In April 2005, the Company announced the go-ahead of a US$2.3M Bankable Feasibility Study (BFS) as a result of the improved economics shown by the pre-feasibility work. After completing a Development Agreement with the Malawi Government and the BFS together with a full Environmental Impact Assessment, the Mining Licence, ML 152, covering 5,550 hectares was granted in April 2007 for a period of fifteen years. Construction of Kayelekera began in June 2007 at a budgeted cost of US$200M with total construction taking almost two years. During this period Paladin completed major infrastructure upgrades to the local roads, initiated substantial earth works and commenced commissioning.
The construction project workforce peaked at around 2000 persons, with more than 75% of workers being Malawian nationals.
Open pit mining commenced in June 2008 to develop initial stockpiles, with the first blast occurring on 24 July 2008. Commissioning began in January 2009 with first production achieved mid April. The Kayelekera Mine was officially opened on 17 April 2009 by the late his Excellency, Dr. Bingu wa Mutharika, President of Malawi. Transport of the first containerised drummed product consignment to Walvis Bay, Namibia via Zambia took place on 17 August 2009.
The mine is designed to give an annual production of 3.3Mlb U3O8 from the processing of 1.5Mtpa of sandstone and associated ores by grinding, acid leaching, resin-in-pulp extraction, elution, precipitation and drying to produce saleable product. Kayelekera represents Paladin’s second construction project and the first commercial mining venture in Malawi’s history contributing around 10% of Malawi’s GDP.
The Company accepted credit committee approved offers of project financing totalling US$167 million, consisting of a seven year project finance facility of US$145 million, a standby cost overrun facility of US$12 million and a performance bond facility of US$10 million. The facilities were provided by Société Générale Corporate and Investment Banking (as intercreditor agent and commercial lender), Nedbank Capital, a division of Nedbank Limited (ECIC Lender) and The Standard Bank of South Africa Ltd (as ECIC facility agent and lender). The project is funded via a mix of project finance debt and equity. The project financing facility totaled US$167 million, consisting of a seven year project finance facility of US$145 million, a standby cost overrun facility of US$12 million and a performance bond facility of US$10 million.