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Australian uranium miner Paladin in a poor situation, battles to survive

Paladin-thumbWeak uranium price hurts Paladin Nick Sas, The West AustralianNovember 15, 2013, Paladin Energy has underscored the enormity of its battle for survival, admitting its African uranium mines lost $US14.9 million ($15.9 million) in the September quarter despite record production.

As shareholders prepare to quiz long-standing managing director John Borshoff at the company’s annual meeting in Perth next week, Paladin last night released its financial and operating report for the three months to September 30 detailing the pain caused by the depressed uranium price.

The gross loss on operations was the result of a 17 per cent slump in quarter-on-quarter uranium price and a resulting impairment of uranium inventory at the Kayelekera mine in Namibia, more than offsetting a 37 per cent jump in sales volumes.

It was the first time in more than five years that Paladin has not reported a gross profit for the September quarter, despite a period that included bringing the company’s second mine, Kayelekera, into production to add to output from Langer Heinrich in Namibia.

The weak September quarter came despite record production at Langer Heinrich – leading to a record group output – and continued cash cost reductions.

Production at Kayelekera fell by 9 per cent. Although Paladin receives a premium over the market-traded spot price courtesy of long-standing contracts with suppliers, a yellowcake price sitting at historical lows has now pushed it over the brink of profitability.

Over the quarter Paladin received an average of $US41.38 a pound U _{-3} _

O{-8} – down from $46.22/lb in the June quarter. The average spot price over the quarter was $US36/lb – a historical low.

The gross loss for the quarter including impairments was $US40 million. It adds to the $US420.9 million loss reported during the 2012-13 financial year, largely because of big writedowns on the value of its assets.

Paladin celebrated its 20-year anniversary earlier this year but the pressures surrounding the uranium price, mounting debt and a free-falling share price have been no cause for celebration. Paladin’s shares, at 40¢, are worth less than half of the 91.5¢ they commanded on the eve of last year’s annual meeting.

Paladin has $US276 million in unsecured convertible bonds maturing in late 2015, and a further $US236.6 million falling due 18 months later, fanning fears about its ability to generate cash to repay its debt.

Shareholders are likely to vent their disappointment at Thursday’s meeting. The Australian Shareholders’ Association wants chairman Rick Crabb to retire.

November 15, 2013 - Posted by | AUSTRALIA, business and costs

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