Shares in West Perth-based Hylea Metals were up 592 per cent today after the junior announced it acquired a 65 per cent stake in Paladin Energy’s Kayelekera uranium mine in Malawi.
Shares in West Perth-based Hylea Metals were up 592 per cent today after the junior announced it acquired a 65 per cent stake in Paladin Energy’s Kayelekera uranium mine in Malawi.
Under the deal, Paladin Energy will sell its 85 per cent stake in Kayelekera, but Hylea will obtain 65 per cent initially, with the remaining 20 per cent to be owned by the company’s joint venture partner, Chichewa.
Investors welcomed the news as Hylea’s shares touched up to 9 cents today, compared with its previous close of 1.3 cents each.
Under the deal, Hylea will pay Paladin $1.8 million in shares upfront, and a further $3 million worth of its shares on the third anniversary of the deal’s completion.
Paladin will receive a royalty of 3.5 per cent of gross returns at the Kayelekera mine, up to a maximum of $5 million.
Hylea will also pay $US10 million in an environmental bond, which will be paid over three years.
Paladin spent over $US200 million on plant and infrastructure at the Kayelekera project.
The mine began production in 2009 and was placed on care and maintenance in 2014, following the freefall of the uranium price after the Fukushima Nuclear Disaster.
Hylea managing director Simon Andrew said the acquisition of the 65 per cent was a great opportunity.
“Kayelekera is a world class uranium asset that has produced over 10.9 million pounds of uranium and represents an opportunity to use the past production information to re-engineer certain mining and processing processes in order to reduce the overall capex and opex of the operations,” he said.
“We are optimistic about the global uranium market and the outlook for firmer pricing.”
Paladin chief executive Scott Sullivan said the sale of its stake would allow it to prioritise its capital and other resources on restarting its Langer Heinrich mine in Namibia.
“The sale is a positive result that will enable Paladin to focus all of its resources on restarting our flagship asset Langer Heinrich by releasing restricted cash resources of approximately $US10 million and realising significant care and maintenance cost savings of approximately $US5 million per annum,” he said.
Hylea has exploration projects in Western Australia and NSW, encompassing gold, cobalt, iron ore and base metals.
Shares in Paladin were down 7.7 per cent to trade at 12 cents each.
