China National Nuclear Corporation (CNNC)—the country’s leading nuclear utility—has bought 25% of Paladin Energy’s TSX:PDN flagship uranium mine, Langer Heinrich in Namibia.
Through its wholly owned subsidiary China Uranium Corp, CNNC paid $190 million for the stake. Under the agreement, the Asian company will be able to buy one-quarter of production at spot market prices.
“There is also an opportunity for Paladin to benefit by securing additional long-term offtake arrangements with CNNC, at arm’s length market rates, from Paladin’s share of Langer Heinrich production,” Paladin noted in a January 20 news release.
Paladin has called the joint venture a “formidable partnership.”
“This development also reinforces the importance of Namibia in the global uranium mining context with the key Chinese nuclear organizations now represented in uranium production in Namibia,” Paladin wrote.
Completion of the deal is subject to Chinese regulatory approvals, which are expected by mid-2014. In the meantime, CNNC will pay a $20-million non-refundable deposit to the Australia-based company.
Langer Heinrich began producing uranium in 2007 and has undergone two stages of expansion. The operation has a current design capacity of 5.2 million pounds of uranium concentrate per year and is targeting production of 5.7 million pounds in 2014.
Paladin will use the cash injection primarily to pay off debts. The Australian miner has been eager to find a partner for the Namibian project for some time now. Last August the company lost 20% on its share price after it announced that negotiations with potential buyers had failed; the company didn’t think the offered price would “appropriately” reflect the “strategic value of the asset.”
On January 20 the company gained nearly 10% on the Toronto exchange, trading at $0.60 per share. Over the past 12 months, Paladin has lost more than 50% of its value.
Reprinted by permission of MINING.com