Paladin Energy: Financial Report for Three Months Ended 30

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
News Release. 

--  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. 
--  Production: 
    --  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: 
    --  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$80M during FY2013 and FY2014. The
        Company has undertaken a comprehensive cost and production
        optimisation review as part of the process of moving from
        development to a sustained production phase. Focus on improving
        operational efficiency will be an ongoing objective with substantial
        gains expected over the next 2 years. The cost review encompassed
        examination of all activities within the Paladin Group from its
        mining operations, corporate/administration overheads, future
        development considerations, exploration, sales and business
        development, some of which is still ongoing. Opportunity for re-
        negotiation of key mining and consumables contracts has arisen,
        paving the way for material cost reductions over the next 2 years.
        The Company is targeting a 7.5% reduction in unit cash costs for the
        remainder of FY2013 at both Langer Heinrich and Kayelekera and for
        FY2014 is targeting a further 7.5% reduction in unit cash costs at
        Langer Heinrich and 15% at Kayelekera. 
--  Profit and Loss: 
                                                         Three Months Ended 
                                                            30 September    
                                                          2012         2011 
                                                          US$M         US$M 
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)
                                                          (6.5)        (2.2)
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
    to 2011. 
--  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
        of US$5.3M. 
    --  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 (
and on the Company's website (  
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  
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
John Borshoff
Managing Director/CEO
+61-893-814-366 or Mobile: +61-419-912-571 
Paladin Energy Ltd
Alan Rule
Chief Financial Officer
+61-893-814-366 or Mobile: +61-438-942-144 
Paladin Energy Ltd
Greg Taylor
Investor Relations Contact
+1 905-337-7673 or Mobile: +1 416-605-5120 (Toronto) 
Paladin Energy Ltd
Matthew Keane
Investor Relations Contact
+61-893-814-366 or Mobile: +61-407-682-974
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