The deal was signed with China Uranium, a wholly owned subsidiary of China National Nuclear (CNNC), the leading Chinese nuclear utility, for consideration of $190m.
The offtake component of the agreement enables China Uranium’s parent company, CNNC to purchase its pro-rata share of product at the prevailing market spot price.
CNNC has agreed to pay a $20m non-refundable deposit to Paladin, which also has an opportunity to sell some of its share of the mine’s production to CNNC under additional long-term offtake arrangements.
Paladin managing director/CEO John Borshoff said the significant cash injection from the sale will largely be applied to debt reduction, which the Board considers an essential step during a time of unprecedented low uranium prices.
”This will help stabilise the Company, establishing an incredibly strong platform that will enable us to maximise the value of our assets and ensure increased production of much needed uranium once the price is sufficient to support the planned future growth of nuclear energy in China and elsewhere," Borshoff added.
CNNC Department of Geology and Mining director-in-general Du Yunbin said, "I do believe, through the investment in the Langer Heinrich project, CNNC and Paladin will develop a long-lasting business relationship which is beneficial to each other and also bring long-term influence to the global uranium mining industry.”
The transaction completion is subject to certain Chinese regulatory approvals, including the National Development and Reform Commission, expected to be obtained by mid-2014, and routine consents from Paladin’s project financiers and the Bank of Namibia.
The Langer Heinrich mining operation started uranium production in 2007 and has subsequently undergone two stages of expansion.
