Paladin Energy Limited says Keyelekera Uranium Mine (KUM) in Karonga remains a valuable asset despite its continued suspension over plummeting uranium price on the global market.
The stance by the dual-listed multinational firm follows a feasibility study for the recommencement of the production at Keyelekera which, according to Paladin, is nearing completion.
“The study to date has confirmed that [KUM] remains a valuable strategic asset that can be quickly returned to production when justified by a higher uranium price environment,” said Paladin managing director John Borshoff in the company’s latest quarterly activities report for the period ending June 30 2015.
Paladin suspended uranium production by placing Malawi’s biggest investment venture on care and maintenance on February 7 2014 before ceasing uranium exportation later the same year in May.
The miner is keeping its fingers crossed to see uranium prices reach $70-$75 per pound, way above the prevailing spot price hovering around $35 per pound.
The desired price range of $70-$75 per pound envisaged by Paladin is deemed as a profitable recovery price threshold by the company to determine recommencement of production on a profitable basis.
Uranium was trading at $ 110 per pound when the mining licence to develop the Kayelekera site was granted in 2007.
Borshoff reiterated that KUM remains on care and maintenance, adding that quarterly activities at site focused on treating and discharging water to reduce KUM’s water balance prior to the onset of the next rainfall season and on maintaining idled plant and equipment in good working order.
“Controlled treated water release commenced in mid-April 2015 and continued without incident. In late June, discharge was suspended due to the very low receiving water level in the local river system,” he said.
According to the Paladin boss, KUM will provide an additional 2.5 million pound per annum in production and has clear potential to produce strong cash flow for at least six years, as more than 50 percent of the project’s total reserves and resources remain for future development.
Recently, Paladin [Africa] Limited resident director Greg Walker described recent improvements in the spot price of uranium on the global market as ‘very encouraging’ but said any consideration of a likely resumption in uranium production at the mine was still far away.
Paladin has since 2007 invested $620 million in Kayelekera, including initial $300 million in construction costs plus a further capital expenditure and working capital funding.
Malawi government holds 15 percent stake in KM while the majority 85 percent is held by Paladin and this has over the years been a bone of contention since the mine started operating as indigenous Malawians feel that government should have held more stakes in the mine.
According to figures released by the Ministry of Finance, Economic Planning and Development in the 2013 government annual report, the mine’s uranium production was valued at K47.7 billion, or three percent of gross domestic product (GDP).