Paladin Energy, has announced that the Langer Heinrich uranium mine in Namibia will be placed on care and maintenance. The company reports low uranium prices and cash flow losses as the motivation for the decision.
Paladin Energy (ASX:PDN), has announced that the Langer Heinrich uranium mine in Namibia will be placed on care and maintenance. The company first announced its intentions to halt production at its 75 percent owned mine last month, and has since received stake holder approval to move forward with the halting.
The decision to shutter the mine is a result of low uranium prices and operating cash flow losses, reports Paladin.
According to the press release there will be a three month ‘run-down’ phase where various areas of the project will be progressively suspended and cleaned. During this period there will be continued limited production of finished uranium.
As quoted in the press release:
“The decision to place LHM into care and maintenance was not taken lightly particularly because of its impact on our loyal employees and contractors, and the community in which we operate. However, care and maintenance is the most logical decision to preserve LHM’s valuable uranium resource and mitigate cash flow losses. The company believes the ongoing care and maintenance cost will be sustainable less that then Kayelekera mine in Malawi due to differences in water balance and plant footprint. Furthermore, LHM will likely have a relatively low working capital requirement and short lead-time to resume operations,” the company noted.
Paladin’s own internal analysis suggest that absent external shocks, the uranium market appears set to for normalization over the next few years. Supply curtailments such as the one represented with this announcement together with actions of global peers could serve to accelerate the anticipated market normalization. Being the lowest cost open-pit uranium mine in the world means LHM will likely be one of the first mines to return to production as the uranium market normalizes. As 75 percent owner of LHM and its operator, the company remains uniquely placed to benefit at the time with associated benefits for its stakeholders.