Paladin Energy: Update and Confirmation

Date : 11/20/2012 @ 8:00AM
Source : Marketwired
Stock : (PDN)
Quote : 0.045  0.0 (0.00%) @ 2:07AM
Paladin Energy Ltd share price Chart

Paladin Energy: Update and Confirmation

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

Contacts: Paladin Energy Ltd John Borshoff Managing Director/CEO +61-8-9381-4366 or Mobile: +61-419-912-571 +61 (8) 9381 4978 (FAX) Paladin Energy Ltd Greg Taylor Investor Relations Contact +1 905 337-7673 or Mobile: +1 416-605-5120 (Toronto)

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