Malawi uranium mine sale agreed

Malawi uranium mine sale agreed

Paladin Energy has agreed to sell its 85% interest in the Kayelekera uranium mine in Malawi to Hylea Metals Ltd for AUD5 million (USD3.5 million) in cash and shares. Paladin says the sale will enable it to focus on optimising and restarting its Langer Heinrich Mine in Namibia.

Paladin permitted, constructed, commissioned and operated the open pit mine, which produced 10.9 million pounds of uranium (4193 tU) from 2009 to 2014, when it was placed on care and maintenance due to consistently low uranium spot prices. The mine, which is 15% owned by the government of Malawi through its interest in Paladin Africa, has 31 million pounds of remaining resources, Paladin said.

The agreement will see Sydney, Australia-based Paladin sell its interest to Hylea subsidiary Lotus Resources Pty Ltd, a joint venture with Chichewa Resources Pty Ltd. This will give Hylea a 65% interest in Kayelekera and Chichewa a 20% interest, which Hylea will have an option to acquire.

The AUD5 million consideration for the sale comprises AUD200,000 in cash and AUD4.8 million in Hylea shares to be issued to Paladin, of which AUD1.8 million will be issued on completion and AUD3 million on the third anniversary of completion. Paladin will also receive a 3.5% royalty based on revenues derived from future production at Kayelekera, capped at AUD5 million. The company will also be repaid funds previously used to provide security for a USD10 million environmental performance bond issued for Kayelekera.

The transaction is, amongst other things, subject to approval by Hylea shareholders and the government of Malawi approvals. Completion is expected in late 2019.

Paladin CEO Scott Sullivan said the sale, which would release cash resources as well as realising savings of about USD5 million per year from care and maintenance costs at Kayelekera, would allow the company to focus all of its resources on restarting its flagship Langer Heinrich uranium asset in Namibia. That operation has been under care and maintenance since 2017, but Paladin in February announced a pre-feasibility study for its restart after identifying options to reduce operating costs and maintain cost competitiveness.

“With this structure, we also keep some exposure to the upside of this transaction through the AUD4.8 million in share placements early in the development cycle,” he said.

Hylea Managing Director Simon Andrew said the acquisition was an “excellent” opportunity for the company.

Kayelekera is a world class uranium asset … and represents an opportunity to use the past production information to re-engineer certain mining and processing processes in order to reduce the overall Capex and Opex of the operations,” he said. “We are optimistic about the global uranium market and the outlook for firmer pricing.”

Paladin entered administration in mid-2017 but recommenced trading on the Australian Securities Exchange in February 2018 after recapitalisation.

 

Source: world-nuclear-news.org

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