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Paladin lifts Q3 uranium output as Langer Heinrich output rises, costs fall

Despite Australia-based uranium producer Paladin Energy lifting saleable uranium output by 16% in the quarter ended September 30, it missed its sales guidance by 50 000 lbs of uranium oxide (U3O8), citing a re-timing of sales negatively influencing results.

Total sales for the quarter amounted to 600 000 lbs U3O8, compared with the guidance of between 650 000 lbs and 750 000 lbs U3O8, at an average selling price of $25.19/lb. This resulted in gross sales revenue of $15.1-million.

Paladin also noted recently that sales volumes were impacted by its stockpiling of volumes of uranium since June for a major delivery to client CNNC, as well as other contracts in December.

As a result, Paladin expects higher sales volumes for the December quarter, in the range of 1.4-million pounds U3O8 to 1.6-million pounds of the yellow cake. Paladin said it succeeded in pricing most of the December deliveries in a range of $27/lb to $28/lb, beating current spot prices, which averaged $25.33/lb for the September quarter.

The company reported C1 cash costs at its Langer Heinrich mine (LHM), in Namibia, falling nearly 40% to a record low of $16.45/lb in the September quarter, boosted by strong operating performance and the impact of a $168.9-million writedown of LHM’s ore stockpiles at the end of June.

Despite mill throughput rising 13% quarter-on-quarter to 949 906 t, Paladin expects to implement a reduced mining plan in the current quarter. LHM will reduce mining material movement, combined with processing plant feed coming from stockpiled low- and medium-grade ores. According to Paladin, the mine plan adjustment has been designed to improve LHM operating cash flows for a period of two to three years.

Paladin stated that plans to sell a 24% interest in LHM for $175-million and the sale of an interest in the early-stage Australia-based Manyingee project to MGT continue to progress in the documentation stage. The company said it intended to use funds received from the strategic initiatives, together with existing cash reserves, to fully repay the $212-milllion outstanding amount of the convertible bonds due April 2017.

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