Paladin Energy to re-start operations at mothballed Langer Heinrich uranium mine

Paladin Energy (ASX: PDN) has announced a decision to re-start production at the mothballed Langer Heinrich uranium mine in Namibia, with first volumes targeted for early 2024.

The move is underpinned by strong uranium market fundamentals and the company’s continued progress on marketing activities.

The scope of work will focus on general repairs and refurbishments required to return the existing process plant to operational readiness, and the delivery of process upgrades to increase throughput capacity and availability.

Paladin has confirmed the capital expenditure required for the re-start has increased from US$87 million to US$118 million, primarily driven by increased prices for labour, equipment and raw materials.

Key utility infrastructure work packages to ensure the stable and reliable provision of water and power over a 17-year mine life, as well as a strengthened project management and execution team have also added to overall costs.

EPCM contractor

Paladin has appointed Africa-focused engineering company ADP Group to complement its in-house capabilities and ensure Langer Heinrich is delivered to production.

ADP will provide EPCM (engineering procurement construction and management) services including detailed engineering and design; tendering for the procurement of equipment and materials; project management and contracts administration; provision of systems and computer software; and project commissioning and handover.

Current work packages include the completion of detailed engineering and design for process upgrades; the purchase of project materials and equipment; and the commencement of plant refurbishment and upgrade works.

Project funding

Paladin has committed to providing funding for the Langer Heinrich re-start project via loans to be repaid in priority to all outstanding shareholder loans.

Minority shareholder CNNC Overseas Uranium Holding Limited (25% ownership) is yet to finalise its own funding commitments.

With approximately US$177.1 million cash at hand and no corporate debt, Paladin said it would be well-funded to deliver first production from Langer Heinrich while pursuing further uranium marketing activities and advancing its global exploration portfolio.

Long-life operation

Langer Heinrich is a globally-significant, long-life operation which produced more than 43 million pounds of uranium oxide prior to being placed on care and maintenance in 2018 due to low uranium prices.

The mine is situated in the Namib Desert which is considered to be a significant uranium region.

It is approximately 40km southeast of the world’s longest running open pit uranium mine at Rössing, which was previously operated by Rio Tinto Group (ASX: RIO) and is now owned by CNNC.

The world-class Husab uranium operation, run by China General Nuclear Power Company, is also close by.

Paladin said its re-start plan for Langer Heinrich confirms the mine is “positively placed” to take advantage of an improved uranium market.