More purchasers pounce on Paladin uranium Friday, 24 August...

More purchasers pounce on Paladin uranium Friday, 24 August 2012
Brooke Showers

PROVING uranium still holds a valuable spot in the commodity supply chain, Paladin Energy has struck another two offtake agreements for uranium oxide from its African mining operations and expects more offtake partners are on the horizon.

Paldain has bedded down mid-term agreements worth an undisclosed sum with an undisclosed offtake partner for uranium oxide from its mining operations at Langer Heinrich in Namibia and Kayelekera in Malawi.

The agreements are for the purchase of a total of 6.3 million pounds uranium oxide to be delivered from late 2012 to the end of 2015 at about 2Mlb per annum.

Paladin said pricing would be determined predominantly by the market price at the time of delivery while a minority portion of the delivery prices will be in accordance with series of specified fixed prices which exceed current spot uranium prices.

Just last week, Paladin secured a $US200 million ($A191 million) six-year offtake contract with an unnamed “major utility” to deliver 13.7Mlb of uranium oxide between 2019 and 2024.

There are further uranium offtake arrangements in the pipeline as the company remained confident of increasing future uranium demand, despite Fukushima and some uranium projects in Australia withdrawing development investment.

“There are a number of tenders out at present and we are putting in for those,” a Paladin spokesperson told MiningNews.net this morning.

“We know the potential with the US coming back into the market later this year, which is substantial because they are usually a short term contract, compared to Asian and European contracts usually being longer term.

“There are other Asian partners out there looking too.”

The growing number of contracts has been positive for the company, which says demand is full steam ahead.

“It’s positive in the sense that what we are seeing in the market is relatively no new projects coming on line before 2015,” the spokesperson said.

“This puts roughly 25Mlb of supply into a market that currently absorbs about 167Mlb.

“You’ve got a very faltering supply side, particularly from the next year onwards.

“We’re forecasting a real deficit of supply around 2014 to 2016.

“This contract is actually putting us in that period where there is a tightening of supply, so for us, it’s quite a substantial volume and it comes at a very timely point.”

In terms of the broader picture, Paladins said the latest two agreements were another example of the market absorbing the available supply of uranium for that period as well.

Paladin shares fell slightly by 0.7% to $1.41 this morning.