Resource World Magazine

o c t o b e r / n o v e m b e r 2 0 1 4 www.resourceworld.com 41 a u s t r a l i a n u p d at e G r e g B a r n s higher uranium prices bode well for Paladin energy One company that could take advantage of the deal signed on September 9 this year between Australian Prime Minister and his Indian counterpart, Narendra Modi, to allow Australian uranium exports to India is Paladin Energy Ltd. [PDN-TSX, ASX]. The African focused producer is looking to develop projects in Australia and Canada. With India aiming to have 25% of its energy needs met through nuclear power by 2050, companies like Paladin Energy will be looking to develop assets in Australia, where in the past uranium min- ing has been difficult because of strong domestic political opposition. In the meantime, Paladin Energy has been able to weather the difficult, post- Fukushima, operating environment which led to a slump in uranium prices and pro- duction in 2011 and beyond. Uranium prices are, at the time of writing, up over 20% since May this year and are averag- ing US $31.87 in 2014, according to a September 16 Bloomberg report. Paladin Energy's flagship operation is the Langer Heinrich Project in Namibia. It achieved record annual production of 5.59Mlb U 3 O 8 for the last Australian finan- cial year (July 2013 to June 2014). It is a relatively low cost producer and in 2013-14 produced at a rate of US $28.80/lb, which was down 4% on the previous year. Maintenance at the operation is seeing slower production in the first quarter of 2014-15 but the company has reiterated recently its previous forecast production of 5.4Mlb to 5.8Mlb. Earlier this year Paladin Energy announced that the China Uranium Corporation Limited (a subsidiary of China National Nuclear Corporation – CNNC) had paid US $190M for a 25% stake in the Langer Heinrich Mine. The other African mine that Paladin Energy operates is in Malawi. The Kayelekara Project produced 2.35Mlb in 2013-214. It is a more expensive opera- tion. Even accounting for cost reductions of 16% the plant produced at US $35.90/ lb during 2013-14. Kayelekara is now on care and maintenance and it is expected, on resuming production, to produce in the low US $30s/lb. The company says over 50% of the resource remains to be mined. When it comes to Australia, Paladin Energy is focused on the Manygee Project in northwest, Western Australia. It has an indicated mineral resource of 15.7Mlb U 3 O 8 with 10.2Mlb in the inferred cat- egory. The company has said it is looking at a 2018 development target, depending on price, and will look at a 2Mlb per year in-situ recovery (ISR) project. The open- ing of the Indian market for Australian uranium might also get Paladin Energy focusing more heavily on the Manygee Project. In Canada, Paladin Energy is excited by the Michelin deposit in Newfoundland. A successful drilling campaign in March this year saw a 25% increase in the measured and indicated resource which now sits at 84Mlb U 3 O 8 , with 23Mlb in the inferred category. As the global uranium market emerges from a difficult winter, and with greater access to India for Australian uranium, Paladin Energy looks to be in a very rea- sonable position. It's early days, but with Russian sanctions beginning to bite the supply side of the uranium market, the upward pressure on price seems to have some solid underpinnings. n services as well as providing mine training opportunities to Wilp Luuxhon people. One of most challenging aspects of build- ing a mine is financing it. Towards that end, Avanti has made significant headway over the past six months, announcing that it inked a debt financing mandate letter with a syndicate of six lenders for US $612 million to develop the Kitsault Mine. The lenders consist of BNP Paribas, Caterpillar Financial Services Corp., Export Development Canada, Korea Development Bank, Mizuho Bank Ltd. and UniCredit Bank AG. Final credit approval for the facility is expected in September 2014. "We welcome the financial support of our banking partners and we can now focus on advancing equity funding options to complete our $818 million initial con- struction capital requirement for Kitsault," commented Bogden. In June 2013, Avanti signed an off-take deal with Germany-based ThyssenKrupp Metallurgical Products for 50% of total molybdenum production and a molybde- num concentrate processing agreement with Chilean-based Molibdenos y Metales (Molymet). Both agreements are for the mine's life. The company also arranged an addi- tional off-take agreement with SeAH M&S Corp., a large South Korean steel manufac- turer. The deal is based on market prices of molybdenum for up to 20% of the mine's concentrate production over 13 years. The SeAH Group has been a shareholder in Avanti since 2010 and currently owns about 11% of its shares. The last tranches of financing could potentially come from selling some of its silver production, a potential strategic Investor and/or common share issue to current and new institutional and retail shareholders. After achieving a series of major project financing and permitting milestones, Avanti is now closer to its goal of resuming mining at Kitsault. n

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