IGO to record impairment against nickel assets in strategy shift
IGO has been undertaking a strategic review in an attempt to revaluate its resources.
Australia’s Paladin Energy recorded a 47% increase in production and record revenues of $208.7m on the back of a 31% increase in sales volumes for the nine months to March compared with the same period in 2010.
Paladin produced some 4.23m pounds of uranium oxide. The Langer Heinrich mine in Namibia, accounted for over 2.6m pounds with the Kayelekera mine in Malawi making up the balance.
Total sales for the nine months was up by 31%, reaching more than 3.7m pounds of U3O8, at an average realized price of $56/lb. During the March 2011 quarter the average sale price reached $66/lb. Revenue increased to $208.7m, up from $154.5 during the nine months to March 2010. The company posted gross profit of $39.3m but net losses widened to $34.7m.
The miner reported that production at Langer Heinrich for the March 2011 quarter was down 14%, with the miner producing some 795,808 lb U3O8 after abnormal rainfall impacted production. Construction of the stage 3 expansion at the Namibian mine to increase annual production to 5.2Mlb is 92% complete, the company reported.
Earlier Paladin stated that as an existing license owner it will not be affected by planned changes in Namibia’s policy on mineral ownership, adding that the clarification removes any uncertainty over its operations in Namibia.
The Malawi property achieved record production of 606,034 lb of U3O8 during the March 11 quarter, up 14% from the December quarter of 2010. During the nine months production increased 257%.
The company also addressed concerns over the nuclear fuel market following the earthquake and tsunami in Japan: “No responsible person could assert that the Fukushima events in any way undermine the fundamental safety of more than 400 nuclear plants operating worldwide today.”
Nuclear energy represents about 14% of global electricity production and with 25 new plants currently under construction in China the trend is set to continue. Uranium prices fell immediately following the earthquake, but have since recovered to around US$55 per pound and Paladin sees further upward pressure on uranium prices: “the uranium supply/demand imbalance is real and will widen as existing and new plants under construction continue to consume current and future uranium production capacity.”
Paladin is on an aggressive expansion drive. In February 2011 the company announced that it completed its acquisition of the uranium assets of Aurora Energy Resources for C$260.8m, valuing the current resources at US$1.90/lb. Paladin now holds title to significant uranium assets across six deposits within the Central Labrador Mineral Belt of Eastern Canada, totalling 83.8Mlb of Measured and Indicated Resources and 53.0Mlb of Inferred Resources.
Image of Langer Heinrich mine in the Namib desert supplied by Paladin Energy
