Paladin lowers guidance after tough quarter

Paladin Energy has lowered its full-year guidance after quarterly production came in around 10 per cent below analyst expectations, the result of bottlenecking issues at its Langer Heinrich uranium mine in Namibia.

Paladin today reported production of 1.77 million pounds of uranium over the March quarter, well down on estimates from Patersons Securities, which forecast production of 1.96 million pounds.

The company said it recorded sales of 1.14 million pounds of uranium, at an average price of $US59.17/lb.

Paladin said it expected financial year 2012 production to be around 2 per cent below its previous guidance of 7.1 million lbs due to the issues at Langer Henrich and testing at its Kayelekera mine.

Patersons put a sell rating on Paladin earlier this month, citing concerns with the company’s high debt levels.

The stockbroker today said Paladin’s high debts, circa $800 million, remained its biggest concern.

“While we believe Paladin could operationally outperform over the next couple of quarters, the issue remains at current uranium prices that Paladin does not make sufficient cash flows to pay out its convertible note,” Patersons said.

“On a positive note, Paladin is seeking a minority joint venture of its non-producing uranium assets which could improve its financial position and flexibility.”

Paladin today reported  strong interest from “parties in the nuclear industry to engage in long-term relationships.”

At close of trade, Paladin stocks were down 2 per cent, trading at $1.77.