21/07/2016 - 12:26

Paladin to raise $275m from project sales

21/07/2016 - 12:26


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Paladin to raise $275m from project sales
Paladin's flagship Langer Heinrich uranium mine in Nambia

Debt-laden uranium miner Paladin Energy has struck agreements to sell an interest in two of its projects, with total proceeds expected to be $US205 million ($A275 million).

It has signed a non-binding term sheet to sell a 24 per cent stake in its flagship Langer Heinrich uranium mine in Nambia, to an unnamed major participant in the global nuclear power industry.

Today’s announcement comes two years after Paladin finalised the sale of a 25 per cent stake in Langer Heinrich to China National Nuclear Corporation for $US190 million.

The asset sales are designed to help Paladin reduce its high debt levels, which have been a burden during a prolonged period of weak uranium prices.

The Subiaco-based company has also been focused on cost reductions at Langer Heinrich, while its Kayelekera mine in Malawi has been placed on care and maintenance.

Under new chief executive Alexander Molyneux, the company has been cautious in its commentary on the uranium market.

In its June quarter report, released earlier this week, it said the Japanese and US nuclear power markets provided conflicting signals in terms of demand growth, whereas growth in emerging markets such as China and India continued unabated.

It added that global uranium production will be lower than had been expected, with Cameco and Sibanye Gold cutting output.

Paladin said it would continue to hold 51 per cent of the Langer Heinrich mine on completion of the latest transaction, which is set to deliver $US175 million in cash.

It will also be accompanied by long-term off-take arrangements.

Paladin said it is working towards a financial close of the transaction by the end of 2016.  

Separately, Paladin has struck a binding deal with Sydney-based MGT Resources to sell up to 75 per cent of the Manyingee project in northern Western Australia.

MGT will pay $US10 million for an initial 30 per cent interest in Manyingee and will form a joint venture over the project with Paladin.

It will then have an option to acquire an additional 45 per cent for $US20 million cash.

Under the agreement, Paladin and MGT will issue options to each other to subscribe for new shares.

If the options are exercised, Paladin will own 10 per cent of MGT while MGT will own 4 per cent of the miner.   

Paladin’s share price fell 11 per cent today to 21.2 cents, after rallying over the past week from recent lows of 18.5 cents.


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