PERTH (miningweekly.com) – Uranium miner Paladin Energy on Thursday announced that it was unlikely to resume physical mining activities at its Langer Heinrich operation, in Namibia, and has taken preparatory steps to place the operation under care and maintenance.
Paladin previously told shareholders that the medium-grade ore stockpiles currently being used as feed for the Langer Heinrich processing plant would be exhausted before mid-2019, necessitating a decision on the future of the project.
The company said on Thursday that given the continued deterioration of macro factors, which include a “stubbornly low” spot price for uranium, as well as foreign exchange rates and the high prices of processing reagents, it was becoming less likely that it would be in a position to resume physical mining in 2018, or that processing low-grade stockpiles would be a viable option.
The spot price has been hovering at about $20/lb, compared with a peak of $140/lb in June 2007 and the $70/lb it fetched just before the Fukushima disaster in March 2011.
“The uranium market has failed to recover since the Fukushima incident, with the average spot price so far in 2018 the lowest in 15 years,” said Paladin CEO Alex Molyneux.
Paladin reported that the company had started consultation with the relevant stakeholders, including representatives for the 600 staff directly employed by the operation, as well as government and customers.
Other preparatory works include changes in supplier arrangements and staffing, which Paladin said could result in initial redundancies.
“It’s deeply distressing to have to consider suspending operations at Langer Heinrich because of the consequences for our employees and the broader community. However, as there has yet to be a sustainable recovery in the uranium market, and with the aim of preserving maximum long-term value for all stakeholders, it is clearly prudent to consider these difficult actions,” Molyneux added.
Paladin would make a formal decision on the future of the Langer Heinrich operation within the next two months, with the care-and-maintenance process expected to take between one and two months, after which the operation would cease uranium production.
Paladin produced 670 456 lb of uranium oxide from its Langer Heinrich operation during the three months to March, a 23% decline on the previous quarter, with C1 cash costs rising by 32% over the same period to $29.82/lb.
The project has a 5.2-million-pound-a-year nominal production capacity, and in 2017 produced 3.4-million pounds of uranium oxide. Physical mining at the project was halted in 2017.
Paladin in 2014 ceased mining at its Kayelekera operation, in Malawi, after that operation also failed to remain viable in the low uranium price environment.
The Langer Heinrich news is a fresh blow to the company, which in February completed a restructuring after entering into administration in July 2017, following a failure to pay a major creditor.