Financial Report for Nine Months Ended 31 March 2012
15.05.2012 | Marketwire
PERTH, WESTERN AUSTRALIA -- (Marketwire) -- 05/15/12 -- Paladin Energy Ltd ("Paladin" or "the Company") (TSX: PDN)(ASX: PDN) announces the release of its Financial Report for the nine months ended 31 March 2012.
The Financial Report is appended to this News Release.
Highlights
-- Record production for nine months of 4.846Mlb U3O8, an increase of 14%
over the corresponding 2011 period.
-- The Langer Heinrich Mine produced 1.052Mlb U3O8 in the March 2012
quarter, with ore volumes processed 8% above the December 2011 quarter,
as Stage 3 continues to ramp-up.
-- The Kayelekera Mine delivered record production of 0.725Mlb U3O8in the
March 2012 quarter, a 15% increase over the December 2011 quarter and
88% of nameplate. Record production in January at 96% of nameplate.
-- Cash cost of sales (C1 cost) reduced to US$34/lb for nine months to
March 2012, down from $35/lb in the previous comparable period.
-- Cash outflow from investment activities reduced to US$5.2M in March 2012
quarter with the near term high capital phase required to expand
production capacity to 8.5Mlb now completed.
-- Cash investment in working capital reduced to US$18.6M in March 2012
quarter down from US$63.1M in December 2011 quarter. No further
significant investment in working capital is expected beyond the June
2012 quarter with the operations now reaching production design
capacity.
-- High average price of $59/lb achieved on March 2012 quarter sales. Also
for June 2012 quarter confirmed sales volumes of 2,241,213lb U3O8 at an
average price of US$56/lb for record revenue forecast to be US$125.5M.
-- New contracts and a contract extension for delivery of a total of 4.0Mlb
U3O8 signed including three new U.S. utility customers.
-- Cash position strengthened with US$141M Stage 3 project finance drawdown
and A$68M share placement.
-- Post quarter successful raising of US$274M through Convertible Bonds.
Part of the proceeds will be used to fund a concurrent tender offer to
acquire up to US$200M of the existing convertible bonds maturing in
2013.
-- Significant level of interest in asset sales and strategic engagement
with Paladin has resulted in potential for two complementary outcomes,
providing an increased level of confidence in a successful result. Funds
potentially generated to provide for material debt reduction.
-- Ending of three-year moratorium on uranium development and mining gives
access to be able to progress the world class Michelin Uranium Deposit,
commencing with a drill programme in 2012.
-- Post quarter 50% Kwacha devaluation positive for Malawian economy and
for Kayelekera Mine cost optimisation progress.
Results
(References to 2012 and 2011 refer to the equivalent nine months ended 31
March 2012 and 2011 respectively).
-- Safety and Sustainability:
-- Maintained high safety performance with a 12-month moving average
Lost Time Injury Frequency Rate (LTIFR) of 0.9.
-- Production:
-- Record production for nine months of 4.846Mlb U3O8 - an increase of
14% from the previous nine months, despite operations being affected
by a combination of planned shutdowns, unscheduled remediation work
and disruptions from Stage 3 tie-ins.
-- Production for three months of 1.777Mlb U3O8- a slight decrease of
2.6% below the record December 2011 quarterly production.
-- Operations during the first six months of the period were affected
by a combination of planned shutdowns on both projects and
unscheduled remediation work at Kayelekera. Upgrades and remedial
work have since been successfully completed with record production
for the nine months achieved.
-- Post quarter both mining projects operated exceptionally well.
Production for Langer Heinrich for May month to date is above
design. Kayelekera's production in May is at 96% of nameplate and
also heading for record levels. Following the industrial action at
Kayelekera the mine is operating with a reduced workforce and
currently producing at 65% of nameplate. This is expected to only
marginally affect guidance, if workers return to work early.
-- Langer Heinrich Mine:
-- Record production for the nine months of 3.094Mlb U3O8 - a 14%
increase from 2011. Demonstrated production and performance benefits
achieved from Stage 3 production ramp-up.
-- March 2012 quarter U3O8production of 1.052Mlb, a 12% decrease from
the quarter ended 31 December 2011. Quarterly production in the
March 2012 quarter represented 81% of Stage 3 design capacity. Stage
3 continues to ramp-up with throughputs for the March 2012 quarter
8% above the December 2012 quarter levels, using lower grade feed
material in line with the mine plan.
-- Construction of the Stage 3 expansion completed. Staged ramp-up is
continuing with crushed tonnes increasing and ore feed grade being
reduced to scheduled mine plan levels. The front-end circuit
continued to perform well with record throughput. Extraction in the
leaching circuit continued to improve due to the ongoing success
with the new Flash/Splash heat exchanger and increasing leach
temperatures. Commissioning of the NIMCIX circuit is proving
successful. Stage 3 will increase annual production capacity from
3.7Mlb U3O8 to 5.2Mlb U3O8 pa.
-- Results of feasibility study for Stage 4 expansion evaluation has
been deferred to the end of the calendar year 2012 as a result of
additional capabilities being presented by Stage 3 equipment. Stage
4 is targeting conventional production of 8.7Mlb pa and 1.3Mlb pa
through processing of low grade material.
-- Kayelekera Mine:
-- Record production for the nine months of 1.752Mlb U3O8 - a 9%
increase from 2011. During the six months to 31 December 2011
production was impacted by planned plant upgrade shut down (3 weeks)
and unscheduled remediation work (3 weeks).
-- Record March 2012 quarter U3O8production of 0.725Mlb - an increase
of 15% above the quarter ended December 2011 and 88% of nameplate.
-- Both January and March 2012 produced at over 90% of nameplate.
Record production in January of 96% of nameplate.
-- Record mill feed and operating hours for 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.
-- Localised ground movement abated with conditions continuing to be
stable.
-- Cost Optimisation:
-- Implementation plan approved to target reducing corporate and
marketing costs by at least 15%.
-- Administration, marketing and site non-production costs reduced by
25% from US$14.9M in March 2011 to US$11.1M in the March 2012
quarter as a result of the cost optimisation programme.
-- Tighter control has led to a reduction of corporate overheads
including travel costs and outsourced work. Labour costs have
reduced as the high capital investment phase has largely been
completed.
-- Discretionary exploration expenditure reduced by US$5M for FY12 by
extending programme timeframes.
-- Kayelekera Mine cost optimisation programme is a key focus with
production nearing design performance. Fourteen areas have been
identified with specific targeted cost saving opportunities
including the key areas of acid, reagents, diesel and transport.
Progress over the past six months included reaching a new agreement
with the finished goods transporter to reduce costs, securing
cheaper imported acid, direct diesel imports to save costs and
cheaper mill balls now being sourced from China.
-- Recent 50% devaluation of the Malawi Kwacha corrects the
artificially high fixed rate that has negatively impacted the
Kayelekera Mine costs over the past few years. The US$ reported cost
of production is expected to reduce in line with the proportion of
costs denominated in Kwacha.
-- Sales:
-- Sales revenue increased 16% from US$207.2M in 2011 to US$240.0M for
the nine months ended March 2012, mainly as a result of higher sales
volumes of 4.457Mlb U3O8compared to 2011 sales volume of 3.713Mlb
U3O8. The average realised uranium price for the nine months ended
March 2012 was US$54/lb compared to US$56/lb for 2011. The average
sales price reflects the lower spot price during the period.
-- Total sales volume for the March 2012 quarter of 1.137Mlb U3O8- a
14% decrease compared to the December 2011 quarter sales of 1.318Mlb
U3O8. The impact of the lower volumes was offset by the higher
average realised uranium price for the March 2012 quarter of
US$59/lb, compared to US$53/lb for the December 2011 quarter.
Uranium sales volumes are expected to fluctuate quarter-on-quarter
due to the uneven timing of contractual commitments and resultant
scheduling by customers. Once production reaches design levels,
sales and production volumes are expected to be similar, measured on
an annual basis.
-- New contracts signed for the delivery of 2.8Mlb from 2012 to 2016 at
pricing from mid to low US$60s per lb. as well as extension of
existing contract for the delivery of more than 1.0Mlb over the sam
e
period at market-related pricing.
-- Term market interest by nuclear utilities in all regions has
increased recently for deliveries commencing in 2013-2014 which will
provide additional multi-year contracting opportunities in an
improving long-term market.
-- Cash Cost of Sales (C1 cost):
-- Overall C1 cost for the nine months to 31 March 2012 decreased
slightly to US$34/lb from US$35/lb in 2011.
-- Overall C1 cost for quarter ended March 2012 increased to US$36/lb
U3O8 from US$32/lb U3O8 for the December 2011 quarter, reflecting a
higher proportion of total sales attributable to Kayelekera Mine.
-- Langer Heinrich Mine C1 cost for quarter ended March 2012 decreased
to US$30/lb U3O8 from US$31/lb U3O8 in the December 2011 quarter,
despite the effects of the stronger Namibian dollar.
-- Kayelekera Mine C1 cost for the quarter ended March 2012 remained
relatively stable at US$47/lb compared to US$46/lb in the quarter
ended December 2011. Inventory sold in the March 2012 quarter was
partly produced in the September 2011 quarter when production was
lower due to the plant shutdown. As production is nearing design
performance, a key focus is cost optimisation. Specific targeted
costs saving areas include acid, reagents, diesel, transport and
providing increased opportunities for local workers.
-- Profit and Loss
Three Months Ended Nine Months Ended
31 March 31 March
2012 2011 2012 2011
US$M US$M US$M US$M
Revenue 67.8 92.9 241.2 208.7
C1 cost(1) (41.0) (58.0) (153.7) (129.9)
Royalties and
distribution (3.3) (5.5) (12.2) (12.6)
Amortisation and
depreciation (8.3) (11.0) (33.1) (26.9)
----------------------------------------------------
Gross profit 15.2 18.4 42.2 39.3
Exploration expenses (0.2) (0.8) (1.6) (1.8)
Site non-production
costs (4.0) (3.7) (14.1) (9.3)
Corporate, marketing and
administration (4.8) (8.3) (15.7) (19.3)
----------------------------------------------------
6.2 5.6 10.8 8.9
Non-cash costs (2.3) (2.9) (6.8) (11.3)
Other income & expenses (15.3) 1.2 (200.4) (7.1)
----------------------------------------------------
(Loss)/profit before
interest and tax (11.4) 3.9 (196.4) (9.5)
Finance costs (10.7) (14.6) (38.6) (48.3)
----------------------------------------------------
Loss before income tax (22.1) (10.7) (235.0) (57.8)
Income tax
benefit/(expense) 2.7 (1.2) 74.8 20.3
----------------------------------------------------
Loss after tax (19.4) (11.9) (160.2) (37.5)
Non-controlling
interests 1.9 (1.6) 22.6 2.8
----------------------------------------------------
Net loss after tax
attributable to members
of the parent (17.5) (13.5) (137.6) (34.7)
----------------------------------------------------
(1) Cash cost of sales (C1 cost) = cost of sales excluding product
distribution costs, sales royalties and depreciation and amortisation.
-- Gross profit for the nine months ended 31 March 2012 increased to
US$42.2M from US$39.3M in 2011 due to higher sales volumes which has
been partially offset by lower average prices. Adding back
amortisation and depreciation of US$33.1M for 2012 (2011: US$26.9M),
gross profit before amortisation and depreciation increased to
US$75.3M in 2012, up from US$66.2M in 2011.
-- Site non-production costs for the nine months ended 31 March 2012
were higher at US$14.1M due to higher royalties on increased sales,
increased activity at the Canadian operations following the lifting
of the moratorium and the Stage 4 expansion evaluation study.
-- Corporate and marketing costs were US$3.6M lower for the nine months
ended 31 March 2012 due to cost savings achieved through the cost
rationalisation programme that was announced to the market in the
latter half of 2011. Tighter control has led to a reduction in
corporate overheads.
-- Non-cash costs, mainly share based payments, for the nine months
ended 31 March 2012 reduced from US$11.3M to US$6.8M as a result of
no new grant of share rights in this period.
-- Other income and expenses for the nine months ended 31 March 2012
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
and a US$11.9M impairment of finished goods at the Kayelekera Mine.
-- Finance costs for the nine months ended 31 March 2012 decreased by
US$9.7M due to a portion of the Langer Heinrich Mine Stage 3 project
finance loan being capitalised as part of the Stage 3 construction
costs and in 2011 finance costs included a US$4.6M non-cash loss on
convertible bond buy-back.
-- A net loss of US$137.7M was recorded for the nine months ended 31
March 2012, 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 quarter ended September 2011.
-- Company recorded a US$17.6M net loss after tax attributable to the
ordinary equity holders for the quarter ended March 2012 compared to
a US$13.5M loss in the comparative quarter predominantly as a result
of the impairment of inventory expense.
-- Cash Flow:
-- Positive cash flow of US$62.1M generated by the Langer Heinrich and
Kayelekera mine operations for the nine months before investment
into working capital required to support higher production levels
and payments for administration, marketing and non-production costs,
exploration and net interest paid.
-- Cash outflow from investing activities slowed to US$5.2M in March
2012 quarter with completion of construction required to expand
production capacity to 8.5Mlb.
-- Cash investment in working capital reduced to US$18.6M in March 2012
quarter, down from US$63.1M in December 2011 quarter, mainly for
additional finished goods stocks required to meet firm sales
commitments of over 2Mlb for the June 2012 quarter. No further
significant investment in working capital is expected once the
operations reach production design capacity.
-- Positive cash flow from financing activities of US$135.7M for the
nine month period ended March 2012 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$96.9M at 31 March 2012.
-- Capital Raising and 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.
-- Successfully completed A$68M institutional private placement in
October 2011.
-- Post quarter, successful raising of US$274M through convertible
bonds.
-- Post quarter, tender offer to acquire up to US$200M of the US$325M
issue of convertible bonds due in March 2013. Following the US$200M
buyback the remaining US$125M of March 2013 convertible bonds are
expected to be repaid from a combination of existing cash balances,
cash generated from the Langer Heinrich and Kayelekera mine
operations and cash proceeds from the asset sales process.
-- Minority Asset Sales and Strategic Engagement Opportunities
-- Discussions with a select group of nuclear industry parties seeking
a broader and deeper partnership with Paladin than originally
envisioned are advancing. Funds potentially raised will primarily be
used to reduce net debt levels in the business.
-- The overall engagement process continues to make good progress. As a
result of the significant level of interest received from parties,
two separate and complementary outcomes are being pursued
simultaneously, providing a higher level of confidence in being able
to reach a successful outcome within the June/September timeframe.
Based on this expanded approach a material reduction in debt is
anticipated.
-- Exploration and Development
-- 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. This has cleared the way
to re-commence work on projects and substantial long-term resource
increases are expected.
The documents comprising the Financial Report for the nine months ended 31 March 2012, including the Report to Shareholders, Management Discussion and Analysis and Financial Statements and Certifications are available here (http://media3.marketwire.com/docs/fulldoc.pdf) and will be filed with the Company's other documents on Sedar (sedar.com) and on the Company's website (paladinenergy.com.au).
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 07:00 Perth & Hong Kong, Thursday 17 May 2012, 19:00 Toronto, Wednesday 16 May 2012 and 24:00 London, Wednesday 16 May 2012.
Details were included in a separate news release made on 11 May 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