Ann: Positive Evaluation of Borehole Mining - Han, page-19

re: Ann: Positive Evaluation of Borehole Mini... Hi Swiss

With a production cost of $27/pound we could end up being

a more efficient enterprise than Paladin Energy.





Paladain Energy Report:

Cash Cost of Sales (C1 cost)(1):

- Overall C1 cost for the six months ended December 2011 increased to US$34/lb from US$31/lb in 2010 as a
result of a higher proportion of sales from the Kayelekera Mine as production at that mine continues to ramp
up to design levels.

- Overall C1 cost for quarter ended December 2011 decreased to US$32/lb U3O8 from US$35/lb U3O8 for the
September 2011 quarter reflecting a higher proportion of lower cost Langer Heinrich Mine sales.

- Langer Heinrich Mine C1 cost for quarter ended December 2011 decreased to US$31/lb U3O8 from US$32/lb
U3O8 for the September 2011 quarter due to the effects of the lower Namibian dollar. With increased
production from the ramp-up towards Stage 3 production levels, cost of production has reduced. This lower
cost is expected to reflect in cost of sales in future results. FY12 target of US$28/lb remains unchanged.

- Kayelekera Mine C1 cost for the quarter ended December 2011 increased from US$40/lb in the quarter
ended September 2011 to US$46/lb in the quarter ended December 2011.



(1) Cash cost of sales (C1 cost) = cost of sales excluding product distribution costs, sales royalties and depreciation and amortisation.