Investors welcome Kayelekera mine suspension
Investors seem to have welcomed the suspension by Paladin Energy of one of its two loss-making Africa mining operations at Kayelekera in the Northern Region district of Karonga.
The other is Langer Heinrich Mine (LHM) in Namibia.
Australian Stock Exchange (ASX)—listed mining firm on Friday announced production at the mine had been halted and would not be re-started until the uranium price hit $75 a pound.
Minister of Mining John Bande has since regretted the decision by Paladin, saying the move will render many Malawians jobless.
“It is true that they [Paladin] wrote to inform us on their decision. But as government, it is regrettable as some people will lose jobs,” he said.
The sentiments of the investors was reflected in the company’s shares at ASX on Monday which closed up 2.5 cents, or 5.1 percent, at 51.5 percent after hitting a high of 52.5 cents, according to Australian-based Western Australian.
Paladin managing director John Borshoff said in a statement the closure was necessary in an “unsustainable” uranium market.
The mining firm had been pushing to close the mine for months, but was waiting on the green light from the Malawi Government, which owns 15 per cent of the mine.
Last week’s move marked the climax of a tumultuous period for Paladin, with the Perth-based company forced to take drastic action to bring its financial position back to health on the back of the languid uranium price.
The company last month sold a 25 percent stake at LHM operation to China Inc for $190 million.
Paladin said at the current uranium price, $35.50 per pound, Kayelekera needed a $20 million [K9 billion, at the current exchange rate] to $25 million [K11.2 billion] capital injection each year for the next two years to operate.
It said the shutdown would improve its cash position by $7 million [K3.1 billion] to $10 million [K4.5 billion] this year and by up to $25 million next year.
Its production guidance would be revised down from between 8.3 million pounds and 8.7 million pounds to about eight million pounds because of the closure.
Paladin said it would retain 194 local staff and 27 expatriates at the mine.
