Paladin Energy, a uranium firm based in Australia, revealed intentions on Thursday to fund A$215 million to reopen the Langer Heinrich uranium mine in Namibia.
The equity offering will consist of a single tranche fully underwritten share placement worth A$200 million and a non-underwritten share purchase plan (SPP) worth up to A$15 million that will be available to qualifying Paladin shareholders with registered addresses in Australia or New Zealand.
The new shares will be sold for 72c each, reflecting an 8.9% discount to Paladin’s most recent closing price.
Paladin told shareholders that proceeds from the equity raised will be used to restart the Langer Heinrich mine, with a return to production planned for 2024.
Restart costs for the operation have previously been estimated at $81-million, with the project’s life-of-mine production estimated at 77.4-million pounds over a 17-year miner life, at an estimated C1 cost of $27.40/lb.
Execution time for the restart project is 18 months from commencement to first production, with full production to be achieved within a further 15 months.
Paladin told shareholders on Thursday that the restart of production at Langer Heinrich has been supported by a successful uranium marketing strategy, which included the company announcing a uranium sales tender award for an offer to supply uranium concentrates to a subsidiary of Duke Energy, a leading Fortune 150 North American power utility.
The Tender Award contemplates the supply of 2.1-million pounds of uranium oxide to the utility over a six-year period starting in 2024, representing 5% of total production over this period. The parties would have the option to extend these yearly supply arrangements for another three years.
Paladin said that the Tender Award was consistent with the company’s uranium marketing strategy of securing contracts with industry-leading counterparties. The company has an existing offtake agreement with CNNC Overseas Uranium Holding for up to 25% of the Langer Heinrich future life-of-mine production, using a spot-market pricing mechanism.
“With the strength of the company’s existing uranium sales offtake with CNNC combined with the recent successful Tender Award and the continuing strong uranium market fundamentals, Paladin can now confidently work towards a formal commencement of the Langer Heinrich mine restart project,” said CEO Ian Purdy.
“The extensive workstreams we have conducted reinforce our confidence in Langer Heinrich as a low risk, robust, long-life operation that is poised to take advantage of the improving uranium market conditions and deliver sustainable value creation for all of our stakeholders.”