Paladin Energy Ltd: Quarterly Activities Report for Period

Paladin Energy Ltd: Quarterly Activities Report for Period Ending-31
December 2012 
PERTH, WESTERN AUSTRALIA -- (Marketwire) -- 01/17/13 -- Paladin
Energy Ltd ("Paladin" or "the Company") (TSX:PDN)(ASX:PDN) is pleased
to provide its Quarterly Activities Report for the three month period
ended 31 December 2013. 

--  Record sales revenue of US$133.9M for the quarter, selling 2.78Mlb U3O8
    at average price of US$48.10/lb. 
--  Record quarterly and annual production at both the Langer Heinrich and
    Kayelekera mines. 
    --  combined production for the December quarter of 2.191Mlb (994t) U3O8
        is an increase of 13.6% on the September quarter and is the
        equivalent of 103.1% of nameplate production of 2.125Mlb U3O8 for
        the quarter. 
    --  total annual production for CY2012 of 7.946Mlb (3,604t) U3O8 is a
        34% increase over the previous calendar year. 
--  Record Langer Heinrich production of 1.419Mlb (644t) U3O8 is an increase
    of 9.9% on the previous quarter. 
    --  record recovery of 87.4% versus design of 85%. 
    --  feed grades of 805ppm U3O8. 
    --  demonstrated ability of the project to produce well above nameplate
        at design of 800ppm feed grades. 
    --  further optimisation initiatives underway. 
    --  Stage 3 Bankers' Completion Tests successfully completed. 
--  Kayelekera production of 772,280lb (350t) U3O8 is an increase of 20.9%
    on the previous quarter and is an all-time quarterly record. 
    --  quarterly production at 93.6% of nameplate while remaining
        constraints in the resin-in-pulp circuit (RIP) are being addressed. 
    --  feed grades of 1,159ppm U3O8 (design is 1,100ppm). 
    --  consistently improved acid plant production continued to provide
        positive cost implications with reduced dependence on imported acid.
    --  increased likelihood of securing low cost grid power to site within
        the year is progressing well. 
--  Cost savings and optimisation initiatives continue successfully with
    total costs and unit production costs reducing at both mines. 
--  FY2013 production guidance of 8.0 - 8.5Mlb
 U3O8 remains well on target. 

The Group continued its high safety performance with a 12-month
moving average Lost Time Injury Frequency Rate (LTIFR) of 1.1. During
the period, one LTI (foot injury) was recorded at the Langer Heinrich
Mine (LHM). The high profile safety management initiatives as part of
a comprehensive Safety Action Plan and a new cultural programme
(Unwritten Ground Rules - UGRs) implemented at LHM to redress its
recent slightly decreased safety trend are bearing fruit with fewer
injuries reported and numerous site hazards being addressed over the
past quarter. During this time, the annual NOSA HSE grading audit was
conducted and the preliminary result has been a 4 Platinum Star
There were no LTIs at the Kayelekera Mine (KM).  
Sales for the quarter were 2,783,424lb U3O8 generating revenue of
US$133.9M, representing an average sales price of US$48.10/lb U3O8
(average Ux spot price for the quarter was US$43.16/lb U3O8). Sales
were a quarterly record and reflect in part the uneven distribution
of contracted deliveries through the year. Sales volume in the March
2013 quarter will be closer to quarterly production. 
Production by quarter 

                      Mar 2012 Qtr  Jun 2012 Qtr  Sep 2012 Qtr  Dec 2012 Qtr
U3O8 Production (lb)     1,052,364     1,322,480     1,290,462     1,418,583

During the quarter, the plant delivered further improved performance
to new record production levels - not only the overall production but
also the overall recovery levels. Overall plant throughput also
further improved to 914,847t crushed - a 2% increase from the
previous quarter.  
Production totalled 1,418,583lb U3O8, which was 9.9% higher than the
previous quarter. The operation is performing consistently with
continuous improvements taking place. During the quarter, the
Bankers' Completion Tests for Stage 3 were successfully completed. 
The overall mined quantities decreased over the quarter as one of the
primary excavators were taken out of operation as part of the cost
rationalisation programme. The mining schedule was revised in order
to either reduce or defer mining costs. Ore mining and availability
were not affected as excavators were relocated as required. 

                                              Sep 2012 Qtr      Dec 2012 Qtr
Ore mined (t)                                    1,556,040         1,191,756
Grade (ppm)                                            652               798
Additional low grade ore mined (t)               1,341,345           757,649
Grade (ppm)                                            321               320
Waste/ore ratio                                       1.72              2.54

Mining continued in three pits with sufficient ore exposed to fulfil
plant feed requirements. The revised mining schedule also included
the mining of suitable waste for tailings storage facility (TSF)
ROM ore stocks have been maintained at around four weeks' supply
while being supplemented by medium and lower grade ores in line with
the crusher blend requirements. 
Process Plant 
The increased plant throughput continued in the December quarter as
reflected below: 

                                              Sep 2012 Qtr      Dec 2012 Qtr
Ore milled (t)                                     896,355           914,847
Grade (ppm)                                            754               805
Scrub efficiency (%)                                  92.0              92.7
Leach extraction (%)                                  93.4              95.1
Wash efficiency (%)                                   86.9              86.7
Overall recovery (%)                                  86.8              87.4

Ore feed tonnage through the process plant increased by 2% with total
throughput of 914,847t.  
The front-end circuit continued to perform well, again achieving
record throughput. The scrub efficiency has improved to 92.7%
(against a design efficiency of 93%). As reported previously,
optimisation work in the screening area in order to further improve
performance is ongoing, with the classification section remaining the
focal area of the optimisation efforts. 
The extraction in the leaching circuit improved in line with
expectations. This part of the circuit is now operating close to
design parameters and the focus will be on improving throughput
consistency to gain further extraction improvements and better
management of reagents. 
Although the efficiencies in the Counter-Current Decantation (CCD)
circuit have been maintained, this area of the plant continues to
have the biggest opportunity for further improvements. Additional
modifications and improved operating procedures are being
implemented, which should lead to further improvements in this area. 
Modifications on both of the NimCix circuits have been completed and
both circuits are now fully commissioned and operational. With both
the NimCix circuits and the old Fixed Bed IX circuits available,
further improved performance in this area is also expected.  
The overall plant efficiency increased to 87.4% against a design
recovery rate of 85%. The most significant contributor to this new
record overall recovery rate has been the further improved leach
recoveries. The improvement in the scrub efficiency also assisted
whilst recoveries in the wash section remained consistent.  
The detailed designs for TSF3 (the first full in-pit tailing
deposition area) were completed during the quarter and construction
work was commenced during this period. Tailings deposition is
envisaged to change from TSF2 to TSF3 during the first half of
CY2013. Construction of TSF2 and TSF2 extension also continued
throughout the quarter. 
Production Optimisation 
During the quarter, an order was placed with Schauenburg MAB for the
delivery of the first Hydrosort unit that will demonstrate the
benefits of this technology to the beneficiation of the ore. This
first unit is scheduled for commissioning at the end of the June
quarter this year. Upon a successful demonstration, it is envisaged
that at least one further Hydrosort unit will be installed to further
improve ore beneficiation performance, reduce operating costs and
increase resource utilisation. 
There is also significant effort being directed toward the
improvement of operating practice at the site now that the operation
is consistently achieving nameplate and is in its post-commissioning
phase. Material gains are expected as a consequence of these
initiatives over the year. 
KAYELEKERA MINE, Malawi (85%) 
Production by quarter  

                      Mar 2012 Qtr  Jun 2012 Qtr Sept 2012 Qtr  Dec 2012 Qtr
U3O8  Production                                                            
 (lb)                      724,552       726,299       638,950       772,280

Production during the December quarter was a record, exceeding the
previous quarter by 20.9%.  
Mining data 

                                             Sept 2012 Qtr      Dec 2012 Qtr
Ore mined (t)                                      193,953           404,261
Grade (ppm) U3O8                                     1,065             1,814
Additional low grade ore mined (t)                 145,328            63,201
Grade (ppm)                                            523               521
Waste/ore ratio                                       3.93              1.54

Total material mined for the quarter was on target with ore mined 12%
above target due to a change in mine sequencing. 
Ore availability on stockpiles (ROM pad) remains in excess of four
months of plant requirements. 
In line with the wet season weather strategies, ore mining to ROM
stockpiles will be maintained in the next quarter to reduce the risk
of crusher feed delays due to inclement weather. 
The reconciliation between the resource model, mined and plant
figures remained good. 
Similar to LHM, a detailed review of the mining plan was undertaken
with the view to minimise mining requirements as part of overall cost
savings initiatives. 
Process Plant 
Operating data 

                                             Sept 2012 Qtr      Dec 2012 Qtr
Operating time (hrs)                                 1,708             1,942
Mill feed(t)                                       323,409           356,764
Grade (ppm) U3O8                                     1,111             1,159
Leach extraction (%)                                  86.9              90.7
RIP efficiency (%)                                    93.6              93.9
Overall efficiency (%)                                81.4              83.8

Operating time was a quarterly record. 
Leach recovery increased to just below 91% due to the ore feed blend,
however acid consumption was maintained at budget with on site acid
production largely meeting process requirements. 
Resin management remains a primary focus. Improvements in RIP
efficiency are expected as the RIP Refurbishment Project reaches
completion in February. Resin deliveries have stabilised. 
Overall recovery increased from the previous quarter as a result of
the improved
 leach recovery and a slightly improved RIP efficiency. 
Production of 261,929lb U3O8 was achieved in October and 262,299lb
U3O8 in November, equating to 94.5% of nameplate, and 248,052lb U3O8
in December, equating to 90.2% of nameplate. 
December production was down largely as a result of a partial mill
liner change out and various other mechanical restrictions in other
parts of the plant as well as temporary restrictions in RIP. 
Production Optimisation 
The key area of process optimisation for KM is in acid recovery.
Detailed engineering for this project is almost complete and the
plant is scheduled for commissioning in July this year. Detailed
testing and pilot work have indicated that approximately 30tpd of
acid will be recycled within the process, reducing overall acid
demand by an equivalent amount and reducing the demand for
neutralisation reagents. When complete, this will represent a
significant reduction in operating costs for the project. 
In addition to the acid recovery project, a further project to
convert the operation from diesel fired power to grid power is now
advanced. Current scheduling provides for the conversion to grid
power in the first quarter of FY2014 and will result in a further
significant reduction in operating costs. 
The exploration drilling was halted at the onset of the rainy season
in early December, with a large number of holes not completed due to
drilling issues. 
A total of 12 holes for 1,647m were completed with all holes drilled
in the Mpata area. Although uranium mineralisation was frequently
encountered, no mineralisation of economic grade and thickness was
Drilling in 2013 will now concentrate south of the minesite in the
South Rukuru Basin in the Nthalire area. 

                   Mar          Jun          Sep          Dec   Total CY2012
LHM          1,052,364    1,322,480    1,290,462    1,418,583      5,083,889
KM             724,552      726,299      638,950      772,280      2,862,081
Total        1,776,916    2,048,779    1,929,412    2,190,863      7,945,970

Considering Stage 3 expansion at LHM was still in
construction/commissioning phase until mid CY2012, the 12 month
production of 5.084Mlb U3O8 that was achieved at LHM came to within
98% of nameplate production of 5.2Mlb U3O8. At KM, where the
operation was still in commissioning phase until September requiring
plant upgrade with considerable downtime involved, it achieved a
12-month production of 2.862Mlb U3O8, achieving 8
7% of nameplate of
3.3Mlb U3O8. 
Nevertheless, the total annual production for CY2012 from both
operations reached 7.946Mlb U3O8 or 93.5% of the final production
design capability of LHM and KM and is considered a very good result,
particularly in light of the fact that the first quarter included the
final stages of Stage 3 ramp-up at LHM. 
The strong combined production over the past two quarters on LHM and
KM of 4.12Mlb U3O8, with signs for continued improvement, place the
Group in a good position to achieve its stated production target
guidance of 8.0 to 8.5Mlb U3O8 given for FY2013, with the opportunity
to deliver in the upper end of this range. 
The summer drilling programme was completed in October. A total of 23
diamond core holes for 4,648m were drilled, of which 19 holes were
drilled at the Michelin Project and four were completed at the
Running Rabbit Lake Prospect, 1km ENE of the Michelin Project.  
All holes intersected mineralisation as expected, with only a sub-set
of drill holes sampled to provide assay data for use in developing an
appropriate set of gamma logging factors and these are shown in the
table below. It is expected that in the future only 10% of the
drilling will be sampled to provide on-going validation of equivalent
uranium grades. Geological mapping, prospecting and ground
geophysical surveys continued along the Michelin trend east and west
of the mineralised zone. The results will now be combined to develop
detailed targets for future follow-up scout drilling. 
Significant results received to date included: 

                                      Azi-                        ter- Grade
                                       mu-       EOH               val U3O8 
Hole        East     North    RI  Grid  th Dip Depth  From     To  (m) (ppm)
Michelin Project                                                            
M12-                             NAD83                                      
 123 6,052,612.9 307,268.9 337.7   -21 334 -67 156.9   4.6     10  5.4   272
                                                        13     15    2   734
                                                        89     97    8 2,342
M12-                             NAD83                                      
 126 6,052,526.7 307,189.7 337.5   -21 334 -75 198.0    47     64   17   277
                                                       118    124    6   502
                                                     145.8    151  5.2   890
                                                       182    185    3   552
M12-                             NAD83                                      
 127 6,052,679.6 307,336.7 339.0   -21 336 -61 142.0    46     49    3   672
                                                        57     59    2   327
                                                        70     82   12 1,124
M12-                             NAD83                                      
 131 6,052,181.7 306,602.0 334.1   -21 334 -80 194.9   151    168   17   539
-ding                                               153.48    158 4.52 1,226
M12-                             NAD83                                      
 133 6,052,173.6 306,576.5 335.2   -21 334 -80 210.0   149    158    9   666
                                                       162    167    5   409
M12-                             NAD83                                      
 134 6,052,216.3 306,686.4 333.0   -21 334 -78 232.2   153    163   10 1,384
M12-                             NAD83                                      
 135 6,052,216.9 306,686.2 332.9   -21 334 -55 177.0   132 140.92 8.92 1,242
M12-                             NAD83                                      
 136 6,052,216.9 306,686.2 332.9   -21 334 -55 177.0   107    131   24   690
M12-                             NAD83                                      
 138 6,052,221.3 306,637.7 333.1   -21 334 -83 165.0   143    153   10 1,046
Running Rabbit Lake Prospect                                                
RR12-                            NAD83                                      
 007 6,053,160.6 308,611.6 340.6   -21 334 -50 285.0    97    105    8   906
                                                       260    269    9   410

Currently, the planning for a winter drilling programme is being
completed. Drilling is expected to start in February and will
continue into March and April as weather permits. 
MANYINGEE PROJECT, Australia (100%) 
Drilling continued into November with a total of 96 holes for 9,036m
of rotary mud and 242m of core being completed. 
Drilling continued to confirm the previously identified
mineralisation. Assay results have recently been received and are in
the process of being validated. Current work concentrates on
comparing assay, equivalent gamma and equivalent Prompt Fission
Neutron (PFN) tool uranium grades to confirm the grades to be used
for an updated resources estimate. 
A total of 35 water bores were installed. Initial pump testing was
carried out in November and monitoring of physical and chemical
properties continued into December. The pump tests show
permeabilities in the main mineralised aquifer sufficient for an ISR
operation. The results will be used to develop a new, up-to-date,
ground water model for the Manyingee aquifer to be applied in any
future ISR leach trials and/or operations.  
MT ISA PROJECTS, Australia (91.04% effective) 
The Queensland Government lifted the 27 year old ban on uranium
mining in Queensland on 22 October 2012. Paladin's response to this
positive change is to pursue a long-term investment strategy in
Generally, strategies are under consideration to develop an economic
flowsheet for uranium ores of the area and to further define new
targets for substantial resource increases based on recent geological
mapping, geophysical results and new modelling. 
Strategic Initiative Efforts 
With the improving production and cost performance of both LHM and KM
in parallel with what is essentially a global moratorium on supply
growth due to low uranium prices, interest has increased to seek a
strategic association with Paladin and attain a de-risked leverage to
The strategic initiative endeavours that have been announced in broad
terms are continuing with a modified and more focussed approach and
results of this work are expected by March/April 2013. The strategic
initiative to date has already resulted in the far-reaching Long Term
Sales Contract negotiated with the major international nuclear
utility, EdF, which involved a US$200M prepayment. The final tranche
of US$150M is scheduled to be paid at the
 end of January 2013. 
Cost Reduction/Production Optimisation Initiative 
In November, Paladin announced its programme to reduce costs within
the Group expected to realise US$60M to US$80M total savings over the
next two years. The comprehensive cost and production optimisation
review is part of the process of moving from development to a
sustained production phase. 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 two years.  
FY2013 Cost reductions: 

--  Langer Heinrich Mine (US$10M) - Key improvements in mining costs,
    discretionary spending and contractor rationalisation resulting in a
    7.5% reduction in unit costs. 
--  Kayelekera Mine (US$10M) - Key improvements in mining costs and
    discretionary spending resulting in a 7.5% reduction in unit costs. 
--  Exploration - This will be scaled back by 20% (US$4M) of budget, mainly
    through deferring non-essential drilling. 
--  Inventory management - The Company has revisited its inventory
    management policy and explored ways to maximise cash generation
    resulting in an expected revenue benefit of US$15M for FY2013. 
--  Corporate overheads - Targeting a reduction of 10% (US$3M). 

FY2014 Cost reductions: 

--  Langer Heinrich Mine (U$10M) - An additional 7.5% reduction in unit
    costs is targeted as the operation is fully optimised with continued
    process refinement and further reductions in mining costs. 
--  Kayelekera Mine (U$20M) - An additional 15% reduction in unit costs is
    expected by gaining access to grid power supply and completion of the
    key production optimisation programmes. 

These cost saving initiatives are being implemented and will
represent a significant reduction in operating expenditure. However,
these cost reductions and production optimisation efforts do not
include the additional benefits anticipated from identified technical
innovation, which will deliver further operational efficiencies and
improved recoveries, which are briefly described in the LHM and KM
sections of this report.  
The Ux spot price weakened during the quarter, moving from
US$46.50/lb U3O8 in July to a low of US$40.75/lb U3O8 in November
before recovering to US$43.50/lb U3O8 in December. The Ux term price
also fell from US$60.00/lb U3O8 to US$56.00/lb U3O8. 
Four key developments that have occurred recently are expected to
re-focus attention on the dynamics of mid to long term uranium supply
growth, which is currently at a standstill. 

--  The new government elected in Japan in December has promised to review
    the previous government's nuclear phase-out policy and has expressed
    support for the construction of new nuclear plants. Re-starts of the 48
    nuclear plants currently offline for safety inspections will begin once
    the Nuclear Regul
ation Authority releases its new safety guidelines,
    which is expected by mid-year. 
--  Nuclear power plant construction has resumed in China with four new
    construction starts in November and December bringing the total number
    of new plants under construction to 29 (28,753 MW). Worldwide, there are
    now 67 plants under construction and 437 in operation (including the 48
    on standby in Japan). 
--  Uranium producers are shelving variously stated plans for further
    production increases or have deferred new projects until the market
    recognises the need for consistently higher prices to ensure adequate
    sustainable uranium supply in the future. 
--  Industry consolidation continues with the recent announcement of the
    planned acquisition of full ownership of Canadian producer Uranium One
    Inc. by JSC Atomredmetzoloto (ARMZ), which is a subsidiary of the
    Russian Rosatom State Energy Corporation. 

This dual event of the return to positive growth in the nuclear
industry and a virtual standstill in uranium supply growth is
unsustainable and only uranium price increases will rectify this
major problem for the industry to be incentivised and start new
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. 
ACN 061 681 098
In Australia: Paladin Energy Ltd
John Borshoff
Managing Director/CEO
+61 8 9381 4366 or Mobile: +61 419 912 571 
In Canada: Paladin Energy Ltd
Greg Taylor
Investor Relations Contact
+905 337-7673 or Mobile: 416 605-5120 (Toronto)
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