities and financial results.
Since that presentation and conference call, Paladin has received numerous enquiries from its investor base seeking confirmation and clarification on the key matters of this update and questioning if there are any further issues that could be influencing the share price decline that has occurred post what has in effect been a quarter of positive achievements for the Company. To reiterate:-
1. Production: The mining operations at both Langer Heinrich Mine (LHM) and
Kayelekera Mine (KM) are going well, have definitely reached design
targets and are essentially de-risked producing at or very near
nameplate. Post quarter LHM has produced 10% above design and KM is at
96% of design. The production guidance given for FY13 of 8Mlb to 8.5Mlb
2. Cost Cutting and Optimisation of Production: The cost cutting targets
have been identified and announced to the market. This cost
rationalisation programme has been part initiated and already
benefitting with reduced cash outflows. Some of the production
optimisation programmes have also been included for integration and
along with cost cutting measures, over FY13 and FY14 substantial cost
reduction outcomes of 15% minimum for LHM and 22% for KM can be
achieved. Additional cost benefits are expected when all production
optimisation programmes are implemented.
3. Debt Management: During the quarter the strategic initiative efforts
resulted in the announcement of the Long Term Contract finalised with
Electricite de France (the largest nuclear utility in the world),
incorporating a break-through US$200M prepayment. The remaining US$150M
payment, which is unconditional, is due to be received at the end of
January and will be used to pay the balance of the US$134M remaining on
the original US$300M March 2013 convertible bonds.
4. Uranium Price Outlook: The uranium spot price (the "Ux U3O8 price")
recently declined to US$40.75/lb, its lowest weekly level since March
2010, but has since strengthened to $41.25/lb. Paladin believes the
current spot price is a result of a near term market imbalances with
industry expectation that this price level can reasonably be anticipated
to recover to the mid to high 40's over the next several months. Based
on detailed market analysis by Paladin management and supported by
increasing commentary from other primary uranium producers and industry
analysts, a movement in the mid-term of the uranium price to the US$75
to US$80/lb region is expected and required to incentivise essential
overall supply growth which is, due to current price levels, completely
on hold. It should be noted that because of its blend of term price and
fixed price contracts, together with spot sales, Paladin is likely to
achieve average sales prices about 10-15% above the prevailing average
uranium spot price in the current market.
5. Debt Covenants: The Company is in full compliance with all covenants
applying to its project financing and convertible bond funding. There
are no covenants relating to Paladin's market capitalisation so the
recent decline in the Company's market capitalisation has no impact
whatsoever on these debt facilities.
6. Continued Disclosure Compliance: Paladin remains in full compliance with
continuous disclosure obligations under the Australian and the Toronto
stock exchange rules.
7. Managing Director Selling Paladin Shares: It was noted this was done
with Board approval (although not in a blackout period in any event),
selling at this time because of the extremely narrow windows the CEO has
available and stating this was the first time since inception of the
Company in 1994 that he has parted with some of his shares. This was
done for personal reasons and I am sure this does not at all change the
confidence he has for the future of Paladin.
As stated, the Paladin Board and management believe the Company is ticking all the boxes across the whole range of its activities and with its cost cutting measures will make the Company more sustainable even at low prices. This strengthening of the Company will enable it to be in full readiness to take advantage when the uranium price makes its expected recovery.
ACN 061 681 098
Paladin Energy Ltd
+61-8-9381-4366 or Mobile: +61-419-912-571
+61 (8) 9381 4978 (FAX)firstname.lastname@example.org
Paladin Energy Ltd
Investor Relations Contact
+1 905 337-7673 or Mobile: +1 416-605-5120 (Toronto)email@example.com