Paladin begins consultations to place LHM mine on care and maintenance

30 April 2018 (Last Updated April 30th, 2018 11:23)

Paladin Energy is considering placing its Langer Heinrich mine (LHM) in Namibia on care and maintenance as a result of the difficult conditions currently facing the uranium market.

Paladin Energy is considering placing its Langer Heinrich mine (LHM) in Namibia on care and maintenance as a result of the difficult conditions currently facing the uranium market.

The company is undertaking preparatory steps for a potential care and maintenance decision and has commenced negotiations with the relevant stakeholders.

Paladin is expected to run out of the medium-grade ore stockpiles that currently serve as the processing feed for the mine’s processing plant before mid-2019.

As a result, the company feels that a decision is required on whether to restart physical mining, process low-grade stockpiles or place LHM on care and maintenance at least six months before the stockpiles are exhausted.

"The uranium market has failed to recover since the Fukushima incident in 2011, with the average spot price so far in 2018 the lowest in 15 years."

Additional major factors affecting the planned resolution include the deterioration of macro factors such as low spot uranium price, foreign exchange rates and the price of processing reagents.

The company noted that it is unlikely to be in a position to restart physical mining activity at LHM this year, while processing low-grade stockpiles is not currently being considered as a viable alternative.

Paladin Energy CEO Alex Molyneux said: “The uranium market has failed to recover since the Fukushima incident in 2011, with the average spot price so far in 2018 the lowest in 15 years.

“It’s deeply distressing to have to consider suspending operations at LHM because of the consequences for our employees, and the broader community.

“However, as there has yet to be a sustainable recovery in the uranium market, and with the aim of preserving maximum long-term value for all stakeholders, it is clearly prudent to consider these difficult actions.”

The decision regarding care and maintenance is expected to arrive within the next two months and will be conditional upon the receipt of any required approvals, as well as the completion of preparatory initiatives.

The announcement would be followed by a final, one-to-two-month process in preparation for the termination of uranium production at the site.

LHM has a capacity of 5.2 million pounds (lb) of uranium production per year and has been in operation since 2007.

The mine produced a total of 3.4 million pounds of uranium last year.