URANIUM producer Paladin Energy has agreed to sell a 25 per cent stake of its flagship project in Namibia to state-owned subsidiary China Uranium Corporation, following several years of softened prices for the nuclear material.
The US$190 million partial sale of Langer Heinrich uranium mine will reportedly provide an essential cash boost for Paladin, which has battled significant debt in the face of deteriorating uranium prices since the Fukushima nuclear disaster nearly three years ago.
Although both the respective boards at Paladin and China Uranium have approved the transaction, the sale is still dependant on certain Chinese regulatory approvals, including the National Development and Reform Commission.
These final approvals are expected to be obtained by mid 2014.
China Uranium, under direction from parent company China National Nuclear Corporation, has agreed to pay a non-refundable US$20 million deposit to Paladin in the interim.
Just days prior to the sale announcement, Paladin confirmed it had successfully refinanced its debt facility for its two major projects – its Namibian flagship, as well as Kayelekera uranium mine in Malawi.
The refinancing was completed after negotiations with several South African and Namibian banks, and effectively enabled Paladin to reduce its debt repayments by US$59 million across the next 18 months.
Within its previous finance agreements, Paladin would have had to pay more than US$80 million across the next 12 months, with total repayments to be completed in 2017.
However, under the new agreement, the company’s annual repayments across both projects will now be reduced from US$53.8 million per annum to US$18.3 million per annum in 2014 – a reduction of $US35.5 million. The first repayment can further be postponed until June 2014 as needed.
Paladin chief executive John Borshoff said the new developments had positive implications for the company’s cash flow, and substantially reduced financial pressures.
“The significant cash injection from this minority interest sale [at Langer Heinrich] will largely be applied to debt reduction, which the board considers an essential step during a time of unprecedented low uranium prices,” Mr Borshoff said.
“[The] successful refinancing is another important step in Paladin’s rigorous assessment of options to strengthen the business, both operationally and at a corporate level.
“Completing the refinancing during this period of depressed uranium prices and difficult market conditions is testament to the operational capability and financial robustness of Langer Heinrich.
“The project has continued to deliver superior production results at the same time as ongoing optimisation work has continued to reduce production costs.”