EVER since the Fukushima disaster in 2011, the trajectory of the uranium price has been down, notwithstanding evidence of significant nuclear build in China, and Japan. For the largest independent uranium producer, Paladin Energy, the consequence has been dire. Unlike BHP Billiton or Rio Tinto, which uses group strength to support their uranium, or indeed the government-owned KazAtomProm or Areva, Paladin Energy has to survive on its own wits. And it’s been hard. Faced with the likelihood that he won’t be able to sell a 24% stake in its four million pound/year (lb/y) Heinrich Langer mine in Namibia to China National Nuclear Corporation for $175m in time, Molyneux has resorted to intricate financial engineering in which repayments of bonds have been pushed out, bondholders issued with new shares, a share consolidation and minimum $75m rights issue – all of which will prove highly dilutive to the Paladin stock. What’s needed is an improvement in uranium – one of the few commodities not to have shown some level of recovery in 2016. At $20/lb the uranium price is insufficient to support Paladin’s all in cash extraction cost of $32 to $34/lb – the level to which it has guided for 2017. At the time of writing, bondholders are largely supportive but a vote requiring a 75% pass rate is required. Signs of a slight uranium price improvement have given Molyneux some hope, however.
LIFE OF ALEXANDER
An investment banker with Citigroup, Molyneux made the move into business by taking the helm of SouthGobi Resources in 2009 which was digging for coal in Mongolia. He has held directorships at several coal and uranium companies including Ivanhoe Energy. Molyneux holds a Bachelor degree in Economics from Monash University in Australia.
“The company is better positioned to ride out the current poor uranium market.”
- Web Address: www.paladin.com.au