Transcription of Finance News Network Interview with Paladin Energy Limited (ASX:PDN) CEO, John Borshoff Lelde Smits: Hello I'm Lelde Smits for the Finance News Network and joining me from uranium producer Paladin Energy Limited (ASX:PDN, TSE:PDN) is CEO and Managing Director John Borshoff. John, welcome.
John Borshoff: Thank you, it’s a pleasure to be here.
Lelde Smits: Now as we’re at the Africa Down Under conference in Perth, could you give us a run down of Paladin’s interests in Africa?
John Borshoff: Yes, we have two mining operations, one in Namibia called Langer Heinrich and the other one in Malawi called Kayelekera and we also have some projects in Niger, but they are on a longer time frame.
Lelde Smits: So which project is the most advanced and what are your plans for ramping up production?
John Borshoff: Langer Heinrich is the most advanced and has the longest life and we have expanded that already twice since construction. And, we have the plans to build and grow that one once we have a price of uranium that I feel justifies expansion.
Lelde Smits: And which price of uranium would that be?
John Borshoff: We’ve done studies; Last year we announced that we will not develop or spend any more money unless the price reaches a threshold of $85 a pound. In our market analysis we believe there are shortages, we believe companies aren’t committing to growth, and this is a structural problem.
Lelde Smits: Of your three off-take deals one has a prepayment attached, where will the funds be deployed?
John Borshoff: The off-take agreement has a $200 million prepayment, part of which is due in September [2012] and the rest in January [2013]. We will use that to reduce our debt and get rid of our March 2013 bond, and the rest will go into working capital.
Lelde Smits: And John,can you tell us who the buyers are or, more generally, which parties have shown interest in Paladin’s product?
John Borshoff: We’re bound by confidentiality and unfortunately I can’t tell you who the utility is. But, we have engaged with this strategic initiative that we have been involved with for the past 12 months, with all the major nuclear economies – government and US. So, I can’t even give you a clue because if I say it is from that region or not that region people will start adding two plus two. And, the particular utility doesn’t want any announcement on this.
Lelde Smits: As many uranium producers Paladin’s share price took a hit in the wake of the Fukushima nuclear crisis: More than a year later what’s your current assessment for uranium demand?
John Borshoff: The uranium demand is going to be in shortage. I mean, the demand hasn’t changed that much. After 12 months, all the analysis, even Germany and Switzerland going, it’s a marginal difference, but what has changed is supply. And it’s been a devastating effect for a whole host of reasons and the gap has widened in shortage, paradoxically.
Lelde Smits: And John, who do you believe will support the growing demand for uranium or nuclear power?
John Borshoff: Mostly it will be the Chinese, the Russians, the Middle East, Korea and also there’s an ongoing commitment on existing fleet in the US who are need in the very short term to replenish those supplies just to run their existing reactor fleet.
Lelde Smits: So with all this perceived demand, where do you see the price of uranium moving in the next six months?
John Borshoff: We have said that we won’t touch a commitment to expand unless it reaches $85 [per pound]. But, I see that natural pressures supply and demand will start it moving into the $70’s I believe late this year, early next year.
Lelde Smits: Finally John, what do you believe will be Paladin’s biggest share price drivers in fiscal 2013?
John Borshoff: Reducing its debt, getting better production efficiency and reducing the costs. We are already there in terms of production and now it is just optimisation. And, we are beautifully positioned on the global scene.
Lelde Smits: John Borshoff, thanks for the update to Paladin Energy.
John Borshoff: Good, thank you very much.
Ends
