Paladin Energy chief executive officer Scott Sullivan says while the sale of Kayelekera Uranium Mine frees up cash for the firm, the deal gives an opportunity to the new owners to focus on studies to reduce costs.
Speaking in a television interview on Proactive Investors, Sullivan said assuming that the sale goes through; Paladin Energy will be $10 million better off in 18 months from now.
This, he said excludes income and sales from shares.
“The sale was a well considered move from us. Our primary asset is Langer Heinrich, that’s where we need to direct our resources because this is our flagship asset that we value in this market. Kayelekera is a good asset but it needs to be in someone’s ownership. Our return is investing cash in Langer.
“If we look at 18 months from now, assuming the sale of Keyelekera comes up before the end of the year, we are $10 million better off and its very much in line with our strategy to focus on our primary asset and look at what we can do to monetise our other assets including reducing the cash burden which is what Kayelekera presents to us,” he said.
Sullivan said the potential sale means the new investors can focus on studies to reduce costs.
“We think it is a win-win situation and presents an opportunity for us to refocus our resources and in the long run, it is a positive step for Malawi to get back into production. This is one way of executing our strategy on Langer, which has a very clear path with a much lower cost asset than Kayelekera,” he said.
The development comes a fortnight after the company, operators of Kayelekela Mines in Karonga, announced their intentions to leave Malawi following a decision by the firm to sell its 85 per cent interest in the Kayelekera uranium mine in Malawi to Hylea subsidiary Lotus Resources, a joint venture with Chichewa Resources.
In their statement, the firm said the stake in Kayelekera will be sold for $5 million (about K3.7 billion), comprising $200 000 (about K148 million) in cash and $4.8 million (about K3.5 billion) in Hylea shares to be issued to Paladin.
This, the company said, will include $1.8 million (about K1.3 billion) upon completion, which is subject to a 12-month voluntary escrow, as well as $3 million (about K2.2 billion) on the third anniversary of completion.
An official from Ministry of Mines, Energy and Natural Resources said while the statement has not come as a surprise, government will have to engage the miner on a number of conditions that have to be satisfied including State of employment for the staff and a due diligence on the new firm before they are given a go ahead.