Paladin Energy warning sparks uranium stock rout
Paladin Energy sparked a sell-off in uranium stocks on Monday after warning of operational challenges at its flagship Langer Heinrich Mine in Namibia.
Paladin Energy sparked a sell-off in uranium stocks on Monday after warning of operational challenges at is flagship Langer Heinrich Mine in Namibia.
ASX-listed Paladin fell 15.3 per cent to $10.36 after its latest quarterly report revealed operational issues at the mine, which restarted production in February.
Paladin said the short-term challenges were affecting ore feed, recovery rates and production volumes. Other uranium stocks declined, including Boss Energy, down 5.8 per cent at $3.41, and Bannerman Energy, which dropped 3.2 per cent to $3.07.
Paladin chief executive Ian Purdy said production at the Langer Heinrich Mine in the second quarter encountered process recovery and efficiency challenges.
A planned shutdown, which will allow for operational upgrades to be implemented, is scheduled for next month and is expected to run for about two weeks.
The mine is in central western Namibia about 80km east of Swakopmund and 85km northeast of the Walvis Bay major deepwater harbour.
“The onsite team have commenced the implementation of operational and process design improvements, which delivered improved performance towards the end of the quarter,” Mr Purdy said. He said that, with the large-scale uranium mine back in production, a world-class contract book and a positive outlook for future uranium pricing, Paladin was well-positioned to deliver continued shareholder returns.
“Our global clean-energy customers have commenced receiving and processing our product, with Paladin now delivering on its mission to resource a carbon-free future,” he said.
Paladin said its planned $1.25bn takeover of Canada’s Fission Uranium, in a friendly all-scrip deal, continued to face challenges. It said it had received a notice from the Canadian Minister of Innovation, Science and Industry ordering a national security review of the proposed deal.
Paladin said that in, light of the review, “there can be no certainty that Paladin” would be able to obtain clearance in a timely manner or at all. Failure to obtain clearance would prevent the deal from being successfully completed. Paladin said it would continue to keep the market informed of all material developments.
The deal would open up the Canadian development as its second production hub and could propel it into being the second-largest uranium producer listed on a Western market.
Uranium stocks have rallied over the past year as more countries put nuclear reactors on the development agenda, and potential shortages emerge as a result of long-running lack of investment in new mines, exacerbated by Russia’s invasion of Ukraine.
Spot prices for uranium oxide nudged over $US90 a pound earlier this year, more than triple its level five years ago. In June the US banned the import of Russian-sourced fuel for its own nuclear reactor fleet, with President Joe Biden announcing a $US2.7bn support package to reinvigorate the US’s uranium mining sector.
When fully ramped up, Langer Heinrich will produce about 6 million pounds of uranium oxide each year, and Mr Purdy said the mine’s production was fully contracted to major utilities.
“We’ve got the five largest nuclear entities in the US. We’ve got three of the largest in Europe, and we’ve got the largest in China. So our business is underpinned by the biggest utilities in the world,” Mr Purdy said earlier this year.
Paladin said it continued to manage its significant exploration portfolio in Australia and Canada. It holds a 100 per cent interest in the Michelin project in the premier mining jurisdiction of Newfoundland and Labrador, Canada. It would continue to leverage strong market conditions while retaining substantial exposure to the uncapped market price.
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