Paladin Energy: Financial Report for Three Months Ended 30 September
PERTH, WESTERN AUSTRALIA -- (Marketwire) -- 11/12/12 -- Paladin
Energy Ltd ("Paladin" or "the Company") (TSX:PDN)( ASX:PDN) announces
the release of its consolidated Financial Report for the three months
ended 30 September 2012. The Financial Report is appended to this
-- Continued solid production for the quarter of 1.929Mlb U3O8, in line
with expectations considering 16 days maintenance shutdown at Kayelekera
-- C1 cost of production continues to fall. Langer Heinrich Mine C1 cost of
production decreased from US$32.2/lb in the June 2012 quarter to
US$31.8/lb in the September quarter 2012 and Kayelekera Mine C1 cost of
production decreased from US$52.2/lb in the June 2012 quarter to
US$49.0/lb in the September quarter 2012, including US$45.0/lb for the
month of September.
-- Average realised sales price of US$50/lb U3O8 for the quarter, compared
to average UxC price of US$49lb.
-- Both mines now operating at nameplate performance and are entering
period of optimisation, which will lead to improved recoveries and
reduced unit operating costs.
-- Cash position strengthened from US$112.1M at 30 June 2012 to US$144.3M
at 30 September 2012 as a result of an increase in receipts from
customers and the receipt of the first tranche of the off-take agreement
funds of US$50M from Electricite de France S.A.
-- New mid-term sales contracts were secured for a total of 6.3Mlb U3O8, to
be delivered from late 2012 to end of 2015 at market prices, with a
fixed price component well above the current spot price.
-- Discussions are continuing with potential partners with the aim of
further unlocking value through strategic initiatives utilising the
Company's extensive uranium data base.
-- Queensland Government announced that it will convene an implementation
committee to oversee allowing the recommencement of uranium mining in
(References below to 2012 and 2011 refer to the equivalent quarter ended 30
September 2012 and 2011 respectively).
-- Safety and Sustainability:
-- Continued high safety performance with a 12-month moving average
Lost Time Injury Frequency Rate of 1.0.
-- Combined production for the quarter of 1.929Mlb U3O8 - an increase
of 55% from 2011, despite operations being affected by a 16-day
planned annual maintenance shutdown at Kayelekera Mine.
-- In the September 2012 quarter, both mining projects operated
exceptionally well with production in excess of 97% of nameplate
when excluding the Kayelekera plant maintenance shutdown period.
-- Langer Heinrich Mine:
-- Production up by 52% to 1.290Mlb U3O8 in September 2012 quarter from
0.849Mlb U3O8 in September 2011 quarter.
-- Production 99.2% of Stage 3 nameplate, but importantly, at feed
grades of 754ppm U3O8, 5.8% below design of 800ppm and 10.2% below
June 2012 quarter feed grade of 840ppm. Project has demonstrated the
ability to produce at nameplate with feed grades well below design.
-- Record recovery of 86.8%.
-- October month production a record 486,753lb, over 12% above
-- Kayelekera Mine:
-- Production up by 61% to 0.639Mlb U3O8 in September 2012 quarter from
0.396Mlb U3O8 in September 2011 quarter.
-- Production down on the June 2012 quarter but in line with
expectation considering the successful plant maintenance shutdown
which reduced plant availability for the quarter by 18% or
approximately 135,000lb U3O8 equivalent.
-- On an available operating day basis, the plant achieved 94% of
nameplate. October month achieved 95% of nameplate.
-- Acid plant production substantially increased as a result of
upgrades during the shutdown with positive cost implications.
-- Benefits of process optimisation being realised.
-- Sales revenue decreased 41% from US$102.7M in 2011 to US$61.0M for
the quarter ended September 2012, mainly as a result of lower sales
volumes. The average realised uranium price for the quarter was
US$50/lb U3O8 (2011: US$51/lb). The average UxC spot price for the
quarter was US$49/lb.
-- Total sales volume for the September 2012 quarter of 1.224Mlb U3O8 -
a 39% decrease on the September 2011 quarter sales of 2.002Mlb U3O8.
-- December 2012 quarter sales are expected to be approximately 2.7Mlb.
-- Uranium sales volumes are expected to fluctuate quarter-on-quarter
due to the uneven timing of contractual commitments and resultant
scheduling by customers. Now that production has reached design
levels, sales and production volumes are expected to be comparable
on an annualised basis.
-- C1 Cost of Production:
-- Langer Heinrich Mine C1 cost of production for the quarter decreased
to US$31.8/lb U3O8 from US$34.2/lb U3O8 in 2011, mainly due to the
cost benefits of the increased Stage 3 production.
-- Kayelekera Mine C1 cost of production for the quarter decreased to
US$49.0/lb from US$52.8/lb in 2011 despite the plant shutdown in
August 2012. The C1 cost of production for the month of September
was US$45.0/lb and remained at this level in October. This is
evidence that the cost benefits from the cost optimisation programme
at Kayelekera are being realised. Cost optimisation continues to be
a key focus, with specific target areas including mining, acid,
reagents, diesel, transport and staff rationalisation. Major
benefits from these costs reductions are expected over the next 18
(1) C1 Cost of production = cost of production excluding product
distribution costs, sales royalties and depreciation and
amortisation. C1 cost is a widely used 'industry standard' term.
-- Cost Optimisation:
-- Following both operations reaching nameplate performance, the sites
are now entering a period of optimisation, which will lead to
improved process recoveries and reduced unit operating costs. Some
elements of this work have potential to expand the reserve base for
both projects by being able to use lower ROM feed grades.
-- Post quarter end, the Company announced that it expects to realise
total savings of US$60M to US$80M during FY2013 and FY2014. The
Company has undertaken a comprehensive cost and production
optimisation review as part of the process of moving from
development to a sustained production phase. Focus on improving
operational efficiency will be an ongoing objective with substantial
gains expected over the next 2 years. The cost review encompassed
examination of all activities within the Paladin Group from its
mining operations, corporate/administration overheads, future
development considerations, exploration, sales and business
development, some of which is still ongoing. Opportunity for re-
negotiation of key mining and consumables contracts has arisen,
paving the way for material cost reductions over the next 2 years.
The Company is targeting a 7.5% reduction in unit cash costs for the
remainder of FY2013 at both Langer Heinrich and Kayelekera and for
FY2014 is targeting a further 7.5% reduction in unit cash costs at
Langer Heinrich and 15% at Kayelekera.
-- Profit and Loss:
Three Months Ended
Revenue 61.3 103.0
Costs before depreciation and amortisation (53.0) (79.7)
Impairment loss in prior year relating to inventory
sold during the year 10.4 10.0
Impairment - inventory (2.6) -
Royalties and distribution (3.7) (6.1)
Depreciation and amortisation (10.0) (17.2)
Gross profit 2.4 10.0
Exploration expenses (0.5) (0.8)
Site non-production costs (3.5) (5.4)
Corporate, marketing and administration (4.9) (6.0)
Non-cash costs (2.1) (2.5)
Other income & expenses (43.8) (185.8)
Loss before interest and tax (52.4) (190.5)
Finance costs (17.0) (13.8)
Loss before income tax (69.4) (204.3)
Income tax benefit 18.2 61.3
Loss after tax (51.2) (143.0)
Non-controlling interests 5.3 19.6
Net loss after tax attributable to members of the
parent (45.9) (123.4)
-- Gross profit for the year decreased to US$2.4M from US$10.0M in 2011 due
to lower sales volumes and a US$2.6M impairment of inventories at the
Kayelekera Mine (2011: US$Nil).
-- Site non-production costs for the quarter were reduced by US$1.9M to
US$3.5M due mainly to a decrease in expenditure relating to the Stage 4
expansion evaluation study, which is nearing finalisation.
-- Corporate and marketing costs were US$1.1M lower for the quarter due to
cost savings achieved through the cost rationalisation programme
announced to the market in the latter half of 2011. Tighter control has
led to a reduction in corporate overheads.
-- Non-cash costs, mainly share-based payments, were reduced from US$2.5M
to US$2.1M as a result of a reduction in share rights granted compared
-- Other income and expenses mainly reflect the impairment of the
Kayelekera Mine asset expense of US$41.1M pre-tax, (US$31.0M post-tax)
(2011: US$178.9M pre-tax, US$132.1M post-tax) caused by the
deterioration of uranium prices. Additionally other expenses include the
write-off of fixed costs during the plant shutdown of US$2.3M (2011:
-- Net loss after tax of US$45.9M was recorded for the three months, mainly
as a result of the US$31.0M (post-tax) impairment associated with the
write down of the Kayelekera Mine assets.
-- Cash Flow:
-- Positive cashflow from operating activities of US$54.8M primarily
due to receipts from customers of US$105.9M and receipt of the first
tranche of the off-take agreement funds of US$50.0M. Positive cash
flow of US$7.5M generated by the Langer Heinrich and Kayelekera mine
operations before investment in working capital required to support
higher production levels, payments for administration, marketing and
non-production costs of US$8.9M. The remaining expenditure was
US$0.5M for exploration and net interest paid of US$4.2M.
-- Cash outflow from investing activities was US$12.7M relating mainly
to plant and equipment acquisitions of US$7.4M, predominantly the
new tailings facility at LHM and capitalised exploration expenditure
-- Cash outflow from financing activities of US$10.4M is mainly
attributable to repayment of project financing for KM of US$10.0M.
-- Cash Position:
-- Cash of US$144.3M at 30 September 2012.
-- Long-term Off-take Contract with a US$200M prepayment:
-- US$50M first tranche payment received pursuant to the Long Term Off-
take Contract with Electricite de France S.A. with the balance of
US$150M due to be received by 31 January 2013.
-- Mid-term Sales Contracts Secured:
-- Two mid-term off-take agreements secured for a total of 6.3Mlb U3O8
to be delivered from late 2012 to end of 2015 at approximately 2Mlb
pa from mining operations at LHM and KM. Pricing will be determined
predominately by the market price at the time of delivery (without
floor or ceiling limitations), while a minority portion of the
delivery prices will be in accordance with a series of specified
fixed prices which exceed current spot uranium prices.
-- Exploration and Development:
-- Aurora - Michelin Uranium Project, Canada - Drilling started at
Michelin in late August. Two diamond core rigs are now operating on
site and it is anticipated that drilling will cease in November. An
updated mineral resource estimate for the Michelin deposit is
expected in 2013 after all assays have been received and validated.
-- Manyingee Project, Australia - Drilling progress is as planned and
is anticipated to be completed during November. After the completion
and verification of all data and assays, an updated mineral resource
estimate is expected in the March quarter of 2013.
The documents comprising the Financial Report for the three months
ended 30 September 2012, including the Management Discussion and
Analysis, Financial Statements and Certifications are attached and
will be filed with the Company's other documents on Sedar (sedar.com)
and on the Company's website (paladinenergy.com.au).
To view the First Quarter Financial Report and Certificates, please
visit the following link:
Generally Accepted Accounting Practice
The news release includes non-GAAP performance measures: C1 cost of
production, non-cash costs as well as other income and expenses. The
Company believes that, in addition to the conventional measures
prepared in accordance with GAAP, the Company and certain investors
use this information to evaluate the Company's performance and
ability to generate cash flow. The additional information provided
herein should not be considered in isolation or as a substitute for
measures of performance prepared in accordance with GAAP.
The information in this Announcement relating to exploration and
mineral resources is, except where stated, based on information
compiled by David Princep B.Sc who is a Fellow of the AusIMM. Mr
Princep has sufficient experience that is relevant to the style of
mineralisation and type of deposit under consideration and to the
activity that he is undertaking to qualify as a Competent Person as
defined in the 2004 Edition of the "Australasian Code for Reporting
of Exploration Results, Mineral Resources and Ore Reserves", and as a
Qualified Person as defined in NI 43-101. Mr Princep is a full-time
employee of Paladin Energy Ltd and consents to the inclusion of this
information in the form and context in which it appears.
Conference Call and Investor Update scheduled for 06:30 Perth & Hong
Kong, Tuesday 13 November 2012, 18:30 Toronto and 23:30 London,
Monday 12 November 2012.
Details of the dial-in were included in a separate news release made
on 9 November 2012. Those details remain the same although the date
of the call has been brought forward as detailed above.
ABN 061 681 098
Paladin Energy Ltd
+61-893-814-366 or Mobile: +61-419-912-571
Paladin Energy Ltd
Chief Financial Officer
+61-893-814-366 or Mobile: +61-438-942-144
Paladin Energy Ltd
Investor Relations Contact
+1 905-337-7673 or Mobile: +1 416-605-5120 (Toronto)
Paladin Energy Ltd
Investor Relations Contact
+61-893-814-366 or Mobile: +61-407-682-974
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