AN emerging worldwide shortage of uranium has thrust West Australian junior explorer, Paladin Resources into the international nuclear energy spotlight and also sent its share price soaring.
AN emerging worldwide shortage of uranium has thrust West Australian junior explorer, Paladin Resources into the international nuclear energy spotlight and also sent its share price soaring.
The Subiaco-based junior holds four uranium deposits in Australia and Africa, the most developed of which is its flagship Langer Heinrich deposit in Africa, that it hopes to be producing from in 2006.
Paladin says it holds enough uranium to place it in the top five producers in the world, a significant position considering the state of global nuclear energy.
According to the World Nuclear Association a significant shortage of uranium exists which has pushed uranium prices to seven-year highs of more than $16.50 a pound.
Paladin managing director John Borshoff (pictured below) tips this to go higher, citing both the developing and developed world’s increasing reliance on nuclear generated electricity.
The WNA says production from uranium mines, even supplemented by ex-military material, only supplies half of the requirements of the world’s power utilities and will need to expand significantly after 2005.
The market’s realisation of an emerging worldwide uranium shortage has fuelled Paladin’s share price rise in recent months – driving it from below 2 cents last September to 16 cents a few weeks ago.
Mr Borshoff, started exploring for uranium in Australia more than 20 years ago with German mining group Uranerz.
After Uranerz pulled out of Australia he bought the group’s assets, including unique proprietary databases, and subsequently listed Paladin Resources on the Australian Stock Exchange in 1993.
Mr Borshoff said Paladin had retained a strong uranium focus during its 11-year history despite significant fluctuations in the uranium price and distrust of the commodity in Australia.
During that time the company has amassed gold and other base metals projects and an interest in a biotech company.
Paladin recently spun-off its gold assets into the successful Marengo Mining float.
Mr Borshoff said the company’s patience had paid off.
“Now we are finding of about eight juniors Paladin is the only one with an advanced portfolio of projects. All the rest are exploration plays,” he said.
“There is simply no capacity left in the existing mines so new mines have to be brought on stream.”
Mr Borshoff said the company stayed focused despite significant depressions in the uranium price, which reduced the amount of producers from 50 down to about five. He said during that time the company diversified its interests and managed to obtain the company maker Langer Heinrich deposit for just $15,000 from Acclaim Uranium (now Aztec Resources).
Langer Heinrich was discovered almost 20 years ago by Gencor and, although of lower grade, production of 1,000 tonnes an annum according to Shaw Stockbroking generates a tidy net present value (pre tax and finance) sum of $72 million.
Following a loan of $2 million from the Australian branch of French bank Societe General, Paladin last month commenced a bankable feasibility study on the Langer Heinrich.
Paladin has also signed a letter of intent with a major international trading house to take a significant portion of the Langer Heinrich production.
Mr Borshoff said the company now had a big chance to maximise the viability of the project.
Adding to the project’s attraction is its close proximity to the 68 per cent Rio Tinto owned Rossing Uranium mine, which is one of the world’s biggest producers of uranium.
However, Rio is looking to close Rossing, a major employer in the region, before 2007 and Mr Borshoff said the Namibian government was keen to see uranium mining continue in the country.
Paladin’s also owns a second uranium deposit in Africa, the 90 per cent owned Kaylelekera in Malawi and two projects in WA; Manyingee and Oobagooma.
While Mr Borshoff was confident of the short-term viability of the Kaylelekera deposit, he said the Australian deposits were long-term holdings.
He said he did believe the WA Government’s policy of no uranium mining would never change.
Despite being the world’s leading uranium producer, Australia has had a somewhat chequered past in relation to uranium, forcing Paladin to diversify outside of Australia.
