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(ASX: PDN) | PALADIN ENERGY

Dec 21, 2023

Sentiment: Bullish

Type of Trade: Speculative

Industry: Uranium

Sector: Energy

Paladin Energy is a global uranium production company based in Australia. The company’s primary business is uranium mine exploration, development, and operation. It is heavily invested in uranium mining 75% owned assets in the Namib Desert.

Paladin Energy’s main uranium mine is the (75% owned) Langer Heinrich Mine, which is located in Namibia. The Langer Heinrich Mine is considered one of the company’s flagship assets and has been a significant contributor to Paladin’s uranium production. The mine is situated in the Namib Desert, approximately 80 kilometers east of the coastal town of Swakopmund in Namibia’s Erongo Region and has 17 years mine life producing 77Mib of U3O8.

The Company’s mission is to support a global carbon-free future by providing nuclear energy, which is critical in the transition to a low-carbon economy.
Nuclear energy generates 47% of carbon-free electricity in the United States.

Uranium mined and processed at the Langer Heinrich Mine will be used to fuel nuclear power plants, assisting in the global energy transition to a low-carbon, sustainable future.

With great tracking record of 0 environmental incidents, and 100% compliance with laws, regulation, licences and permit conditions, Paladin Energy has been setting meaningful targets for Paladin’s carbon footprint reduction and environmental impact, once the baseline footprint has been confirmed in operations.

Although we normally avoid companies that have its projects based in Africa, Namibia is generally considered a stable jurisdiction for mining operations. The country has a well-established legal framework and regulatory system that governs the mining industry. Namibia has a history of political stability and a favorable investment climate, attracting significant foreign investment in the mining sector.

The Namibian government has implemented policies to promote transparency, attract investment, and ensure responsible mining practices. It has established the Ministry of Mines and Energy to oversee the mining industry and has enacted legislation to regulate mining activities, including the Minerals (Prospecting and Mining) Act.

Namibia has a long history of mining, including uranium mining, and has developed a reputation as a reliable and responsible supplier of uranium globally. The country is known for its robust mining infrastructure, skilled workforce, and favourable geological conditions for mineral extraction.

🚩 It is important to note that geopolitical and economic factors can change over time, for those whom are looking into investing for the long term, it is critical to stay up to date on any developments or changes in the political and regulatory landscape that may have an impact on mining operations in Namibia or elsewhere. Thorough due diligence and staying up to date on local conditions are critical for any mining company operating in a specific jurisdiction.

Furthermore, Paladin, through its wholly-owned subsidiary Aurora Energy Ltd (Aurora), holds a 70% interest in 52,250 hectares of mineral licences in Canada. These are located within the Central Mineral Belt of Labrador, Canada. The area is approximately 140km north of Happy Valley-Goose Bay and 40km south-west of the community of Postville.

This local government encourages development that promotes regional growth. Support is conditional on taking into account community concerns. Development is encouraged if the government passes Environmental Assessment regulations and implements an Impacts and Benefits Agreement.

Michelin has resumed exploration activity with a dual-track workstream focused on defining development pathways and improving understanding of the regional exploration potential.

The sales process for the Michelin Project has begun, as required by the Michelin Joint Venture Agreement. Paladin reserves the right, in good faith, to determine whether the terms of any offer made during the sales process are acceptable. Paladin also has the right of first refusal to purchase the Michelin Joint Venture partner’s stake in the Project.

Why URANIUM?

The following points provide an overview of the factors influencing the uranium market, including price movements, supply concerns, production levels, and the demand outlook. It’s important to keep in mind that the uranium market can be influenced by various factors, and it’s essential to monitor developments and trends to gain a comprehensive understanding of the market dynamics.


  1. ✅ Uranium prices soared to $54.6 per pound in late May, the highest in over one year, amid threats of lower supply and persistent bets of bullish long-term demand.
    • This indicates a significant increase in the price of uranium, reaching its highest level in more than a year. The rise in prices can be attributed to several factors:
      • Threats of lower supply: Factors such as potential disruptions in the production or availability of uranium can create concerns about reduced supply.
      • Bullish long-term demand: Expectations of increased demand for uranium in the future can drive up prices as investors anticipate higher prices due to potential shortages.
  2. ✅ Two bills to ban the import of Russian uranium were approved by relevant US government committees, jeopardising imports from one of the top producers of nuclear fuel.
    • The approval of these bills indicates a potential restriction on the import of Russian uranium into the United States. Russia is one of the major producers of nuclear fuel, and if the import ban is implemented, it could impact the supply of uranium in the US market.
  3. ✅ Major uranium producer Namibia signalled it will push to nationalise its natural resources, which may lead to lower supply from the world’s third-largest producer.
    • Namibia, one of the world’s significant uranium producers, has expressed its intention to nationalise its natural resources. Nationalisation could result in a change in ownership or control over the country’s uranium resources, potentially impacting the supply of uranium from Namibia.
  4. ✅ A report from the EIA showed that the US produced 2,511 pounds of U3O8 in the first quarter of 2023, a 75% plunge year-on-year to underscore the low level of domestic output.
    • The report highlights a substantial decrease in domestic uranium production in the United States. The 75% year-on-year decline in output indicates a significant reduction in the amount of uranium being produced domestically.
  5. ✅ Governments continue to announce plans to increase nuclear power capacity to strengthen energy security and lower carbon emissions, solidifying expectations of strong demand.
    • Governments worldwide are expressing their intentions to expand nuclear power capacity. This is driven by the goals of enhancing energy security and reducing carbon emissions. Such plans indicate a positive outlook for the future demand for nuclear power and, consequently, uranium.

✅ Langer Heinrich Mine to start production in Q1 CY2024 (full details of the latest update click here)

  • Paladin continue to progress and execute activities focused on returning Langer Heinrich Mine to production, with the project on track and on budget (US$118m) for first production in Q1 CY2024.
  • At the site, 600 contractors are actively engaged in various tasks. Repairing and refurbishing the facilities, starting civil construction work, transporting the second Hydrosort classifier to the site, and finalising the contract for the drum packaging plant are among the tasks.
  • Project 40% completed by 20 April. (Further updates should help move the stock price).

✅ Paladin continue with the Exploration Program activity at Michelin in Labrador, Canada.

  • Paladin holds 70% interest in 52,250 ha of mineral licences in Labrador, Canada.
  • Six deposits with a total of 127.7Mlb of Mineral Resources.
  • Largest of the six is Michelin.
  • Among largest deposits in North America.
  • US$75M of total historical in-ground exploration to-date.
Offtake Agreements

✅ Paladin has five uranium offtake agreements with leading contreparties in the USA, Asia and Europe. Paladin has finalised contract negotiations on the final outstanding tender award and expects the offtake agreement to be executed during the current quarter.

✅ Prior to production, Palading has strategically secured contracts. The duration and prices of these contracts vary, and they include base-escalated, fixed-price, and market-related pricing mechanisms. Paladin will retain significant upside exposure to the strengthening uranium market fundamentals, in addition to the market-related contract with CNNC.

✅ Paladin has commenced commercial negotiations with conversion facilities and shipping companies ahead of the Company’s return to production.

Technical Analysis

The stock price has recently been affected by some media speculation about the potential desired fro the Namibian Government to won a minority equity interest in mining and petroleum companies operating in Namibia, arising from comments made at the Mining and Energy Workshop, however, the company has rapidly confirmed that it wasn’t aware of any imminent proposed Namibian legislative changes that would affect the ownership of the (75% owned) Langer Heinrich Mine. Then in 2 June, the Mistry of Mines and Energy has clarified the misconceptions circulating in the media, and the stock price has quickly recovered.

If you have held the stock for the last 12 months, you would be down by 9% up, still outperforming the market.

However, there were 3 trading opportunities during the period, as (ASX: PDN) reaches the hypothetical support levels, under the SMA250 (pink levels), demonstrating that (ASX: PDN) would be more suitable for trading rather than investment.
With strong uranium prices, it is likely that we will see (ASX: PDN) moving further and potentially breaking out the $1.1 resistance.

The current misunderstanding of the media with Namibian Government has also offered another opportunity since the stock was trading at hypothetical support levels once again and bounced back quickly demonstrating a technically fake breakout.

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