Currently, the planning for a winter drilling programme is being completed. Drilling is expected to start in February and will continue into March and April as weather permits.
MANYINGEE PROJECT, Australia (100%)
Drilling continued into November with a total of 96 holes for 9,036m of rotary mud and 242m of core being completed.
Drilling continued to confirm the previously identified mineralisation. Assay results have recently been received and are in the process of being validated. Current work concentrates on comparing assay, equivalent gamma and equivalent Prompt Fission Neutron (PFN) tool uranium grades to confirm the grades to be used for an updated resources estimate.
A total of 35 water bores were installed. Initial pump testing was carried out in November and monitoring of physical and chemical properties continued into December. The pump tests show permeabilities in the main mineralised aquifer sufficient for an ISR operation. The results will be used to develop a new, up-to-date, ground water model for the Manyingee aquifer to be applied in any future ISR leach trials and/or operations.
MT ISA PROJECTS, Australia (91.04% effective)
The Queensland Government lifted the 27 year old ban on uranium mining in Queensland on 22 October 2012. Paladin's response to this positive change is to pursue a long-term investment strategy in Australia.
Generally, strategies are under consideration to develop an economic flowsheet for uranium ores of the area and to further define new targets for substantial resource increases based on recent geological mapping, geophysical results and new modelling.
CORPORATE
Strategic Initiative Efforts
With the improving production and cost performance of both LHM and KM in parallel with what is essentially a global moratorium on supply growth due to low uranium prices, interest has increased to seek a strategic association with Paladin and attain a de-risked leverage to growth.
The strategic initiative endeavours that have been announced in broad terms are continuing with a modified and more focussed approach and results of this work are expected by March/April 2013. The strategic initiative to date has already resulted in the far-reaching Long Term Sales Contract negotiated with the major international nuclear utility, EdF, which involved a US$200M prepayment. The final tranche of US$150M is scheduled to be paid at the end of January 2013.
Cost Reduction/Production Optimisation Initiative
In November, Paladin announced its programme to reduce costs within the Group expected to realise US$60M to US$80M total savings over the next two years. The comprehensive cost and production optimisation review is part of the process of moving from development to a sustained production phase. The cost review encompassed examination of all activities within the Paladin Group from its mining operations, corporate/administration overheads, future development considerations, exploration, sales and business development, some of which is still ongoing. Opportunity for re-negotiation of key mining and consumables contracts has arisen, paving the way for material cost reductions over the next two years.
FY2013 Cost reductions:
-- Langer Heinrich Mine (US$10M) - Key improvements in mining costs, discretionary spending and contractor rationalisation resulting in a 7.5% reduction in unit costs.-- Kayelekera Mine (US$10M) - Key improvements in mining costs and discretionary spending resulting in a 7.5% reduction in unit costs.-- Exploration - This will be scaled back by 20% (US$4M) of budget, mainly through deferring non-essential drilling.-- Inventory management - The Company has revisited its inventory management policy and explored ways to maximise cash generation resulting in an expected revenue benefit of US$15M for FY2013.-- Corporate overheads - Targeting a reduction of 10% (US$3M).
