PERTH, WESTERN AUSTRALIA--(Marketwired - May 10, 2016) -
Paladin Energy Ltd ("Paladin" or "the Company") (
HIGHLIGHTS
Operations
Sales and revenue
Corporate
Outlook
Results
(References below to 2016 and 2015 are to the equivalent three months ended 31 March 2016 and 2015 respectively).
Safety and sustainability
The Company's 12 month moving average Lost Time Injury Frequency Rate6 (LTIFR) was 1.4 as compared to 2.1 at the end of the last quarter and 2.3 for the quarter to 31 March 2015. The Company achieved 635 Lost Time Injury (LTI) free days at the Kayelekera Mine (KM) and 51 LTI free days at the Langer Heinrich Mine (LHM) at the end of this quarter. One lost time injury occurred at LHM in this quarter.
Langer Heinrich Mine (LHM)
Langer Heinrich Mine (LHM) produced 1.302Mlb U3O8 for the three months ended 31 March 2016, up 6% from 2015.
Kayelekera Mine (KM) remains on care and maintenance
Profit and Loss
Total sales volume for the quarter was 0.595Mlb U3O8 (2015: 0.440Mlb). Sales volumes are expected to fluctuate quarter-on-quarter due to the uneven timing of contractual commitments and resultant delivery scheduling to customers, and also fluctuations between U3O8 production and U3O8 drummed. Sales, U3O8 production and U3O8 drummed volumes, and inventories are expected to be comparable on an annualised basis.
Sales revenue for the quarter increased by 22% from US$17.1M in 2015 to US$20.8M in 2016, as a result of a 35% increase in sales volume, which was partially offset by a 9% decrease in realised sales price.
The average realised uranium sales price for the three months ended 31 March 2016 was US$34.67/lb U3O8 (2015: US$38.03/lb U3O8), compared to the TradeTech weekly spot price average for the quarter of US$32.73/lb U3O8.
Gross Profit for the quarter increased by 200% from US$0.7M in 2015 to US$2.1M in 2016.
Underlying EBITDA for the three months ended 31 March 2016 of negative US$0.8M, a US$5.4M improvement from a negative underlying EBITDA of US$6.2M for the three months ended 31 March 2015.
Net loss after tax attributable to members of the Parent for the quarter of US$15.1M (2015: Net loss US$12.6M).
Cash flow
Cash outflow from operating activities for the quarter was US$32.4M, primarily due to payments to suppliers and employees of US$35.3M and net interest paid of US$6.4M, which were partially offset by receipts from customers of US$9.5M.
Cash inflow from investing activities for the quarter totalled US$1.5M:
Cash outflow from financing activities for the quarter of US$84.6M is attributable to the repurchase of additional US$25M April 2017 Convertible Bonds for US$23.0M (excluding accrued interest), repayment of the entire US$56.4M remaining drawn under the LHM syndicated loan facility and US$5.2M distribution to CNNC by way of repayment of intercompany loans assigned to CNNC.
Cash position and capital management
Cash of US$21.4M at 31 March 2016 vs. adjusted guidance in the range of US$19M to US$29M, after adjusting for the implementation of the Convertible Bond repurchase and the repayment of the LHM Syndicated Facility in the March quarter.
Repurchased an additional US$25M of the US$237M Convertible Bonds due April 2017, during the quarter ended 31 March 2016, for approximately US$23.5M (including accrued interest). US$62M was repurchased in total during the nine-months for approximately US$57.5M (including accrued interest).
The documents comprising the Unaudited Consolidated Financial Report for the nine months ended 31 March 2016, including the Management Discussion and Analysis, Financial Statements and Certifications are attached and will be filed with the Company's other documents on Sedar (sedar.com) and on the Company's website (paladinenergy.com.au). Please find, at the link below, the Unaudited Consolidated Financial Report.
http://media3.marketwire.com/docs/G097514QuarterlyReport.pdf
Outlook
Uranium market
The TradeTech weekly spot price average for the March quarter was US$32.73/lb, a fall of 9% compared to the December 2015 quarter and a 14% decrease compared to the March 2015 quarter.
The uranium market continues to be impacted by demand reductions arising as a result of the March 2011 Fukushima accident. Units 3 and 4 of Kansai's Takahama NPP became the third and fourth Japanese reactors to re-start, however, positive progress was short-lived as a district court injunction caused operations to be suspended at both reactors in March. Kansai has appealed against the injunction, however, the reactors are likely to remain offline for several months during the legal process. In more positive news, in early April the Fukuoka High Court rejected an appeal seeking suspension of operations at Sendai 1 & 2. In addition, pre-service inspections have commenced at the Ikata 3 power plant, with July targeted for re-start of the reactor.
Nuclear power development in China continued with two additional reactors connected to the grid during the March quarter. China now has 32 reactors in operation and a further 22 units under construction. During the March quarter, China National Nuclear Corporation and China General Nuclear announced plans to construct four new reactors at inland sites. Development of inland projects had previously been on-hold following post-Fukushima safety reviews.
In February, South Africa announced definitive plans to embark on a nuclear power plant procurement process that seeks to add 9,600 MWe of nuclear energy to South Africa by 2030. In the Middle East, Abu Dhabi's ENEC reported substantive progress in the construction and testing of Units 1 & 2 of its Barakah NPP. Unit 1 is on schedule to commence operations in 2017.
Company strategy
Despite the Company's belief that a uranium industry turnaround is tentatively underway, its current strategies are focused on optimising actions to maximise cash flow whilst also prudently enacting capital management actions. Paladin's strategies are aimed at maximising shareholder value through the uranium price downturn whilst remaining positioned for a future normalisation of the uranium market and price. Key elements of the Company's strategy include:
Company outlook
During recent weeks, LHM experienced reduced performance from return water sumps located in TSF3. Such sumps typically provide approximately 50% of LHM's process plant water requirement. The reduced performance of the TSF3 return water sumps is mainly due to solids ingress into the pumps in those sumps as a result of a failure of the filtration blanket layers around them. LHM has drawn additional water from NamWater to the limit of the supply infrastructure and has also established temporary recovery equipment to source return water from the surface of TSF3, partially mitigating the problem whilst re-engineering of the TSF3 return water process has taken place. Some production losses have been experienced during April and for part of May. Overall, the Company expects the issue to have caused reduced production for the quarter ended 30 June 2016 and FY2016 of approximately 150,000lb.
The TSF3 return water issue results in the Company reducing its production guidance by the expected production losses and for an increase in guidance for LHM C1 cash costs for the quarter to 30 June 2016. However, the issue is not expected to impact other elements of guidance such as sales or the 30 June 2016 forecast cash balance.
Key relevant guidance items for FY2016 have been updated and include:
Key relevant guidance items for the quarter to 30 June 2016 include:
Paladin has prepared its operating plan and budget for FY2017. The Company currently anticipates production in excess of 5.0Mlb for the coming financial year with cost reductions continuing, resulting in LHM C1 cash costs in the range of US$22.50/lb to US$24.50/lb and 'all in' company-wide expenditure falling into the range of US$29.50/lb to US$31.50/lb.
GENERALLY ACCEPTED ACCOUNTING PRACTICE
The news release includes non-GAAP performance measures: C1 cost of production, EBITDA, non-cash costs as well as other income and expenses. The Company believes that, in addition to the conventional measures prepared in accordance with GAAP, the Company and certain investors use this information to evaluate the Company's performance and ability to generate cash flow. The additional information provided herein should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP.
DECLARATION
The information in this announcement that relates to minerals exploration and mineral resources is based on information compiled by David Princep BSc, P.Geo FAusIMM (CP) who has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and to the activity that he is undertaking to qualify as Competent Person as defined in the 2012 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (JORC Code). Mr Princep is a full-time employee of Paladin Energy Ltd. Mr. Princep consents to the inclusion of the information in this announcement in the form and context in which it appears.
CONFERENCE CALL
Conference Call and Investor Update is scheduled for 07:30 Perth & Hong Kong, Wednesday 11 May 2016; 00:30 London, Wednesday 11 May 2016 and 19:30 Toronto, Tuesday 10 May 2016. Details are included in a separate news release dated 4 May 2016. Please find, at the link below, the presentation in relation to the conference call and investor update.
http://media3.marketwire.com/docs/G097514ResultsConferenceCall.pdf
1 LHM production volumes and unit C1 cost of production include an adjustment to in-circuit inventory relating to leached uranium within process circuit.
2 C1 cost of production = cost of production excluding product distribution costs, sales royalties and depreciation and amortisation before adjustment for impairment. C1 cost, which is non-IFRS information, is a widely used 'industry standard' term.
3 EBITDA = The Company's Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) represents profit before finance costs, taxation, depreciation and amortisation, impairments, foreign exchange gains/losses, restructure costs and other income. EBITDA, which is non-IFRS information, is a widely used 'industry standard' term.
4 Underlying All-In Cash Expenditure = total cash cost of production plus capital expenditure, KM care & maintenance expenses, corporate costs, exploration costs and debt servicing costs and repayments. Underlying All-In Cash Expenditure, which is a non-IFRS measure, is widely used in the mining industry as a benchmark to reflect operating performance.
5 Excluding one-off restructuring and implementation costs of approximately US$6M and not taking into account any capital management or strategic initiatives, such as the repurchase of US$37M of the Convertible Bonds due April 2017.
6 All frequency rates are per million personnel hours.
ACN 061 681 098
Contact Information:
CONTACTS
For additional information, please contact:
Andrew Mirco
Investor Relations Contact (Perth)
Tel: +61-8-9423-8162
Mobile: +61-409-087-171
Email: andrew.mirco@paladinenergy.com.au