Langer Heinrich Production Surpasses Target in First Quarter

PRODUCTION at Paladin Energy’s Langer Heinrich reached 632 tonnes of uranium oxide in the quarter ended 31 March. The production was four percent above target, Paladin said in a quarterly report yesterday.

Water supply to the mine in the Erongo Region has improved after all operating mines in the area, including Langer Heinrich, are now obtaining the majority of their water supplies under a water supply agreement executed with NamWater in November 2013, using marine desalinated water from existing infrastructure.

Paladin said since the agreement was signed the mine has been receiving a reliable and secure water supply.

ENTER THE CHINESE

On 20 January, Paladin announced that it had signed an agreement to sell a 25% joint venture equity stake in Langer Heinrich to China Uranium Corporation Limited, a wholly owned subsidiary of CNNC, the leading Chinese nuclear utility, for consideration of US$190 million.

The off take component of the agreement will allow CNNC to purchase its pro rata share of product at the prevailing market spot price.

Paladin said there is also an opportunity for Paladin to benefit by securing additional long term off-take arrangements with CNNC, at arm’s length market rates, from Paladin’s share of Langer Heinrich production.

“Completion is now subject only to certain Chinese regulatory approvals, which are expected to be obtained by June 2014. Consents for the transaction from Paladin’s project financiers and the Bank of Namibia have been received and as a consequence on 16 April 2014 the US$20 million deposit paid by CNNC has been released from escrow to Paladin and is non-refundable,” Paladin said.

Paladin says securing CNNC as a joint venture partner is considered a significant achievement by Paladin given CNNC’s stature and high regard in China and internationally due to its ability to develop, build and operate nuclear power plants.

“Having this highly respected member of the Chinese nuclear power industry participating in Langer Heinrich is a very important and positive development for both the Company and for Namibia,” the company said.

URANIUM PRICE

The spot uranium price was reported at US$34,50 per pound at the beginning of the quarter before rising to US$35,75 per pound in mid February. The price retreated to US$34 per pound by the end of March.

Paladin believes that increasing term contracting will strengthen the term price as the year progresses and additional term demand enters the market.

On 11 April, the Japanese government approved a new energy policy, which incorporates nuclear as an important base load energy source.

In another important development, after extensive debate and numerous drafts, the European Commission on 9 April adopted, in principle, the new rules designed to replace subsidies for renewables with market based schemes. The rules will take effect from 1 July and from 2017 all member states will be required to adopt the new process, following a pilot phase during 2015 to 16.

“These new rules are seen as being supportive of nuclear generation development due to the introduction of market realities into renewable generation economics,” Paladin said.

Source : The Namibian