Paladin loses glow as crisis hits
Banks have been more reluctant to lend money to uranium firms in the current economic environment, with Paladin forecasting trouble, despite asserting that demand for uranium remained “extremely strong” in the medium to long term.
“The impact of the credit tightness on the supply side of the uranium business will probably cause the deferral or cancellation of some planned uranium projects, especially those at the high end of the cost curve,” the company said.
This would also “reduce the money available for exploration companies, which will only exacerbate the supply-demand imbalance in the future,” the announcement said.
The news came one week after JPMorgan Chase & Co cut its uranium price forecast through to 2010, citing the potential for the freeze to slow nuclear power project development.
The former penny stock’s shares rocketed to a dizzy high of more than $10 between 2004 and 2007 when uranium became the resource of choice for traders, but some of the gloss has since worn off as the global credit crisis bites hard and soaring yellowcake prices come back down to earth.
Despite the wider negative forecasts, Paladin said its reactor construction and forward planning for new plants was continuing strongly throughout Asia, including Russia and China.
The company produced 650,554 pounds of uranium from its Langer Heinrich uranium project in Namibia during the September quarter, at which rate the firm would achieve more than its 2.6 million pounds expected annual production rate.
Sales for the quarter from the project reached $US51 million ($70.7 million) in the three months to September 30, from 878,000 pounds of uranium oxide at $US58 a pound.
Meanwhile, the company’s 85 per cent stake in the Kayelekera uranium project in Malawi remained on schedule to start in the March quarter next year, with the project currently 75 per cent complete and still within budget.