Paladin to Complete Study for Namibian Mine Expansion

By Angela Macdonald-Smith

Nov. 11 (Bloomberg) -- Paladin Energy Ltd., the Australian company producing uranium in Namibia, said it will this month complete a study to allow the board to consider a further expansion of its only productive mine.

An enlargement of the Langer Heinrich mine to 3.7 million pounds a year of uranium oxide from 2.6 million in annualized output now is due for completion at the end of December. The further upgrade would take capacity to 6 million pounds a year by 2010, Perth-based Paladin said today in a report to the Australian stock exchange. A second mine, in Malawi, remains on schedule to start up in the first three months of 2009, it said.

Paladin is seeking to tap rising demand for nuclear power, with the International Atomic Energy Agency forecasting 60 plants will be built in the next 15 years. Uranium spot prices, which reached a record $138 a pound in June 2007, last week rose 4.3 percent to $48 a pound, Denver-based TradeTech LLC said.

``It is important to note that the fundamental under-supply position of the existing, as well as planned, nuclear fleet worldwide has not changed,'' Paladin said today. ``Demand for uranium in the medium to long-term remains extremely strong.''

Paladin, which has sunk 49 percent in the past six months in Sydney trading, gained 2.8 percent to A$2.60 on the exchange.

The company reported a net loss of $4.7 million in the three months ended Sept. 30, compared with a loss of $14.5 million a year earlier. Sales jumped 85 percent to $52.4 million. Financing costs surged 35 percent to $9.2 million.

Asian Contract

Paladin said it signed a contract for the sale of 1.5 million pounds of uranium oxide from the Kayelekera project in Malawi. The agreement is with ``a significant Asian power utility'' for delivery in 2009-2011 at prices ``reflective of the longer-term nature of the contract,'' it said.

The expansion of Langer Heinrich and an uninterrupted commissioning of Kayelekera through the wet season will be ``critical'' to reach the output target of 3.6 million pounds of uranium oxide in the year ending June 30, 2009, Paladin said.

``Even with the impact of such influences the combined production from both mines is not expected to vary more than 250,000 pounds'' from the forecast, it said.

To contact the reporter on this story: Angela Macdonald-Smith in Sydney at amacdonaldsm@bloomberg.net