FOLLOWING a weakening of the uranium spot price, Paladin Energy has announced measures to cut costs by US$23 million for the 2014 financial year.
Paladin operates two uranium mines in Africa – Langer Heinrich in Namibia and Kayelekera in Malawi – and recorded a loss of $US420.9 million for the 2013 financial year due to massive write downs on the value of its assets, caused by the weak uranium price.
The company stated that while the lower commodity price didn’t detract from the strong fundamentals of uranium in the mid to long term, it did make the revision of far-reaching rationalisation and optimisation strategies pertinent.
Paladin intended to reduce corporate overhead and exploration costs by 24 per cent (US$10.8 million) and discretionary capital expenditure by US$12.4 million. Exploration budgets would be cut by 50 per cent, with activities suspended on all projects except essential work on the Michelin project in Labrador, Canada, and some necessary follow-up work on the Mount Isa projects in Queensland.
Board and management salaries had been cut by 10 per cent, and head office rationalisation included a cut in staff numbers. Although it did not report how many jobs would be scratched, media have reported the company had made 14 staff redundant in the past year.
The company aimed to reduce the C1 cash costs at Langer Heinrich by 15 per cent (US$25 per pound) and by 22 per cent (US$30.60/lb) at Kayelekera, by the end of the 2015 financial year.
“Paladin is also continuing to review and optimise management of its existing assets,” the company stated.
“Efforts to complete the sale of a minority interest in Langer Heinrich to reduce debt have recommenced in a rejuvenated process and the company will also pursue negotiations for suitable joint venture of its advanced undeveloped projects.
“Paladin’s flagship Langer Heinrich operation continues to perform exceptionally well.
“The reducing unit cost profile of this project going forward as identified above, along with its 20 year mine life and opportunity to expand production when uranium price justifies, makes this project of world class quality demonstrating also the sound capability residing within the Paladin Group to deliver value.”
Meanwhile, a serious electrical incident at Langer Heinrich in early October caused one employee and two contractors to be hospitalised.
“Two of the workers received significant burns while the third worker received smoke inhalation and has been discharged. The more seriously injured worker has been flown to South Africa for treatment,” Paladin reported.
An investigation into the incident is underway.