Langer Heinrich Mine in offing
The sale of a minority stake in Langer Heinrich Mine is complete, pending the outcome of Chinese regulatory approvals.
On 20 January this year, Paladin signed an agreement to sell a 25% joint-venture equity stake in its flagship Langer Heinrich uranium mining operation in Namibia to China Uranium Corporation Ltd, a wholly owned subsidiary of CNNC, China’s leading nuclear utility, for consideration of US$190 million. This was announced in its quarterly report.
The off-take component of the agreement will allow CNNC to purchase its pro-rata share of products at the prevailing market spot price. There is also an opportunity for Paladin to benefit by securing additional long-term off-take arrangements with CNNC at arm´s length market rates, from Paladin´s share of Langer Heinrich production, the report stated.
According to the report, completion is now subject only to certain Chinese regulatory approvals, which include the National Development and Reform Commission and which are expected to be obtained by June 2014. Consent for the transaction from Paladin´s project financiers and the Bank of Namibia have been received, and as a consequence, on 16 April the US$20 million deposit paid by CNNC has been released from Escrow to Paladin and is non-refundable.
Paladin announced on 17 January 2014 that it had entered into agreements with its lenders to refinance the Langer Heinrich Mine and the Kayelekera mine project finance facilities. This new facility provides significant cash-flow benefits to both projects and leaves Paladin in a much stronger financial position. The annual principal repayments across both projects have been reduced from US$53.8 million to US$18.3 million by the end of last year, a substantial reduction of US$35.5 million, with the first repayment not being due until June 2014. In 2015, annual principal repayments under the existing facilities compared to the new facility will be reduced by a further US$23.7 million, as announced in the report.
Paladin further satisfied conditions for a US$20 million deposit from CNNC to become non-refundable refinancing of Langer Heinrich, allowing a significant reduction in debt repayments over 2014 and 2015. Additionally, continued steady production was achieved at Langer Heinrich and Kayelekera mines in the first quarter, achieving a combined production of 2.0889Mlb (948t) of Uranium 308.
Langer Heinrich produced 1,392,694lb (632t) U308 in the first quarter of the year, 4% above budget, with an overall recovery rate of 85.8% as was reported in the statement.
A major health and safety review was undertaken at the Langer Heinrich Mine. This identified several areas for improvement, including additional safety training, which is a major initiative for the next twelve to 24 months. According to Paladin ‘s quarterly report, the annual NOSA CMB 253 (HSE) audit was conducted at LHM, resulting in a three-star Platinum accreditation, dropping from its four-star rating the previous year,.