Paladin announces Namibian and Australian sales

26 July 2016

Paladin Energy has announced plans to sell 24% of the Langer Heinrich uranium mine in Namibia and up to 75% stake of its Manyingee project in Western Australia. The transactions stand to raise over $200 million.

Langer Heinrich mine - 460 (Paladin Energy)
Langer Heinrich (Image: Paladin)

A non-binding terms sheet has been signed with a "major participant in the global nuclear industry" for the sale of a 24% interest in Langer Heinrich, while Australian company MGT Resources has signed a binding term sheet to acquire an initial 30% interest in Manyingee. MGT will then have an option to acquire a further 45% of the project.

The transactions are the result of a strategic initiatives process embarked on by the company which made net losses in 2014 and 2015. It achieved its goal of becoming "cash-flow positive" in fiscal 2016, excluding one-off restructuring costs and capital management.

Paladin currently owns 75% of Langer Heinrich, having sold a 25% joint venture equity stake in the mine for $190 million to China National Nuclear Corporation's subsidiary CNNC Overseas Uranium Holding Limited in 2014. The name of the party negotiating to buy a 24% stake has not yet been announced, but Paladin said that the sale is expected to raise $175 million in cash, accompanied by long-term arrangements for uranium offtake, if it proceeds on its current terms.

The company is aiming to formally close the transaction in the fourth quarter of 2016. On completion, Paladin will hold 51% of Langer Heinrich and will continue to be the operator of the open pit uranium mine, which has been in operation since 2006.

Although key terms of the proposed transaction, including the identity of the counterparty, are currently confidential, The Australian newspaper reported yesterday that the company is CNNC.

Manyingee sale

The binding term sheet signed with MGT Resources will see the company acquire an initial 30% interest in Manyingee, excluding Carley Bore, for $10 million in cash. On closing, MGT will form a joint venture (Manyingee JV) over the project with Paladin.

MGT will then have an option to acquire a further 45% of Manyingee JV from Paladin for $20 million in cash. The option will be exercisable for 12 months after the joint venture prepares a plan to conduct a field leach trial for uranium extraction by in-situ leach. The transaction is conditional on definitive documentation, regulatory approval, financing and a vote by MGT shareholders, although the company's directors have already agreed to vote in favour.

Sydney-based MGT Resources was founded in 2008 with the express purpose of searching for undervalued mining assets during the global financial crisis. It now owns a suite of tin and gold projects in Queensland and describes itself as Australia's second largest tin producer. Earlier this year, the company announced plans to pursue a new strategy of seeking opportunities in the uranium sector working with investor partners from China and elsewhere.

MGT executive chairman Jonathan Black said the company was "delighted" to announce the prospective deal. "We believe that this is a very attractive opportunity for MGT, and that, working with Paladin, we can bring this project into operation to deliver significant value to all our shareholders," he said.

Manyingee was discovered in 1974 and purchased by Paladin in 1998. The company reactivated the project following the lifting of uranium mining restrictions in Western Australia after a change of state government in 2008, beginning resource drilling in August 2012. The project has JORC-compliant estimated total mineral resources of 11,740 tonnes U3O8 (9956 tU). Paladin purchased the Carley Bore tenements, a potential satellite operation to Manyingee, in 2015.

Trading halt

The day after Paladin's announcement, the company was placed in a trading halt due to a request from the Australian Stock Exchange (ASX) for "clarification and additional information" relating to the 21 July announcement. The company today requested the continued suspension of trading of its securities until 29 July or until the information requested by the ASX has been provided.

Researched and written
by World Nuclear News