Paladin Energy Ltd: 30 June 2011 Annual Report
PERTH, WESTERN AUSTRALIA -- (Marketwire) -- 08/31/11 -- Paladin Energy Ltd ('Paladin' or 'the Company') (TSX: PDN)(ASX: PDN) announces the release of its Annual Report incorporating the financial statements for the year ended 30 June 2011. The Annual Report is appended to this News Release.
Proven production growth and transitioning into an optimisation phase
Paladin has delivered consistent growth in production over the past five years as it established the Company as an independent, global leader in the uranium industry. This production growth is set to continue with the completion of the Langer Heinrich Stage 3 expansion and finalisation of the Kayelekera Mine debottlenecking that will take Paladin to an installed annual production capacity of 8.5Mlb of U3O8.
To view the Graph associated with this press release, visit the following link:
http://media3.marketwire.com/docs/paladin_five_year_production.pdf.
This rapid growth in the period 2005-2010 required a high level of capital investment and resourcing to plan, execute and deliver the projects. During this period costs have been disproportionate to the concurrent production levels as new expansion capacity was installed. The staging of development projects means that, with the imminent completion of the Stage 3 expansion, the Company will move into a phase where there is a natural break in project construction and costs will become much more synchronised with production output. This will complete the high investment and working capital requirements of the past five years. Paladin will use this window to consolidate and undertake essential cost and production optimisation measures across all of its operations.
Paladin has continued to receive inquiries from a range of parties interested in securing sales contracts or equity participation at a project level. The Company is currently evaluating partially monetising some of its non-producing assets through the introduction of strategic minority partners. Paladin believes this will better demonstrate the significant value of these projects and increase cash resources.
As part of this transition from rapid growth to optimisation, Paladin has embarked on a company-wide initiative to reduce costs. Discretionary exploration programmes will be reduced and corporate overheads will be reviewed with targeted reduction objectives.
Final 2011 Year Results
(References to 2011 and 2010 below refer to the equivalent twelve months ended 30 June 2011 and 2010 respectively.)
-- Safety and Sustainability:
-- Kayelekera long term injury frequency rate (LTIFR) down from 6.8 in
2010 to 0.6 in 2011.
-- Langer Heinrich LTIFR down from 1.5 in 2010 to 0.8 in 2011.
-- Established Sustainability Committee reporting directly to the
Paladin Board.
-- Production:
-- Increased U3O8 production by 32% from 4.3Mlb in 2010 to 5.7Mlb
in 2011.
-- Langer Heinrich Mine:
-- Production increased 5% to 3.5Mlb in 2011 from 3.3Mlb in 2010.
-- Stage 3 expansion is near completion with commissioning and staged
ramp-up progressing well. Stage 3 will increase annual production
from 3.7Mlb U3O8 to 5.2Mlb U3O8.
-- Commissioning of the Stage 3 expansion front end in May showed
immediate results enabling the plant to produce at 82% of Stage 3
nameplate production in June 2011.
-- Feasibility Study for Stage 4 expansion targeting annual production
of 10Mlb is well advanced in regards to process design and
capability estimation. The study is set to be completed in the
December 2011 quarter.
-- Kayelekera Mine:
-- Production increased 126% from 1Mlb in 2010 to 2.2Mlb in 2011.
-- Plant operating time continued to improve with consecutive records
for uptime set in May and June 2011.
-- Further plant debottlenecking by increasing leach launder capacity
completed in August 2011.
-- Bankers' completion test postponed until after the planned
maintenance shutdown completed at the end of August 2011.
-- Sales:
-- Total sales volume for 2011 of 4.8Mlb U3O8 was a 29% increase
compared to 2010. The average realised uranium sales price for 2011
was US$55/lb U3O8.
-- Revenue from sales of uranium of US$266.8M was a 32% increase when
compared to 2010.
-- Cost of Sales (C1):
-- Langer Heinrich Mine cost of sales (C1) for 2011 increased slightly
to US$28/lb from US$26/lb in 2010, due to an 8% appreciation of the
Namibian Dollar.
-- Kayelekera Mine cost of sales (C1) for 2011 was US$50/lb. Costs were
higher due to lower volumes during the production ramp-up phase.
With the completion of the current plant upgrade, production volumes
are expected to increase further with a proportionate reduction in
costs.
-- Cash Flow:
-- Positive cash flow of US$83.7M generated by the Langer Heinrich and
Kayelekera operations for 2011 before US$104.2M investment in
working capital, mainly comprising inventory to fill the stock
pipeline to the convertor needed to support higher production and
sales levels.
-- Finished goods stock levels at 30 June 2011 were higher than usual
because of the additional inventory held to satisfy the in excess of
1Mlb of customer deliveries completed in July 2011.
-- Funding:
-- Cash of US$117.4M at 30 June 2011 invested with Australian banks
with a minimum AA Standard & Poor's credit rating.
-- Funding agreements signed with lenders for a US$141M Langer Heinrich
Stage 3 project finance loan, to replace existing project loan and
reimburse Stage 3 construction costs. Drawdown on the financing,
which is expected to provide additional cash of approximately
US$100M after repayment of the residual balance of the original
loan, is subject to fulfilment of conditions precedent usual for
this type of facility.
-- Capital Raising:
-- Successful raising of US$300M via the issue of 5 year convertible
bonds expiring November 2015. Existing US$250M convertible bonds
expiring December 2011 were bought back.
-- Acquisition of Aurora and NGM:
-- Acquisition of the Aurora uranium assets in Canada added 83.8Mlb
U3O8 of Measured and Indicated Mineral Resources at a grade of
0.09% and 53.0Mlb U3O8 of Inferred Mineral Resources at a grade
of 0.08%. Aurora represents a major addition to Paladin's project
development pipeline. The Company is awaiting the lifting of the
three year moratorium on uranium mining by the Nunatsiavut
Government which is expected within the next year. The initial focus
on the Aurora project will be to add value through further
exploration and drilling to significantly expand the resource base,
once the moratorium is lifted.
-- Completion of the takeover of NGM Resources Ltd represented a
significant addition to Paladin's portfolio of uranium exploration
projects. This established a presence in Niger, a major
underexplored uranium province. A scout drilling programme was
completed in early July. A follow-up drilling programme is planned.
-- Reserve and Resource Upgrades:
-- Langer Heinrich Mine increased Reserves 104% to 134.1Mlb with a
grade of 550ppm U3O8.
-- Valhalla increased Measured and Indicated Mineral Resources by 5.6%
to 63.4Mlb U3O8 with an additional 12.8Mlb U3O8 Inferred
Mineral Resources.
-- Odin adds an Inferred Mineral Resource of 10.3Mlb U3O8 at a
grade of 0.06%, increasing the Mount Isa projects' inventory.
-- Bikini adds 18% in contained metal for a total Indicated Mineral
Resource of 6.3Mlb and an Inferred Mineral Resource of 7.3Mlb, both
at a grade of 0.05%, further increasing the Mount Isa projects'
inventory.
-- Angela announced an Inferred Mineral Resource of 30.8Mlb U3O8 at
a grade of 0.13%.
-- Summit Resources Ltd:
-- Paladin settled its dispute with Areva NC (Australia) Pty Ltd
(Areva). The settlement paves the way for Paladin and Areva to work
co-operatively as shareholders of Summit Resources Ltd and provides
Paladin with control of the Mount Isa projects' sales and marketing
rights.
-- Profit and Loss
Year Ended Year Ended
30 June 2011 30 June 2010
US$M US$M
Revenue 268.9 204.3
Cost of sales (170.9) (131.6)
Royalties and distribution (15.2) (7.4)
-------------- ---------------
Gross profit (before amortisation) 82.8 65.3
Exploration (3.0) (9.4)
Corporate and non-production costs (54.0) (38.6)
-------------- ---------------
Contribution from continuing operations 25.8 17.3
Amortisation and depreciation (36.1) (14.3)
Non-recurring income & expenses (33.3) 0.4
-------------- ---------------
Earnings before interest and tax (43.6) 3.4
Finance costs (61.5) (21.4)
-------------- ---------------
Loss before income tax (105.1) (18.0)
Income tax benefit/(expense) 16.6 (28.5)
-------------- ---------------
Loss after income tax (88.5) (46.5)
Non-controlling interests 6.2 0.9
-------------- ---------------
Net loss after tax - members of parent (82.3) (45.6)
-------------- ---------------
-- Revenue increased to a record US$268.9M for 2011 due to increased
uranium sales volumes and the higher realised uranium sales price.
-- Gross profit before amortisation increased to US$82.8M for 2011 from
US$65.3M for 2010.
-- Contribution from continuing operations before amortisation and non-
recurring items increased to US$25.8M in 2011 from US$17.3M in the
previous year.
-- Corporate and non-production costs for 2011 include non-cash expenses of
US$12.6M as well as costs associated with the Canadian and African
operations of US$10.6M.
-- Non-recurring expenses includes an impairment of inventory expense of
US$26.4M at Kayelekera due to higher operating costs experienced during
ramp-up and the lower prevailing uranium spot price seen since events in
Japan in March.
-- Increased finance costs for 2011 reflect the cessation of the
capitalisation of costs with the Kayelekera Mine entering commercial
production on 1 July 2010 and US$6.3M related to the early buyback of
the December 2011 convertible bond.
The documents comprising the Annual Report for the year ended 30 June 2011, including the Appendix 4E, Management Discussion and Analysis and Financial Statements are attached and will be filed with the Company's other documents on Sedar (sedar.com) and on the Company's website (paladinenergy.com.au).
Conference Call
Conference Call and Investor Update scheduled for 07:00 Perth & Hong Kong, Friday 2 September 2011.
19:00 Toronto, Thursday 1 September 2011 and 24:00 London, Thursday 1 September 2011.
Details were included in a separate news release made on 24 August 2011.
To view the Annual Report in full, please visit the following link:
http://investors.paladinenergy.com.au/phoenix.zhtml?c=176316&p=irol-reportsannual.
ACN 061 681 098
Contacts:
Paladin Energy Ltd
John Borshoff
Managing Director/CEO
61-8-9381-4366 or Mobile: 61-419-912-571
john.borshoff@paladinenergy.com.au
Paladin Energy Ltd
Garry Korte
Chief Financial Officer
61-8-9381-4366 or Mobile: 61-409-875910
garry.korte@paladinenergy.com.au
Paladin Energy Ltd
Greg Taylor
Investor Relations Contact
905 337-7673 or Mobile: 416-605-5120 (Toronto)
greg.taylor@paladinenergy.com.au