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Paladin optimistic on Kayelekera

Mining at Kayelekera in progress
Mining at Kayelekera in progress

Paladin Energy Limited says it is optimistic that the spot uranium price on the global market will recover during the course of the year raising hopes that the Australian-based company might resume uranium production at its Kayelekera Uranium Mine (KUM) in Karonga.

In its quarterly activities report for the period ending March, 2014, the company has banked hopes on uranium contracting market which it says has begun to show activity, as a large US nuclear utility has requested offers for deliveries spanning 2016 up until the year 2022.

On February 7 2014, the company announced that KUM would be placed on care and maintenance due to the low uranium price and non-profitability of the operation thereby suspending production in the process.

The decision, according to the company’s managing director John Borshoff, would preserve the remaining ore body until a sustained price recovery occurs and Paladin determines that production may be resumed on a profitable basis.

“Paladin believes that increasing term contracting will strengthen the term price as the year progresses and additional term demand enters the market,” said Borshoff in a statement.

He said the spot uranium price was reported at $34.50 per pound at the beginning of the quarter before rising to $35.75 per pound in mid-February.

Borshoff said the price retreated to $34 per pound by the end of March.

International mining experts have greatly attributed the plunge in to the ravaging impact of Fukushima earthquake and tsunami in Japan almost three years ago.

“In February, as a potential sign the market is bottoming out, Uranium Participation Corporation, secured financing totalling C$57.6 million and to date has reportedly purchased a total of 850 000 per pound for near-term delivery,” he said.

Commenting on the placing of the Kayelekera mine on care and maintenance, Borshoff said the plant will now operate until all necessary reagents in the supply chain are run down and consumed to the maximum extent possible.

He said currently, it is anticipated that the plant will continue to produce into early May and adding that during care and maintenance staffing levels will be reduced as appropriate.

According to Borshoff, during the period of care and maintenance, subject to being granted the necessary exploration licences, exploration work will be carried out on the existing Mining Lease and adjoining tenements.

He said during the March quarter, uranium production was affected by the consequences of transitioning the mine towards a care and maintenance status.

Local economic commentators have cast fears that the suspension of uranium mining gat Kum would potentially dampen Malawi’s export growth in 2014 and consequently lower the country’s real Gross Domestic Product (GDP) growth rate in 2014.

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