Paladin Energy Ltd: Financial Report for Six Months Ended 31 December 2011
14.02.2012 | Marketwire
PERTH, WESTERN AUSTRALIA -- (Marketwire) -- 02/14/12 -- Paladin Energy Ltd ('Paladin' or 'the Company') (TSX: PDN)(ASX: PDN) announces the release of its Financial Report for the six months ended 31 December 2011. The Financial Report is appended to this News Release.
Highlights
-- Record half year production of 3.069Mlb U3O8 an 8.5%% increase on the
corresponding 2010 period.
-- In the December 2011 quarter, the Langer Heinrich Mine production
increased to 92% of Stage 3 design capacity recording a 40% increase
over the September 2011 quarter.
-- The Kayelekera Mine production increased to over 90% of design for the
December 2011 quarter recording a 60% increase over the September 2011
quarter.
-- The key production measures for the Kayelekera Mine bankers' technical
completion test, covering 90 days from 1 November 2011 to 31 January
2012, have been passed. Work is continuing on final completion test
certification.
-- US3.2M profit after tax for the quarter ended 31 December 2011.
-- Cash position strengthened with US$141M Stage 3 project finance drawdown
and A$68M share placement.
-- Ending of three-year moratorium on the mining, development and
production of uranium gives access to the world class Michelin Uranium
Deposit validating decision to acquire the Aurora uranium assets at a
discounted price of US$1.90/lb.
-- New contracts for delivery of 2.8Mlb signed with three new customers.
-- Mid to long term uranium market fundamentals intact.
-- Progress on minority JV partner farm-outs on Australian projects with
evaluation expected to be completed in the March quarter.
Results
(References to 2011 and 2010 refer to the equivalent six months ended 31 December 2011 and 2010 respectively).
-- Safety and Sustainability:
-- Safety continued to improve - rolling 12-month Loss Time Injury
Frequency Rate down from 0.8 to 0.7.
-- Production:
-- Record half year production of 3.069Mlb U3O8 - an increase of 8.5%
from the 2010 half year.
-- Record quarterly production of 1.825Mlb U3O8- an increase of 47%
over the September 2011 quarter.
-- Operations during the first part of the half year were affected by a
combination of planned shutdowns on both projects and unscheduled
remediation work at Kayelekera. Upgrades and remedial work has since
been successfully completed with record final quarter production
achieved.
-- Langer Heinrich Mine:
-- December 2011 half year U3O8 production increased to 2.042Mlb from
1.832Mlb in 2010, an 11% increase. Production was impacted by Stage
3 tie-in shutdowns, however increasing production benefits evident
as new equipment comes on-line.
-- December 2011 quarter U3O8 production 1.193Mlb, a 40% increase over
the quarter ended September 2011. Quarterly production in the
December 2011 quarter represented 92% of Stage 3 design capacity.
-- Construction of the Stage 3 expansion project reached an overall 99%
state of completion. Commissioning and overall staged ramp-up is
well advanced with steam generation and NIMCIX areas recently coming
on stream for production ramp-up. Ramp-up of plant is expected to be
completed in March 2012. Stage 3 will increase annual production
capacity from 3.7Mlb U3O8 to 5.2Mlb U3O8 per annum ('pa').
-- Economic results of feasibility study for Stage 4 expansion
evaluation expected to be available by April 2012. Stage 4 is
targeting conventional production of 8.7Mlb pa and 1.3Mlb pa through
processing of low grade material.
-- Kayelekera Mine:
-- December 2011 half year U3O8 production increased to 1.027Mlb from
0.997Mlb in 2010, a 3% increase. Production was impacted by planned
plant upgrade shut down (3 weeks) and unscheduled remediation work
(3 weeks).
-- December 2011 quarter U3O8 production of 0.632Mlb was an increase of
60% above the quarter ended September 2011, despite 12 days lost in
October due to the acid plant being offline.
-- Both November and December 2011 were record production months
averaging 93% of nameplate.
-- Bankers' technical completion test commenced on 1 November and
completed as scheduled on 31 January 2012. The lenders technical
expert has confirmed that the key production tests have been met.
Work will continue with lenders over the next month to finalise
completion test certification.
-- Localised ground movement abated with conditions continuing to be
stable.
-- Cost Optimisation:
-- Implementation plan approved to target reducing corporate and
marketing costs by 15%.
-- Tighter control has led to a reduction of corporate overheads.
Labour costs have been reduced as the high capital investment phase
has largely been completed.
-- Administration, marketing and site non-production costs reduced from
US$14.3M to US$11.8M in the December 2011 quarter as a result of the
cost optimisation programme.
-- Discretionary exploration expenditure reduced by US$5M for FY12 by
extending programme timeframes.
-- Kayelekera Mine cost optimisation programme is a key focus with
production nearing design performance. Fourteen areas have been
identified with specific targeted cost saving opportunities
including the key areas of acid, reagents, diesel and transport. A
restructure of the mining contract has been completed and agreement
has been reached with the contractor to reduce transport costs.
-- Sales:
-- Sales revenue increased 50% from US$115.8M in 2010 to US$173.4M for
the half year ended December 2011, mainly as a result of higher
sales volumes for the December 2011 half year of 3.320Mlb U3O8
compared to the December 2010 half year sales volume of 2.317Mlb
U3O8. The average realised uranium price for the December 2011 half
year was US$52/lb compared to US$50/lb for 2010.
-- Total sales volume for the December 2011 quarter of 1.318Mlb U3O8, a
34% decrease compared to the September 2011 quarter sales volume of
2.002Mlb U3O8. Uranium sales are expected to fluctuate quarter-on
quarter due to the uneven timing of contractual commitments and
resultant scheduling by utility customers. The average realised
uranium price for the December 2011 quarter was US$53/lb, the same
level as recorded for the September 2011 quarter.
-- New contracts signed for the delivery of 2.8Mlb from 2012 to 2016 at
pricing from mid to low US$60s per lb.
-- Cash Cost of Sales (C1 cost)(1):
-- Overall C1 cost for the six months ended December 2011 increased to
US$34/lb from US$31/lb in 2010 as a result of a higher proportion of
sales from the Kayelekera Mine as production at that mine continues
to ramp up to design levels.
-- Overall C1 cost for quarter ended December 2011 decreased to
US$32/lb U3O8 from US$35/lb U3O8 for the September 2011 quarter
reflecting a higher proportion of lower cost Langer Heinrich Mine
sales.
-- Langer Heinrich Mine C1 cost for quarter ended December 2011
decreased to US$31/lb U3O8 from US$32/lb U3O8 for the September 2011
quarter due to the effects of the lower Namibian dollar. With
increased production from the ramp-up towards Stage 3 production
levels, cost of production has reduced. This lower cost is expected
to reflect in cost of sales in future results. FY12 target of
US$28/lb remains unchanged.
-- Kayelekera Mine C1 cost for the quarter ended December 2011
increased from US$40/lb in the quarter ended September 2011 to
US$46/lb in the quarter ended December 2011. Inventory sold in the
December quarter was produced in the September quarter when
production was lower as a result of the plant shutdown. The product
sold in the September 2011 quarter was predominantly from inventory
held at 30 June 2011, which had previously been written down to a
recoverable value of US$52.75/lb, with a C1 cost component of
approximately US$40/lb. As production reaches design performance, a
key focus is cost optimisation. Specific targeted costs saving areas
include acid, reagents, diesel, transport and providing increased
opportunities for local workers.
(1) Cash cost of sales (C1 cost) = cost of sales excluding product distribution costs, sales royalties and depreciation and amortisation.
-- Profit and Loss
Three Months Ended Six Months Ended
31 December 31 December
2011 2010 2011 2010
US$M US$M US$M US$M
Revenue 70.4 66.7 173.4 115.8
C1 cost (42.8) (42.7) (112.0) (71.6)
Royalties and distribution (3.1) (4.1) (9.6) (7.4)
Amortisation and depreciation (7.5) (8.9) (24.8) (15.8)
----------------------------------------
Gross profit 17.0 11.0 27.0 21.0
Exploration expenses (0.6) (0.5) (1.4) (1.0)
Site non-production costs (4.8) (2.7) (10.2) (4.9)
Corporate and marketing (5.1) (7.3) (11.0) (11.8)
----------------------------------------
6.5 0.5 4.4 3.3
Non-cash costs (1.9) (4.3) (4.4) (8.3)
Other income & expenses 0.8 (2.3) (185.1) (8.3)
----------------------------------------
Profit/(loss) before interest and
tax 5.4 (6.1) (185.1) (13.3)
Finance costs (14.1) (20.6) (27.9) (33.7)
----------------------------------------
Loss before income tax (8.7) (26.7) (213.0) (47.0)
Income tax benefit 10.8 6.4 72.1 21.6
----------------------------------------
Profit/(loss) after income tax 2.1 (20.3) (140.9) (25.4)
Non-controlling interests 1.1 2.7 20.7 4.3
----------------------------------------
Net profit/(loss) after tax
attributable to members of the
parent 3.2 (17.6) (120.2) (21.1)
----------------------------------------
-- Gross profit for the December 2011 half year increased to US$27.0M for
2011 from US$21M in 2010 due to higher sales volumes and prices. Adding
back amortisation and depreciation of US$24.8M for the 2011 half year
(2010: US$15.8M), gross profit before amortisation and depreciation
increased to US$51.8M in 2011 from US$36.8M in 2010.
-- Site non-production costs for the December 2011 half year were higher at
US$10.2M due to higher royalties on increased sales, the acquisition of
the Canadian operations and the Stage 4 expansion evaluation study.
-- Corporate and marketing costs were US$0.8M lower for the December 2011
half year due to cost savings achieved through the cost rationalisation
programme which has started to show results in the last quarter.
-- Non-cash costs, mainly share based payments, for the December 2011 half
year reduced from US$8.3M to US$4.4M as a result of no new grant of
share rights in this period.
-- Other income and expenses for the December 2011 half year mainly
reflects the September 2011 impairment of the Kayelekera Mine asset
expense of US$178.9M pre-tax (US$133M post-tax) caused by the
deterioration of uranium prices since events in Japan in March 2011.
-- Finance costs for the December 2011 half year decreased by US$5.8M due
to the December 2010 expense, including a US$4.6M non-cash loss on
convertible bond buy-back.
-- A net loss of US$120.2M was recorded for the half year ended December
2011, mainly as a result of the US$133M (post-tax) impairment cost
associated with the write down of the Kayelekera Mine assets that
occurred in the previous quarter ended September 2011. The write down
was considered necessary as a result of the reduction in uranium prices
post Fukushima.
-- Company recorded US3.2M profit after tax attributable to the ordinary
equity holders for the quarter ended December 2011 compared to a
US$17.6M loss in the comparative quarter as a result of higher sales
volumes and prices as well as lower overhead and finance costs.
-- Cash Flow:
-- Positive cash flow of US$41.1M generated by the Langer Heinrich and
Kayelekera mine operations for the six months before US$79.2M
investment into working capital, administration, marketing and non-
production costs of US$21.2M, exploration of US$1.4M and net
interest paid of US$17.3M. The increase in working capital was
mainly due to a reduction in creditors with the wind down of Stage 3
construction and an increase in debtors due to timing of sales at
end of December 2011. Higher inventories associated with higher
production levels at the Kayelekera Mine also contributed.
-- Positive cash flow from financing activities of US$145.7M
attributable to the drawdown of the Langer Heinrich Stage 3 project
finance facility, proceeds from the share placement and after
scheduled repayments of the Langer Heinrich and Kayelekera project
finance facilities.
-- Cash Position:
-- Cash of US$126.9M at 31 December 2011.
-- Funding:
-- US$141M Langer Heinrich Stage 3 project finance facility fully
drawndown.
-- Remaining US$24.8M of Langer Heinrich Stage 1 project finance
facility repaid.
-- Capital Raising:
-- Successfully completed A$68M institutional private placement.
The documents comprising the Appendix 4D - Financial Report for the six months ended 31 December 2011, including the Report to Shareholders, Management Discussion and Analysis and Financial Statements and Certifications 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).
To view the full Quarterly Report, please visit the following link: http://media3.marketwire.com/docs/paladin1.pdf
Generally Accepted Accounting Practice
The news release includes non-GAAP performance measures: Cash cost of sales (C1 cost), gross profit before amortisation and depreciation, non-cash costs as well as other income and expenses. The Company believes that, in addition to the conventional measures prepared in accordance with GAAP, the Company and certain investors use this information to evaluate the Company's performance and ability to generate cash flow. The additional information provided herein should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP.
Conference Call
Conference Call and Investor Update scheduled for 06:00 Perth & Hong Kong, Thursday 16 February 2012, 17:00 Toronto, Wednesday 15 February 2012 and 22:00 London, Wednesday 15 February 2012.
Details were included in a separate news release made on 8 February 2012.
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: +61-409-875-910
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
Paladin Energy Ltd
Matthew Keane
Investor Relations Contact
+61-8-9381-4366 or Mobile: +61-407-682-974
matthew.keane@paladinenergy.com.au
www.paladinenergy.com.au