Reason for July 17 Drop

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Paladin Energy shares fall as uranium mine grades decline

The Australian July 17, 2015 12:00AM Paul Garvey Resources Reporter Perth

Paladin dives as grades decline The uranium price has been in the doldrums since the 2011 Fukushima nuclear power plant disaster in Japan Source: Supplied Shares in uranium miner Paladin Energy have fallen back towards their lowest level in a decade after a drop in uranium grades at its flagship Langer Heinrich mine in Namibia. Paladins latest quarterly report yesterday showed that the uranium grade at the mine had averaged 792 parts per million during the quarter, down from 928 parts per million in December. The companys share price fell by 6 per cent to 23.5c in the wake of the result, putting it within a whisker of its lowest level since 2005. Paladin managing director John Borshoff said he was frustrated by the markets focus on the grade at Langer Heinrich, noting that the company was continuing to lower its costs and maintain its output despite the drop. Costs are still going lower even as the grades go lower, he said. Weve been bringing in technology that is groundbreaking. Weve got our unit cost of production down. Were continuing to cut costs both in corporate and operations, and were preserving our orebody. Paladin said it had recorded $US73.3m in sales for the quarter at an average price of $US41.50 a pound. The uranium price has been in the doldrums since the 2011 Fukushima nuclear power plant disaster in Japan, and has struggled to recover despite widespread expectations from the uranium industry of looming supply shortfalls. Mr Borshoff said the recent news that the Rio Tinto-controlled Energy Resources Australia would not go ahead with a study to expand the life of its Ranger uranium mine in the Northern Territory was another sign that the malaise in uranium could soon be over. These stalwarts (ERA and Rio) are now potentially at risk; how unsettling is that for a consumer? Mr Borshoff said. These are fundamental step-changers that havent played out fully. All of a sudden theres a big risk about whats going to happen. All of that conspires to make the supply situation even more intriguing. The company said it expected to produce between 5 and 5.4 million pounds of yellowcake in 2016, compared to the 5.04m lbs produced in 2015.