Further cost cutting at Langer Heinrich
Australian uranium miner and owner of the Langer Heinrich mine, Paladin this week announced that it would cut costs further following an announcement last week that it was scalling down on its capital expenditure as the mining house adapts to a low uranium spot price.
Said Paladin in a statement, “these measures will reduce total cash costs by more than US$33 million. Further measures that will be implemented within the December 2015 quarter are expected to bring the Company´s overall cash flow to a break-even level that is sustainable even if the current low uranium price environment continues.
“Paladin still firmly believes the uranium market is near an inflection point, after which materially higher prices are expected. The cost reduction initiatives outlined, in conjunction with the pending measures, are intended to make Paladin’s cash flow positive during Financial Year 2016, enhancing shareholder leverage to any future uranium price upturn,” the company said.
Key elements Paladin listed as part of its cost reduction initiatives include a revised forecast cash cost of approximately US$26 per pound for the financial year 2016 based on 5.2Mlb of production. Said Paladin, “This will result in a significant decrease in total cash costs reducing from US$36.44/lb in financial year 2015 to US$30.74/lb and represents a reduction of almost US$6/lb including a deferment of US$10 million capital expenditure into financial year 2017.
Additional elements of the reduction also include renegotiation of terms with the mining contractor, reduced reagent consumption linked to further optimisation of the Bicarbonate Recovery Plant and deferment of some planned capital expenditure as announced last week.
On the corporate and exploration front, total costs will be reduced to approximately US$16 million. “Exploration [is] rationalised for financial year 2016, focussed on essential exploration, including a small amount of potentially high impact drilling.”
Said the Aussie miner, “this US$33 million cash cost saving is a key step for Paladin to achieve sustainability in the current low uranium price environment. Paladin expects, as a minimum, to be cash flow neutral by the end of calendar year 2015. The further cost reductions undergoing review in the next three months will be implemented once verified and are aimed at lowering total all-in cash costs to achieve the cash flow neutral position. Alongside the cost reductions, a revised Life of Mine plan for Langer Heinrich is well advanced and Paladin expects its completion to result in further operational improvements.
The costs and efficiency gains announced are part of a focussed effort to put Paladin in a sustainable position and preserve shareholder value. Continued cost reduction combined with the positive outlook for uranium and the globally competitive position of our flagship Langer Heinrich project, means Paladin will have greater leverage to an improving uranium market with its established projects” according to Paladin.