Paladin Energy’s Langer Heinrich Mine Set for Production Return

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ASX uranium stock Paladin Energy [ASX:PDN] has this morning announced its Langer Heinrich Mine will return to production by early 2024.

Shares have remained relatively flat, with the news likely already well-anticipated by the market.

While flat today, PDN shares are up 45% over the past 12 months (although down 25% YTD) highlighting the volatile nature of the uranium sector.

Fellow uranium stock Energy Resources [ASX:ERA] is down 35% TYD.

And Boss Energy [ASX:BOE] is down 13%.

asx:pdn stock chart 2022


Paladin’s LHM — back in business

Paladin has released the intention to breathe life back into Namibia-based LHM, a decision which will see the mine return to full production by March 2024.

Paladin will channel focus on general repairs and refurbishment, aiming to get the mine to pre-abandonment glory and reach full operational potential.

The company said the decision acknowledges increasing demand in the uranium market.

Paladin said it will be appointing ADP Group, for project and contract management, as LHM’s health reboot really kicks off.

The company estimates the project’s capital expenditure will increase to US$118 million on a 100% project basis.

Previously, the guidance was estimated at around US$87 million. However, inflationary pressure foreshadows the company’s efforts just as it has taunted all other sectors and markets at this time.

Paladin attributes rising interest rates to ‘chaos’ in the supply chain, as well as on power, water, infrastructure and general team expenses.

Despite these issues, the mining company remains committed to fully funding LHM’s comeback. It’s currently awaiting word of possible priority loans from 25%-committed shareholders CNNC Overseas Uranium Holding.

Paladin declared it’s in a good position to begin production at LHM and commence marketing and global exploration activities with a reported US$177.1 million in unrestricted cash as at 30 June 2022.

The miner believes its non-project FY2023 cash expenditure guidance to sit around US$14.7 million currently.

Paladin’s CEO, Ian Purdy, commented:

 ‘With the strength of the Company’s uranium offtakes and the continuing strong uranium market fundamentals, Paladin has made the decision to return the globally significant Langer Heinrich Uranium Mine to production.

The increase in the capital required to restart operations reflects a combination of recent inflationary pressures and the bringing forward of key work packages to ensure the long-term reliable supply of power and water to site. We have also strengthened our project execution team via the appointment of leading African EPCM contractor ADP Group to ensure the successful delivery of the Langer Heinrich Mine into production.

The Langer Heinrich Mine remains a low risk, robust, long-life operation that is poised to take advantage of the improving uranium market conditions and deliver sustainable value creation for all our stakeholders.’

Uranium stocks and Europe’s energy crisis

With the West wishing to shun Russian energy, nuclear is once more being considered as an option to bolster countries’ energy security.

As a comprehensive report by Energy Options Network (EON) notes: ‘An inherent advantage over technologies that only produce electricity (like wind and PV) is nuclear’s capacity to produce both electricity and heat, affording it the ability to take advantage of all hydrogen production technology options.

And with Europe steadfastly holding to its resolution to abandon Russian oil, nuclear may see a resurgence soon.

Amid the crisis, there is one small ASX Aussie uranium stock that could help with Europe’s energy transition.

Ryan Clarkson-Ledward, our small caps expert, has profiled this potential saviour in a recent research report.

To hear more about it, click here.


Kiryll Prakapenka

About Kiryll Prakapenka

Kiryll Prakapenka is a research analyst focusing on investigating the biggest trends in investments. Kiryll brings sound analytical skills to his work, courtesy of his Philosophy degree from the University of Melbourne. A student of legendary investors and their strategies, Kiryll likes to synthesise macroeconomic narratives with a keen understanding…

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