Leading uranium producer is preparing to up its mining activities in Southern Africa
– By Linton Levy –
According to reports from the company, construction on Paladin's Kayelekera mine in Northern Malawi has been completed and the company's board has approved a proposal to move to full production from next month. The Paladin board has also approved an expansion of production at its Langer Heinrich project in Namibia.
Paladin has an 85% stake in the Kayelekera project which it has developed under a joint venture agreement with the Malawi Government. Paladin has also announced that its off-market takeover bid for local uranium explorer Fusion Resources has gone unconditional.
Paladin is set to win control of the target having already garnered acceptances for 79% of Fusion's issued scrip.
Paladin's share price is benefitting from a recovery in the uranium spot market price from $US40 a pound in early November to $US53 this month. The price recovery is due to rising demand from countries such as India and China and a squeeze on global supply.
While world output of most metals such as nickel, copper and iron ore has risen significantly as a result of the commodity price boom, uranium production has remained flat. Rigorous international regulation of the nuclear supply chain means that aspiring producers face big obstacles before they can begin trading the feedstock.
The commissioning of the Kayelekera project will be one of the most significant boosts to global uranium capacity in the past two years. However, price support for uranium will be tested as producers extend existing mining operations including BHP Billiton's planned expansion at Olympic Dam in South Australia.
In a slightly ironic twist, the bans on uranium extraction in Queensland and Western Australia until recently may have contributed to the clamp on global supply.