Australia's Paladin Energy to Expand Uranium Mines in Namibia and Malawi

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Researched by Industrial Info Resources (Sugar Land, Texas)--Australian uranium mining company Paladin Energy Limited (ASX:PDN) (Subiaco, Western Australia) is set to expand production capacity at two uranium mines in Africa: the Langer Heinrich mine in Namibia, and the Kayelekera mine in Malawi.

The Langer Heinrich mine is in the Namib Desert, some 80 kilometers west of the seaport Walvis Bay. The deposit was first developed in the 1970s, but was suspended in the1980s because of low uranium prices. Paladin Energy acquired the mine in 2002, and in June this year reported a 12-month production figure of 2.6 million pounds of uranium oxide.

The $55 million second stage of the mine development construction program was completed in June 2009, intended to raise production output to 3.7 million pounds per year. The company is set to embark on a $71 million third stage of the development program, intended to raise production capacity further to more than 5 million pounds of uranium oxide per year by the end of 2010.

In September this year, Paladin Energy released the results of exploratory drilling activities as part of the resource definition program for the mine. The results showed an increase in the resource base for the mine, which, according to Paladin Energy, should enable the mine to reach a production capacity of 6.6 million pounds in the coming fiscal year, and as much as 8 million pounds per year by 2011-12.

In Malawi, Paladin Energy holds an 85% stake in the Kayelekera mine, with the government of Malawi holding the 15% balance stake. The mine is located in northern Malawi, some 575 kilometers north of the Malawi capital Lilongwe. The deposit was first discovered in the early 1980s by the British Central Electricity Generating Board.

However, as with the Namibian mine, it was considered uneconomic to continue operations, and the mine was shut down in 1992. Paladin Energy acquired the mine in early 1998, and by June 2007 had completed a feasibility study sufficient to begin construction work, budgeted at $200 million and lasting two years. Commissioning of the mine took place in January this year, with initial production in April. Full production capacity, estimated to be 3.3 million pounds per year of uranium oxide, is expected to be reached by early 2010.

In addition to the two mines in Africa, Paladin Energy also has interests in several uranium mine projects and deposits under development in Australia. In Western Australia, the company has two projects under way, following a change in the state government in 2008 that removed uranium mining restrictions in the state.

The Manyingee project, some 1,100 kilometers north of Perth and about 80 kilometers inland, is set to begin field exploration early in 2010, while the Oobagooma project in the West Kimberley district, some 1,900 kilometers northeast of Perth, is waiting on the Australian Federal Government to grant exploration permission.

In Queensland, the situation is more complicated. The ruling Labor Party of the state has maintained a hard line regarding uranium mining, but is reportedly softening its approach. Paladin Energy has a 91% interest in the Mount Isa deposits of Valhalla and Skal, but must wait for approval to begin operations there.

In the Northern Territory of Australia, Paladin Energy has interests in two further deposits: the Bigrlyi deposit, which is some 390 kilometers northwest of Alice Springs, in which the company has a 42% interest; and the Angela/Pamela deposit, which is 25 kilometers south of Alice Springs, in which it has a 50% interest. Both projects are at the pre-feasibility stage, to be undertaken after resource validation.

In terms of measured and indicated resources, the two African mines contain about two-thirds of Paladin Energy's estimated uranium reserves, compared with one-third contained in the Australian deposits. However, resource definition is still under way at a number of Australian sites.

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