June 2015 Quarter

 

Production by quarter

Langer Heinrich Mine Sep Qtr Dec Qtr Mar Qtr June Qtr Year to Date
U3O8 Production (lb U3O8) 1,089,560 1,376,578 1,234,325 1,336,826 5,037,289

The quarterly production of 1,336,826lb U3O8 was 8% higher than the preceding quarter.

Mining

.

Sep Qtr

Dec Qtr

Mar Qtr

June Qtr

Year to Date

Ore mined (t)

910,082

703,901

598,341

700,831

2,913,156

Grade (ppm U3O8)

802

928

868

792

851

Additional low grade ore mined (t)

345,943

183,341

353,664

354,559

1,237,507

Grade (ppm U3O8)

328

325

316

325

319

Waste (t)

3,803,470

4,119,374

4,021,724

4,143,019

16,087,586

Total Ore and Waste

5,059,495

5,006,616

4,973,729

5,198,410

20,238,250

Waste/Ore ratio

4.6

6.1

7.3

6.4

6.0

Mining production volumes remained on target (700,000 bcm/month) and consistent within budget. The ore-to-waste ratio during the quarter was slightly lower due to mining both the deeper western pit areas as well as a new pit in the east (G2A) with a much lower strip ratio.

ROM ore stockpiles decreased at the end of the quarter. Lower stockpile levels will remain until mid-July when high grade ore is exposed in Pit H4. The ROM medium grade is being supplemented by medium grade ore from long term stockpiles in line with the mine plan.

Extension of the current in-pit tailings storage facility (TSF #3) and re-establishment of a major south-north drainage channel for flood mitigation were completed on target at the end of June 2015.

Process Plant

Plant production for the June quarter was up 8% over the prior quarter, due mainly to higher leach ore throughput (14%). Throughput and feed grade for the quarter were 3% and 6% higher respectively from the previous quarter while recovery was down slightly by 0.4% with overall recovery for FY15 at 87.6% (in line with budget).

.

Sep Qtr

Dec Qtr

Mar Qtr

June Qtr

Year to Date

Ore milled (t)

734,226

916,576

860,337

886,520

3,397,659

Grade ppm U3O8)

786

773

736

778

768

Overall recovery (%)

85.6

88.2

88.4

87.8

87.6

Production (lb U3O8)

1,089,560

1,376,578

1,234,325

1,336,826

5,037,289

Innovation

The BRP operated well throughout the quarter, achieving 115% to 120% of design capacity in terms of both volume processed and sodium bicarbonate recovered. Significant process optimisation has taken place during the quarter such that, for the month of June, the plant achieved 147% of its design capacity, a level of performance that is expected to be maintained, or exceeded, through the September quarter. This equates to a potential direct annual saving of approximately 22,500tpa of sodium bicarbonate and 10,700tpa of caustic soda totalling about US$16M in reagent cost savings.

Further optimisation is ultimately expected to lift the BRP performance to higher than 200% of design (in terms of sodium bicarbonate recycled and caustic savings) by December 2015 and without the need for the installation of any additional equipment. Further associated innovations are either in the implementation or design phase and scheduled for both FY16 and FY17.

As expected, the BRP has had a significant additional positive impact on broader process plant performance and subsequent unit operating cost with:

  • soluble loss down approximately 70%;
  • resin loadings approximately double previous levels and consequently planned resin replacement ($0.50/lb cost) may no longer be required;
  • stabilised process operability; and
  • stabilised site water balance with greater discretionary control.

The high degree of success from the BRP project augers well for the ongoing success of Paladin’s innovation programme. The new technology underpinning this programme is the key driver of the forecast further reductions in C1 costs at LHM. It should be noted that at the end of FY14 the combined sodium bicarbonate and caustic reagent costs represented approximately 56% of process operating costs. This is expected to fall to 32% in FY16 with potential remaining for further reductions.

Production Guidance for FY16

Annual production was 5.04Mlb U3O8 toward the lower end of the stated guidance of 5.0Mlb to 5.2Mlb U3O8. Production performance was affected by plant availability and utilisation with improvement in both factors being targeted in FY16.

Annual production guidance in FY16 is 5.0Mlb to 5.4Mlb U3O8, which includes a planned 11% reduction in milled ore grade to 683ppm U3O8. C1 cost reductions that have been achieved are expected to be maintained despite the lower head grade. Langer Heinrich remains the lowest cost open pit uranium mining operation in the world. Due to low prevailing uranium prices, the Company will focus on continuing to lower unit costs and generally increasing production efficiencies rather than production volumes in the current price environment in order to preserve ore reserves and maximise long-term financial returns.

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