Paladin sets out uranium target from reborn Langer Heinrich

Stockpiles of uranium ore

PALADIN Energy has targeted uranium oxide production of between four to 4.5 million pounds (lbs) in its 2025 financial year after restarting operations at its Namibian operation Langer Heinrich in March.

The re-commissioning of Langer Heinrich couldn’t come at a better time for Paladin as the uranium spot price has stabilised between $85 to $95/lb this year following a 88.54% price increase in 2023.

Based on its contract book, and assuming the average price so far this year, Paladin stands to realise a $40/lb margin, in rough terms.

This is based on a realised price of $71/lb if the spot price is $80/lb, and assuming Paladin’s forecast cost of production of $28 to $31/lb. The company expects to sell between 3.8 and 4.1 Mlbs in uranium oxide in 2025.

Mining will begin in 2026 with 2025 output sourced from the reprocessing of stockpiled material. Langer Heinrich was closed in 2018 with Paladin’s previous management citing “stubbornly low” uranium prices.

Since then, the uranium market has staged a turnaround driven by “nuclear reactor restarts and new builds, supporting a sustained bullish outlook for uranium,” according to a report by Canadian asset manager, Sprott.

Paladin said it expected Langer Heinrich to reach a nameplate capacity of six million lbs of uranium oxide production by the end of the 2026 calendar year.

On June 24, Paladin announced an all-share takeover of Toronto-listed Fission Uranium Corp. which values the Canadian firm at C$1.1bn. The offer has been unanimously agreed by a special committeed formed by Fission Uranium.

Paladin offered 0.1076 shares for each of Fission’s shares. The offer represented a 25.8% premium to Fission’s closing share price on June 21, and a 30% premium to the then 20-day VWAP (volume weighted average price).

The combined group will have production at Paladin’s Langer Heinrich mine in Namibia and the prospect of production from Fisson’s Patterson Lake South project in Canada’s Athabasca Basin in 2029.

“Both sets of shareholders are expected to benefit from the increased scale of the enlarged company, with a combined mineral resource representing one of the largest amongst pure-play uranium companies globally,” Ian Purdy, CEO of Paladin Energy was quoted in the Wall Street Journal as saying.

Despite this shares in Paladin Energy have fallen under pressure falling 11.5% over the last six months, and 21% in the last 30 days. The share edged up marginally in trade today.

“Whilst we are bullish uranium given its a protracted supply deficit, we note the acquisition is near-term earnings and value dilutive,” said Bank of America in a recent report.