Paladin Energy Lies in Wait for Uranium Price Bounce

Uranium-focused Paladin Energy (ASX:PDN,OTC Pink:PALAF) has described its past financial year as a formative one. With no assets currently producing, the miner is waiting to take advantage of a resurgent uranium market.

Of its formerly operational assets, Paladin’s Langer Heinrich uranium mine in Namibia was placed on care and maintenance in August 2018, while its Kayelekera mine in Malawi was sold in June 2019.

In a letter preceding the company’s 2019 financial report, Chairman Rick Crabb said, “Paladin Energy is recognized as being uniquely placed within the ranks of listed uranium-focused companies, to benefit from the expected substantial increase in the uranium price.” 

“The timing of such increase however, still remains elusive due to a number of factors known and some unknowns given a degree of opaqueness in this market,” he added.

Looking at some numbers, Paladin processed no ore in the 2019 financial year, leading to a 71 percent fall in revenue from sales of uranium oxide from the previous year, with the company posting revenues of only US$21 million.

The company paid no dividends and posted a loss after tax of over US$30 million compared to US$367 million in profits in the previous financial year.

The company remains upbeat about the potential of the market, but CEO Scott Sullivan pointed to a lack of a clear outcome from the US Department of Commerce’s Section 232 investigation into uranium exports as a drag on the uranium price.

A three-month Nuclear Fuel Cycle Review was initiated, and as a result some uncertainty still exists in the market and utilities continue to remain out of the term market compared to historical levels.

“Whilst primary production has continued to be short of forecast growth, the uranium price recovery has retracted and temporarily stalled in the shadow of this market uncertainty,” he said.

“Notwithstanding, market restructuring has continued with conversion and particularly enrichment seeing notable price increases during the first half of 2019. We believe that these improvements will feed across into the uranium market once the outcome of the Nuclear Fuel Cycle Review has been announced and its impact absorbed by the industry during the course of FY20.” 

Paladin continues to work on a Heinrich Langer restart prefeasibility study.

On the ASX, Paladin Energy was trading up by a modest 3.85 percent on Tuesday (August 27), at AU$0.135.

Don’t forget to follow us @INN_Resource for real-time updates!

Securities Disclosure: I, Scott Tibballs, hold no direct investment interest in any company mentioned in this article.