Ref: 150501
12 November 2009
By Electronic Lodgement
Company Announcements Office
Australian Securities Exchange Limited
20 Bridge Street
SYDNEY NSW 2000
Dear Sir/Madam
September 2009 Quarterly Financial Report and MD&A
Attached please find Quarterly Financial Report for the three months ended 30 September 2009
including Report to Shareholders, Management Discussion and Analysis, Interim Financial
Statements and Certifications as required in accordance with Canadian reporting requirements.
Yours faithfully
Paladin Energy Ltd
GILLIAN SWABY
Company Secretary
Grand Central, First Floor, 26 Railway Road, Subiaco Western Australia 6008 Postal: PO Box 201, Subiaco Western Australia 6904
Tel: +61 (8) 9381 4366 Fax: +61 (8) 9381 4978 Email: paladin@paladinenergy.com.au Website: www.paladinenergy.com.au
PALADIN ENERGY LTD
ACN 061 681 098
Grand Central, First Floor, 26 Railway Road, Subiaco Western Australia 6008 Postal: PO Box 201, Subiaco Western Australia 6904
Tel: +61 (8) 9381 4366 Fax: +61 (8) 9381 4978 Email: paladin@paladinenergy.com.au Website: www.paladinenergy.com.au
PALADIN ENERGY LTD
ACN 061 681 098
NEWS RELEASE
For Immediate Distribution
FINANCIAL REPORT FOR THE QUARTER ENDING 30 SEPTEMBER 2009
Perth, Western Australia 12 November 2009: Paladin Energy Ltd ("Paladin" or "the Company") (TSX:PDN /
ASX:PDN) announces the release of its Financial Report for the quarter ending 30 September 2009. The Financial
Report is appended to this News Release.
Quarter Ending 30 September 2009 Results
·
Total production of 744,188lb for the quarter. The Langer Heinrich Mine produced 654,516lb as it transitioned
to Stage 2 nameplate production (650,554lb for quarter to 30 September 2008). The Kayelekera Mine, which
was hampered by slower than expected ramp-up produced 89,672lb.
·
Stage 2 production levels at Langer Heinrich Mine are now almost being realised with October production of
276,757lb (90% of Stage 2 nameplate design).
·
Cost of sales for three months to 30 September 2009 of US$26/lb is lower than in the three months to 30
September 2008 of US$27/lb reflecting improved operating performance at the Langer Heinrich Mine.
·
Stage 3 expansion approved to further expand Langer Heinrich Mine production to 5.2Mlbpa with expected
completion date set for the December quarter 2010.
·
Uranium oxide sales for the quarter from Stage 1 of Langer Heinrich Mine 703,000lb U
3
O
8
(2008: 878,000lb)
averaging US$54/lb (2008: US$58/lb).
·
Financial Year 2010 guidance revised to a range of 5.6Mlb to 6.1Mlb due to slower production ramp-up at
Langer Heinrich Mine and Kayelekera Mine.
·
Major new production expansion plans for Africa (increasing from 8.5Mlb pa to 13.8Mlb pa) to clearly establish
Paladin as a Tier 1 producer. Stage 4 Langer Heinrich Mine expansion targeting 10Mlb pa (includes 1Mlb heap
leach) with nameplate production planned by mid 2014. Kayelekera Mine optimisation to 3.8Mlb pa planned for
late 2012.
Corporate:
·
Profit and Loss
3mths to
3mths to
30 Sept 09
30 Sept 08
US$M
US$M
Revenue
38.6
52.4
Gross Profit
14.9
22.0
Exploration and Evaluation Expenses
(5.1)
(3.6)
Corporate and Other
(8.6)
(10.1)
Finance Costs
(5.2)
(9.2)
Loss before Income Tax
(4.0)
(0.9)
Income Tax Expense
(16.0)
(4.2)
Net Loss after Tax (before minority interests)
(20.0)
(5.1)
November 12, 2009
150288v3
Page 2
·
US$374M private placement completed to fund M&A opportunities, progress Langer Heinrich Mine Stage 3
expansion and expand exploration and pre-development programs in Australia.
·
Strong balance sheet at 30 September 2009 with US$494.5M in cash invested with Australian banks with a
minimum AA Standard & Poor's credit rating. US$167M Project Financing facility completed for Kayelekera.
Currently drawn to US$132M.
·
Paladin participated in placement by NGM Resources Limited to increase shareholding to 19.9% to allow it to
work on its Niger uranium concessions.
Conference Call and Investor Update scheduled for 20:00 Perth / 7:00 Toronto Tuesday 17 November 2009.
Details are included in a separate news release.
The documents comprising the Financial Report for the Quarter ending 30 September 2009, including the Report to
Shareholders, Management Discussion and Analysis, Financial Statements and Certifications are attached and will
be filed with the Company's other documents on Sedar (
http://www.sedar.com
) and on the Company's website
(
http://www.paladinenergy.com.au
).
For additional information, please contact:
John Borshoff
Managing Director/CEO
Tel: +61-8-9381-4366 or Mobile: +61-419-912-571
Email:
john.borshoff@paladinenergy.com.au
Mark Bolton
Acting Chief Financial Officer
Tel: +61-8-9381-4366 or Mobile: +61-488-701-941
Email:
mark.bolton@paladinenergy.com.au
Greg Taylor
Investor Relations Contact
Tel: +905 337-7673 or Mobile: +416-605-5120 (Toronto)
Email:
greg.taylor@paladinenergy.com.au
Company Web site:
www.paladinenergy.com.au
FINANCIAL REPORT
FOR THE QUARTER ENDING
30 SEPTEMBER 2009
PALADIN ENERGY LTD
A.C.N. 061 681 098
PALADIN ENERGY LTD
Table of Contents September Quarter Report 2009
146410_9
2
Page
Report to Shareholders .................................................................................................
3
Management Discussion and Analysis..................................... ..............................
13
Consolidated Income Statement............................................. ..............................
25
Consolidated Statement of Comprehensive Income.............................................
26
Consolidated Statement of Financial Position.................................................. ...
27
Consolidated Statement of Changes in Equity........................... .............................
28
Consolidated Statement of Cash Flows......................................... ........................
29
Notes to Consolidated Financial Statements............................... ...........................
30
PALADIN ENERGY LTD
Report to Shareholders
September Quarter Report 2009
(All figures are in US dollars unless otherwise indicated)
146410_9
3
OVERALL SAFETY
The Kayelekera Mine suffered two fatalities in August and early October both related to mobile
equipment/vehicles. The second fatality involved a bus overturning with 20 employees on board,
which resulted in several additional injuries.
Paladin management has taken immediate actions to audit and, where necessary, improve safety
throughout the organisation. Both Kayelekera and Langer Heinrich will initiate the National
Occupational Safety Association (NOSA) system by mid November. NOSA, which combined with
the strengthening safety culture at Langer Heinrich, is expected to consolidate the necessary
improvements in safety performance at both sites.
Evidence clearly points to vehicle traffic as a major safety risk for both operations and Paladin
Senior Management is committed to developing an appropriate safety regime also focussing on the
Company's global transportation requirements.
LANGER HEINRICH MINE, Namibia
Production
For the quarter, Langer Heinrich produced 654,516lb U
3
O
8
(Stage 1 nameplate capacity), which
was less than that of the previous quarter, due to interruptions from Stage 2 integration (plant tie-ins
and equipment commissioning) and low equipment availability on the front end of the plant. At
quarter end, all major Stage 2 integration had been completed and ramp-up to the Stage 2
production level was in progress. Although significant improvements to the scrubber units on the
plant front end have been completed in the past, the 40% increase in tonnage necessitated
adjustments to their operation and maintenance schedules, particularly for the liners. Additionally,
the two new leach tanks in the second leach circuit required the replacement of faulty agitators.
Recent production figures indicate that Stage 2 levels are now almost being realised with October
production of 276,757lb U
3
O
8
(90% of Stage 2 nameplate design).
Sales
Sales for the quarter were 703,000lb U
3
O
8
at a value of US$38.3M, representing an average sales
price of US$54.48/lb U
3
O
8
.
Mining
Mining has continued in both Pit A and Pit D. A new pit, Pit F, which lays adjacent to the temporary
tailings facility, will be prepared for mining early in 2010 to facilitate the planned tailings
management systems and to provide an optimal blend of feed material to the plant.
The plant ore feed during the quarter was as follows:
July
Aug
Sept
Total
Crushed tonnes,
dry
130,436
141,434
151,086
422,956
Feed Grade, ppm
896
939
917
918
PALADIN ENERGY LTD
Report to Shareholders
September Quarter Report 2009
(All figures are in US dollars unless otherwise indicated)
146410_9
4
Process Plant
Process efficiencies were affected by the stopping and starting of the plant as Stage 2 equipment
was brought on line and the processes fine-tuned. Despite these disruptions, an overall efficiency
of 78.5% was achieved for the quarter. Scrub efficiency dropped from previous high levels but is
expected to improve in October once the remaining upgrades to the screens are completed. Leach
efficiency for the quarter was excellent (93.2%) despite the issues with the new agitators. Iron
exchange (IX) efficiency was briefly affected by the carryover of solids from prepared reagent
solutions that were not completely dissolved.
Tailings
Current emphasis is on the design and construction of extensions to the berm walls of the existing
temporary tailings facility. The design of the first in-pit new tailings facility to the west of the plant is
in progress with construction expected to commence in early 2010.
Preparation for the establishment of Pit F, adjacent to the temporary tailings facility, commenced
during the quarter. Once mined out, this pit will be utilised for flood water control and rain water
harvesting, thereby releasing Pit A and Pit B for tailings storage much earlier than previously
planned.
Stage 2 Upgrade Progress
Despite some initial problems with scrubber availability, screen efficiency and leach agitators, the
plant feed tonnage was increased during the quarter, particularly in the last half of September.
Daily tonnages of over 6,000t per day have been achieved for 60% of this time (Stage 2 design is
6,453tpd) reaching close to 7,000t on occasions.
All outstanding items for Stage 2 commissioning have now been brought online, with the exception
of a second dryer, which has no significance to current plant production. Difficulties experienced
during the commissioning period included delays to front end installation, dust controls and pumping
and piping issues from the new counter current decantation (CCD) thickeners.
All these issues have been addressed and resolved during the quarter and the Stage 2 production
target is now expected to be achieved for this current December quarter.
Stage 3 Upgrade
In accordance with previously released information, the final design parameters have been set for a
Stage 3 expansion on the following basis:
·
Nominal production to increase to 5.2Mlb pa U
3
O
8
(an increase of 1.5Mlb pa or 40% from
the nominal Stage 2 level of 3.7Mlb pa)
·
Target completion date set for the December quarter 2010
·
Capital cost estimated at US$71M
·
No significant additional infrastructure
The flowsheet will involve a number of upgrades across the processing plant, particularly a second
crushing & scrubbing feed line with increases to the existing screening plant, an additional leach
tank (with heat exchangers etc), two additional CCD thickeners and expansion of the ion exchange
circuit.
PALADIN ENERGY LTD
Report to Shareholders
September Quarter Report 2009
(All figures are in US dollars unless otherwise indicated)
146410_9
5
The Stage 2 expansion has already incorporated capacity for the Stage 3 expansion in the pre-
leach thickening, precipitation, product drying and some reagent dosing facilities.
No upgrade to the water supply, nor expansion of the power supply facilities are necessary with
ample grid and generator capacities already available.
Exploration Activity EPL3500
Exploration drilling on EPL3500, west of the Langer Heinrich Mining Lease, was undertaken during
the quarter. A total of 27 RC holes, for 2,199m were drilled. All holes were downhole gamma
logged and equivalent U
3
O
8
grade values have been calculated.
The drilling succeeded in extending the Langer Heinrich mineralised palaeochannel by
approximately 300m further west and the mineralisation appears to be still open in this direction.
Better intersections included:
Hole
Depth From
Depth To
Intersection
Grade (ppm eU
3
O
8
)
EPL3
58
81
23
278
EPL4
54
62
8
738
EPL6
68
74
7
334
EPL7
66
75
7
258
EPL10
51
60
9
614
The intersections shown above were calculated using a cut off grade of 100ppm and a maximum
width of internal waste of 1m. All holes were drilled on a nominal 100m x 50m grid.
KAYELEKERA URANIUM PROJECT, Malawi
Production
Kayelekera production of 89,672lb for the quarter was hampered by a slower than expected ramp-
up in July and August, however September results were improved and this upward trend should
continue towards the anticipated nameplate production rates in the March 2010 quarter. Most
significantly, the entire Resin-In-Pulp (RIP) circuit has now proven to be effective and with a number
of mechanical availability issues rectified, the ramp-up should continue on-track.
The first shipment of product was trucked from Kayelekera to the Walvis Bay port (Namibia) in
August, with a second shipment of two containers leaving site on 12 October. Sulphuric acid
continues to be trucked to site as commissioning of the acid plant was delayed.
Project Development
Construction of the sulphuric acid plant was completed during the quarter. The acid plant is now
producing and is in the final commissioning stage.
The construction workforce has been progressively demobilised with only a small workforce
retained to complete work on the Tailings Storage Facility (TSF) and acid plant completion.
The Malawi Government's road building contractor continues to work on two bridges and some
culverts/drains in the first 13km section of the M26 public road that was recently sealed. Work is on
schedule to be completed in the next quarter. Major roadworks on the final 19km section to the
mine access road have commenced.
PALADIN ENERGY LTD
Report to Shareholders
September Quarter Report 2009
(All figures are in US dollars unless otherwise indicated)
146410_9
6
Operations Commissioning and Ramp-up
Ramp-up over the past quarter has been slower than anticipated due to mechanical availability of
certain equipment (numerous pumps) and pipe work, which have been identified and are in the
process of being replaced.
At quarter end, the Kayelekera employee workforce totaled 234 of which 71% were Malawian. The
contractor workforce totaled 641 persons with the mining contractor, the largest single group,
having 191 people.
Mining
A total of 246,400t of ore grading 1,364ppm U
3
O
8
and 264,800t of waste were removed from the pit
in this quarter. Currently there is about 700,000t of ore either on the Run of Mine (ROM) pad or
exposed in the pit. The mining fleet, not required for open pit mining, has been mobilised to assist
with the construction of the outstanding TSF wall.
Process Plant
The front end of the plant is still in the process of ramp-up with a temporary semi-mobile jaw
crusher planned for installation to augment crushing requirements. The crushing/grinding circuit
has been able to handle current throughputs in spite of some mechanical availability issues which
are currently being addressed. This crusher is expected to be operational in November.
The RIP circuit has been working very well, showing a higher loading of resin than planned. The
elution circuit, although initially problematic, is now operating at the design flow rate, with a few
additional minor modifications to the system expected to further improve its operation.
The plant chemistry is performing well, and it is anticipated that once the outstanding issues
mentioned above have been addressed, final plant ramp-up check throughout should be possible.
Most of the rectification work is planned to be completed in the next quarter.
Electricity
The power station (10MW) is operating as expected with the final load test completed in August.
Exploration Activity
The 2008 reserve drilling at the mine site had shown that the mineralisation was not yet fully
delineated, particularly to the north-west and west, and thus the potential existed to easily identify
additional resources with further drilling which was expected to provide in-pit extensions.
To close off the western portion of the orebody, and better define the total resource, a 67 hole,
7,061m RC drilling programme was completed in August 2009. The results will be evaluated in the
next quarter and a new resource statement for the Kayelekera orebody is expected late in 2009.
The drilling programme at Juma North included 25 RC holes totalling 3,915m. The drilling
programme confirmed the presence of the prospective zones and oxidation states but has
intersected only sub-economic uranium mineralisation to date. Drilling in 2010 will concentrate on
the southern part of the area where further work is needed to better define appropriate targets and
allow access for drill rigs.
PALADIN ENERGY LTD
Report to Shareholders
September Quarter Report 2009
(All figures are in US dollars unless otherwise indicated)
146410_9
7
OVERALL PRODUCTION GUIDANCE FOR FINANCIAL YEAR 2010
Langer Heinrich and Kayelekera continued ramp-up activities during the quarter and, although
ramp-up was slower than anticipated, results continue to trend positively. Overall production for the
September quarter was 744,188lb (764,527lb drummed) compared to a total of 727,716lb in June
quarter. Overall, considerable progress has been made towards removing identified production
bottlenecks and achieving nameplate production levels as evidenced by the recent Langer Heinrich
production figures.
Previous guidance forecasting annual production rates for Paladin had been based on a faster
ramp-up of production than has been realised to date. Significant progress has been made during
the quarter and management is confident the main delays have been absorbed into this period.
Through late September and October the Langer Heinrich Mine has successfully incorporated the
Stage 2 equipment into operation and, with mining stockpiles healthy, the remainder of the financial
year is expected to realise a further 2.8Mlb, which should result in a total yearly production of
3.45Mlb.
As a new production centre in ramp-up, Kayelekera is more difficult to forecast. Certainly the
process plant has proven its flowsheet, and is well equipped to steadily increase throughput to
required levels. The ore feed stockpiles are in excellent shape and thus an annual production of
between 2.2Mlb and 2.6Mlb is expected.
For financial year 2010 guidance for overall production is forecast in the range of 5.6Mlb to 6.1Mlb,
revised from the previously stated guidance of 6.6Mlb.
MAJOR NEW EXPANSION PLAN FOR LANGER HEINRICH AND KAYELEKERA,
PRODUCTION INCREASE FOR 2012 to 2014
A major component of Paladin's stated strategy is focused organic growth through long term
commitment and planning. This planned rigorous expansion programme which, when complete, is
expected to place the Company firmly amongst the Tier 1 uranium producers. This development
programme is expected to result in Paladin having an annual production of approximately 13.8Mlb
pa U
3
O
8
by mid 2014 from its African projects alone and will demonstrate a progressive increase in
production beyond the Stage 3 expansion. (see Paladin news release of 30 June, 2009).
An extensive in-house study has examined a range of expansion options for Langer Heinrich and
has determined that an increase in production to a level around 10Mlb pa U
3
O
8
is sustainable for
the current mineral resources, will add significant value to its flagship asset, and bring the project to
an optimal performance level.
The Stage 4 investigation, initiated in 2008 during the Stage 3 expansion study period, looked at
various production levels taking cognisance of the need to maximise value whilst maintaining a
long-term production profile. It is believed that with current resources this balance can best be
achieved by a plant production level of around 9Mlb pa, and a remaining mine life of 15 years.
Investigations to date also suggest that this can be supplemented by a 1Mlb pa heap leaching
facility.
The ROM operation is planned to crush approximately 8Mtpa at an average grade of 600ppm. This
crushed ore will then be upgraded through an expanded scrubbing circuit to give a leach feed grade
of around 920ppm. The heap leach feed material is expected to comprise 42Mt of low grade
(175ppm) material.
PALADIN ENERGY LTD
Report to Shareholders
September Quarter Report 2009
(All figures are in US dollars unless otherwise indicated)
146410_9
8
Off-site infrastructure requirements include the installation of a second water supply pipeline and an
upgrade to the existing electrical power supply line. Paladin does not believe that there will be any
problems associated with sourcing both water and power as Namibia is planning on increasing the
availability of both in the region within the envisaged project development time frame. The key will
be to negotiate a reasonable cost base for the additional water and electricity requirements.
To develop the project further, Paladin will undertake a feasibility study, including environmental
permitting, to be completed during calendar year 2010 in parallel with in-fill drilling designed to increase
the confidence in the current inferred resources and expand the reserve base. This study is not expected
to be difficult to complete as there is a vast amount of operational project data and in-house expertise now
available across the key technical, environmental and financial areas to ensure its smooth development.
This study would be followed by a 6-month approvals period and a 2 year design and construction period
targeting mechanical completion by mid 2013. Ramp-up to nameplate is expected to take 12 months.
The flowsheet for the main plant would essentially remain as present with substantial upgrades in all
sections of the plant except for final packaging.
Onsite capital expenditure for the main plant has been estimated at +/-US$300M whilst operating
costs are estimated to be within the US$25-$30/lb range. Infrastructure costs will be determined in
the feasibility study and structured financing options with third party ownership will be considered.
The capital cost for the heap leach facility has been estimated at +/-US$50M with an OPEX of
under US$35/lb, and will undergo a detailed evaluation in parallel with the main feasibility study.
Langer Heinrich is currently in the process of ramping up its Stage 2 expansion to 3.7Mlb pa and
implementation of Stage 3 to 5.2Mlb pa is scheduled for completion by late calendar 2010. This
latest proposed expansion further emphasises Paladin's determination for organic growth and its
long term commitment to uranium mining in Namibia.
In addition to its plans for Langer Heinrich, Paladin is to conduct an optimisation study at
Kayelekera whereby it intends exploiting additional resources by extending the west wall of the
current planned pit. This study will be targeting an increased production rate of 3.8Mlb pa (from
current 3.3Mlb pa) with minimal capital requirement (estimated at US$10-$15M) by utilising existing
excess capacity. It is expected this production rate will be achieved by late 2012.
Paladin's strengthened balance sheet, maturing producer status and strong in-house development
capability make, in the opinion of management, an expansion of this nature a realistic and
achievable target.
ISA URANIUM JOINT VENTURE, Queensland - (Paladin Energy Ltd 50%, Summit Resources
(Aust) Pty Ltd 50% Operator)
Valhalla Uranium Deposit
A resource estimate conforming to the JORC guidelines for the Valhalla uranium deposit has now
been completed following validation and compilation of data from drilling undertaken earlier in the
year. The estimate covers the original Valhalla deposit as well as the south eastern extension,
Valhalla South.
The updated Mineral Resource estimate for the Valhalla uranium deposit is quoted using a cut-off
grade of 230ppm
U
3
O
8.
PALADIN ENERGY LTD
Report to Shareholders
September Quarter Report 2009
(All figures are in US dollars unless otherwise indicated)
146410_9
9
Mt
Grade ppm
U
3
O
8
t
U
3
O
8
Mlb
U
3
O
8
Measured Resources
12.66
833
10,549
23.2
Indicated Resources
18.53
900
16,680
36.7
Total Measured & Indicated 31.20
874
27,229
60.0
Inferred Resources
5.2
859
4,494
9.9
(Figures in the table above may not add due to rounding)
Measured and Indicated Mineral Resources increased by 9.9% to 60.0Mlb U
3
O
8
(27,229t U
3
O
8
)
from previously announced 55.4Mlb U
3
O
8
(25,153t U
3
O
8
). Total Resources increased from previous
67.5Mlb U
3
O
8
to 69.9Mlb U
3
O
8
.
The main Valhalla deposit now has a strike length in excess of 1,100m with mineralisation
extending from surface to a depth of over 650m. It is structurally controlled with a characteristic
southerly plunge. Valhalla South is located approximately 600m along strike to the south-east of
the main mineralised zone and has a strike length of at least 400m and appears open both along
strike and at depth. Summit completed the planned drilling programme of 52 holes for 11,739m at
both Valhalla and Valhalla South by the end of June 2009. These holes have been drilled on a
nominal 80m x 40m grid pattern to infill the existing drill holes and replace some historic drill holes
as well as extend the known mineralisation at Valhalla South along strike and at depth. The
majority of these drill holes have been gamma logged down hole and gyroscopically surveyed to
obtain an accurate hole orientation using company owned equipment. The resource dataset is a
combination of chemical assays and appropriately calibrated down hole gamma logging. Gamma
derived grades have been validated against both XRF and chemical assay derived grades.
Skal Uranium Deposit
At Skal a total of 13 RC holes and 28 diamond core holes (for 5,724m) were completed by the end
of June 2009 and this data has been validated and incorporated into the existing Skal dataset. The
drilling was successful in confirming the resource potential at Skal East, located approximately east
of Skal North and South.
Updated resource estimation for the Skal East deposit has now been completed and incorporated
into the greater Skal Mineral Resource (detailed below). All Skal Mineral Resources conform to the
JORC guidelines. The resource dataset used is a combination of chemical assays and
appropriately calibrated downhole gamma logging. Gamma derived grades have been validated
against both XRF and chemical assay derived grades. Whilst Skal East in particular has been
closed off along strike there still appears to be potential for the resource to be open at depth in the
centre. Drilling in the future will be targeted at confirming both the depth extensions to Skal East
and North as well as depth and strike extensions to Skal South.
PALADIN ENERGY LTD
Report to Shareholders
September Quarter Report 2009
(All figures are in US dollars unless otherwise indicated)
146410_9
10
Skal Mineral Resource
(Individual mineral resource figures are quoted on a 100% of project basis)
Updated Skal East Mineral Resource at 250ppm U
3
O
8
Cut-off
Mt
Grade ppm
U
3
O
8
Tonnes
U
3
O
8
Mlb
U
3
O
8
Indicated Mineral Resource 4.3
575
2,458
5.4
Inferred Mineral Resource
0.8
448
348
0.8
The Skal East resources tabled above show the initial Indicated Mineral Resources estimated for
the deposit and represent a 38% increase on the previously estimated Inferred Only resource of
3.9Mlb U
3
O
8
.
OVERALL PALADIN ATTRIBUTED MINERAL RESOURCES IN THE MOUNT ISA PROJECTS
The resource updates at Valhalla and Skal have resulted in a 19.7% increase in combined
Measured and Indicated Mineral Resources. Resources at either 230ppm or 250ppm U
3
O
8
cut-off
grade at the Mount Isa Uranium Project including the updated Valhalla and Skal resources are now:
Deposit
Measured and Indicated
Mineral Resources
Inferred Mineral
Mineral Resources
Paladin
Share
Cut-off
ppm
U
3
O
8
Mt
Grade
ppm
t U
3
O
8
Mt
Grade
ppm
t U
3
O
8
Valhalla
230
31.2
874
27,229
5.2
859
4,494
91.0%
Skal
250
4.3
575
2,458
8.4
491
4,129
91.0%
Bikini
250
10.1
517
5,200
82.0%
Andersons
230
2.0
1,050
2,100
82.0%
Watta
230
4.2
410
1,720
82.0%
Duke Batman
250
0.5
780
388
1.6
630
1,016
100%
Honey Pot
250
2.6
700
1,799
100%
Total
36.0
837
30,075
(66.3Mlb)
34.1
600
20,458
(45.1Mlb)
Total Resource
Attributable to Paladin
32.8
836
27,373
(60.3Mlb)
29.9
604
18,049
(39.8Mlb)
(Figures in the table above may not add due to rounding)
Total Measured, Indicated and Inferred Mineral Resources under management by Paladin in the
Mount Isa region increased to 111.4Mlb (50,533t U
3
O
8
) from previous 106.6Mlb U
3
O
8
(48,381t
U
3
O
8
). Measured and Indicated Mineral Resources increased to 66.3Mlb U
3
O
8
(30,075t U
3
O
8
at
837ppm) from previous 55.4Mlb U
3
O
8
(25,153t U
3
O
8
at 889ppm).
BIGRLYI URANIUM JOINT VENTURE, Northern Territory - Australia (Paladin 42.06%, Energy
Metals Ltd 53.74% Operator)
Following the updated resource estimate announced in May 2009 by Energy Metals, new mining
studies indicated that additional open pit resources would be required to maintain the viability of the
project at current uranium prices. Based on these assumptions a new budget was approved in July
PALADIN ENERGY LTD
Report to Shareholders
September Quarter Report 2009
(All figures are in US dollars unless otherwise indicated)
146410_9
11
2009 by the Joint Venture partners to concentrate on both resource extension drilling and a limited
grade control study. These programmes commenced in August 2009.
ANGELA JOINT VENTURE, Northern Territory - Australia (Paladin 50% - Cameco 50%
Operator)
The 2009 exploration and geotechnical drilling programme was completed during the quarter. A
total of 111 holes including 8 large diameter geotechnical drillholes, were completed. A total of
27,017m has now been drilled at the project including 16,684m RC and 10,333m diamond core.
The data is currently being evaluated and a new geological model is in the process of being
developed. All recent, and a significant proportion of the historic holes, have been down hole
gamma logged in an effort to confirm historical values. After all confirmation assays have been
received, a new resource model estimation is expected to be completed late in the March 2010
quarter.
Metallurgical samples totalling 79kg have been sent to the Cameco laboratories in Canada for
scouting leach tests. This work is in the early stages and no results are yet available.
CORPORATE
US$167M Project Finance Completed for Kayelekera
Paladin has drawndown US$132M under the Kayelekera Project Financing Loan (Facility) to the
end of September 2009.
The Facility is provided by a syndicate of banks made up of Société Générale, Standard Bank and
Nedbank Capital, the same syndicate of banks that provided project finance for Langer Heinrich
Stage 1. The US$167M project finance package consists of; US$145M Project Financing Facility
currently drawn to US$132M, US$12M Cost Overrun Facility currently funded with US$8M cash
and US$10M Performance Bond Facility.
US$110M of the US$145M project finance facility is backed by the Export Credit Insurance
Corporation of South Africa.
A$429M (US$374M) Private Placement
Paladin completed an institutional private placement during the quarter with RBC Capital Markets
and UBS AG, Australia Branch acting as Global Joint Lead Placing Agents and Cormark Securities
Inc., Dundee Securities Corporation and GMP Securities L.P. as Co-Managers to the placement.
Azure Capital acted as Corporate Adviser to Paladin. A total of 93,450,000 ordinary shares were
issued raising A$429M at a price of A$4.60 per share. The pricing represented a small discount of
0.5% to the Company's 5 day VWAP.
Participation in A$5.3M placement by NGM Resources Limited
Paladin has increased its shareholding in NGM from 16.7% to 19.9% by contributing A$1.77M
towards the placement. The placement was completed in two stages at A$0.15 per share.
PALADIN ENERGY LTD
Report to Shareholders
September Quarter Report 2009
(All figures are in US dollars unless otherwise indicated)
146410_9
12
Market Comments
The Ux spot price moved from US$52/lb U
3
O
8
at the beginning of July to US$42.75/lb U
3
O
8
at the
end of September reflecting a seasonal slowing of activity during the northern summer. Concerns
about US Department of Energy proposed uranium sales added to market hesitancy in September
before buyers returned in early October. The long term indicator price eased one dollar from
US$65/lb U
3
O
8
(in April 2009) to US$64/lb U
3
O
8
at the end of August.
As the shock of the global financial crisis slowly recedes, governments are once again focussing on
climate change and the forthcoming Copenhagen conference. The importance of nuclear power in
a CO
2
constrained energy mix is now so widely recognised that the significant growth in nuclear
power, which Paladin has long predicted, has moved from hypothetical to inevitable. The
International Energy Agency's special paper prepared for the recent Bangkok UNFCC meeting
identifies a doubling of nuclear capacity by 2030 in its "450ppm CO
2
Scenario" and specifically calls
for "...a much faster roll-out of renewables and nuclear..." amongst other strategies. Similarly both
the World Nuclear Association and the International Atomic Energy Agency have recently revised
upwards their forecast of nuclear capacity in 2030 significantly from their earlier reports in 2007 and
2008 respectively.
In Europe, the change in attitude towards nuclear is reflected in the new German Government's
plan to review and abandon the German nuclear phase-out policy, and the recent decision by
Belgium to offer a ten year lifetime extension for existing nuclear plants. Even Greenpeace UK has
dropped its anti-nuclear position in its recent climate change manifesto.
Yours faithfully
Paladin Energy Ltd
JOHN BORSHOFF
Managing Director/CEO
PALADIN ENERGY LTD
Management Discussion and Analysis
For the Quarter Ended 30 September 2009
(All figures are in US dollars unless otherwise indicated)
146410_9
13
The following Management Discussion and Analysis ("MD&A") for Paladin Energy Ltd ("Company")
should be read in conjunction with the Report to Shareholders and the Consolidated Financial
Statements for the quarter ended 30 September 2009. The effective date of this report is 12
November 2009.
The financial information presented in this MD&A has been prepared in accordance with applicable
International Financial Reporting Standards (IFRS), other mandatory professional reporting
requirements and the Corporations Act 2001. Applicable Accounting Standards include Australian
Accounting Standards Board (AASB) 134 Interim Financial Reporting.
In addition to these Australian requirements further information has been included in the
Consolidated Financial Statements for the quarter ended 30 September 2009 in order to comply
with applicable Canadian securities law, as the Company is listed on the Toronto Stock Exchange.
Additional information relating to the Company, including the Company's most recent Annual Report
for the year ended 30 June 2009 and other public announcements are available at
www.paladinenergy.com.au.
FORWARD LOOKING STATEMENTS
Some of the statements contained in this MD&A, including those relating to strategies and other
statements, are predictive in nature, and depend upon or refer to future events or conditions, or
include words such as "expects", "intends", "plans", "anticipates", "believes", "estimates" or similar
expressions that are forward looking statements. Forward looking statements include, without
limitation, the information concerning possible or assumed further results of operations as set forth
herein. These statements are not historical facts but instead represent only expectations, estimates
and projections regarding future events and are qualified in their entirety by the inherent risks and
uncertainties surrounding future expectations generally.
The forward looking statements contained in this MD&A are not guarantees of future performance
and involve certain risks and uncertainties that are difficult to predict. The future results of the
Company may differ materially from those expressed in the forward looking statements contained in
this MD&A due to, among other factors, the risks and uncertainties inherent in the business of the
Company. The Company does not undertake any obligation to update or release any revisions to
these forward looking statements to reflect events or circumstances after the date of this MD&A or
to reflect the occurrence of unanticipated events.
OVERVIEW
The Company operates in the minerals resources industry with a principal business focus on
development and operation of uranium projects in Africa and Australia, as well as evaluation and
acquisition opportunities throughout the world. The Company is incorporated under the laws of
Western Australia with a primary share market listing on the Australian Securities Exchange and
additional listings on the Toronto Stock Exchange in Canada; Munich, Berlin, Stuttgart and Frankfurt
Stock Exchanges in Europe; and the Namibian Stock Exchange in Africa.
PALADIN ENERGY LTD
Management Discussion and Analysis
For the Quarter Ended 30 September 2009
(All figures are in US dollars unless otherwise indicated)
146410_9
14
The main activities undertaken during the quarter ended 30 September 2009 were:
·
September quarter overall production of 744,188lb small increase on last quarter.
-
Langer Heinrich plan to achieve Stage 2 production of 3.7Mlb pa for December 2009
quarter.
-
Kayelekera ramp-up behind schedule, however, design production of 3.3Mlb pa is still
on target for March 2010 quarter.
·
Financial Year 2010 guidance revised to a range of 5.6Mlb to 6.1Mlb due to slower
production ramp-up at Langer Heinrich and Kayelekera.
·
Sales of 703,000lb at an average price of US$54.5/lb for revenue of US$38.3M for the
September 2009 quarter.
·
Major new production expansion plans for Africa (increasing from 8.5Mlb pa to 13.8Mlb pa)
to clearly establish Paladin as a Tier 1 producer.
-
Stage 4 Langer Heinrich expansion targeting 10Mlb pa (includes 1Mlb heap leach) with
nameplate production planned by mid 2014.
-
Kayelekera optimisation to 3.8Mlb pa planned for late 2012.
·
US$374M private placement completed.
·
US$167M Project Finance Completed for Kayelekera
·
Increased shareholding in NGM Resources Limited
PALADIN ENERGY LTD
Management Discussion and Analysis
For the Quarter Ended 30 September 2009
(All figures are in US dollars unless otherwise indicated)
146410_9
15
INCOME STATEMENT
Quarter Ended
30 September
2009
2008
US$M
US$M
Revenue
38.6
52.4
Gross profit
14.9
22.0
Exploration and evaluation expenses
(5.1)
(3.6)
Other expenses and income
(8.6)
(10.1)
Finance costs
(5.2)
(9.2)
Income tax expense
(16.0)
(4.2)
Minority interests
0.6
0.4
Loss after tax attributable to the ordinary equity holders
of the Company
(19.4)
(4.7)
US$
US$
Loss per share - basic & diluted
(0.03)
(0.01)
Quarter Ended 30 September 2009
References to 2008 and 2009 refer to the equivalent 3 months ended 30 September 2008 and 2009
respectively.
Revenue from Continuing Operations decreased to US$38.6M in 2009 as a result of decreased
sales of uranium of US$38.3M (2008: US$51.0M). All sales for 2008 and 2009 relate to Stage I of
Langer Heinrich Mine (LHM). Total sales volume for the quarter was 703,000lb U
3
O
8
(2008: 878,000lb) and total production for the quarter by LHM was 654,516lb U
3
O
8
(2008:
650,554lb). The average realised uranium sales price in 2009 was US$54/lb U
3
O
8
(2008:
US$58/lb).
Total production for the quarter by Kayelekera Mine (KM) was 89,672lb U
3
O
8
(2008: Nil).
Interest income decreased to US$0.2M (2008: US$1.3M) as a result of lower cash and cash
equivalents for most of the quarter.
Gross Profit in 2009 of US$14.9M is lower than in 2008 as a consequence of decreased uranium
sales. The cost of sales decreased in 2009 to US$26/lb U
3
O
8
(2008: US$27/lb).
Exploration and Evaluation Expenditure of US$5.1M in 2009 related predominantly to the
Valhalla/Skal, Isa North, Bigrlyi, Angela, LHM and KM projects.
Of this total, US$1.2M was spent
on the Valhalla/Skal joint venture project.
PALADIN ENERGY LTD
Management Discussion and Analysis
For the Quarter Ended 30 September 2009
(All figures are in US dollars unless otherwise indicated)
146410_9
16
Other Expenses and Income have remained relatively unchanged at US$8.6M despite a US$1.2M
foreign exchange loss in 2009 compared to a US$2.3M foreign exchange gain in 2008. This was
offset by the recognition of an impairment of the Paladin Nuclear Ltd inventory of US$3.7M in the
September 2008 quarter.
Finance Costs have decreased by US$4M to US$5.2M despite increased average borrowings year
on year due to a proportion of the interest payable on the convertible bonds being capitalised as
part of the construction of KM. Finance costs relate primarily to interest payable on the US$250.0M
convertible bonds issued 15 December 2006 and the US$325.0M convertible bonds issued 11
March 2008.
Income Tax Expense of US$16.0M is predominantly attributable to the foreign exchange movement
on the translation of property, plant and equipment and tax losses in Namibia and Malawi.
Minority Interests credit of US$0.6M has been recorded in 2009 attributable to the 18.0% interest in
Summit held by third parties and the 15% interest in Paladin (Africa) Ltd (PAL) held by the
Government of Malawi.
The Loss after Tax for 2009 of US$19.4M was higher than the loss after tax for 2008 of US$4.7M
predominantly as a result the lower contracted sales and the higher income tax expense due to
improved operating profitability at LHM.
Summary of Quarterly Financial Results
2009
2009
2009
2008
Sep Qtr
Jun Qtr
Mar Qtr
Dec Qtr
US$M
US$M
US$M
US$M
Total revenues
38.6
23.2
25.0
14.2
(Loss)/profit after tax
(19.4)
2.1
(6.8)
(470.8)
Basic and diluted loss per share
(0.03)
-
(0.01)
(0.76)
2008
2008
2008
2007
Sep Qtr
Jun Qtr
Mar Qtr
Dec Qtr
US$M
US$M
US$M
US$M
Total revenues
52.4
38.9
15.3
19.4
Loss after tax
(4.7)
(1.9)
(8.4)
(11.2)
Basic and diluted loss per share
(0.01)
(0.01)
(0.01)
(0.02)
Total revenues for the quarters ended September, June and December are lower than the
comparative quarters due to shipping and contracted sales schedules.
Total revenue for the quarter ended March has increased when compared to the equivalent
comparative quarter as a result of higher contracted sales of uranium.
All contracted sales are made in accordance with delivery schedules agreed with each customer
from time to time and, as a result, delivery quantities and revenues are not evenly distributed
between quarters.
Loss after tax has increased for the quarter ended September when compared to the equivalent
comparative quarter as a consequence of the decrease in gross profit due to the lower contracted
sales.
PALADIN ENERGY LTD
Management Discussion and Analysis
For the Quarter Ended 30 September 2009
(All figures are in US dollars unless otherwise indicated)
146410_9
17
A profit after tax was recorded for the June 2009 quarter due to the loss before tax for the quarter
being offset by a tax benefit recognised for LHM. Total revenues for the quarter ended June
decreased when compared to the equivalent comparative quarter as a consequence of lower
contracted sales.
Loss after tax has decreased for the quarter ended March when compared to the equivalent
comparative quarter as a consequence of the increase in gross profit due to the improving
production at LHM and higher contracted sales.
Loss after tax for the quarter ended December is higher than the comparative quarter predominantly
as a result of the recognition of an impairment of the Mount Isa exploration and evaluation asset of
US$527.642M net of the deferred tax liability.
Loss Per Share
The Loss per Share noted on the Income Statements reflects the underlying result for the specific
reported periods and the additional shares issued in 2009 compared to 2008.
Segment Disclosure (refer to Note 3)
In the Namibian geographical segment the Company reflected a lower profit before tax and finance
costs than in 2008 of US$11.8M as a consequence of lower contracted sales volumes. The
Malawian geographical segment loss before tax and finance costs of US$0.2M relates to
exploration and evaluation expenditure and corporate costs which are partially offset by a foreign
exchange gain. In the Australian geographical segment the Company reflected the remaining
Income Statement activities.
STATEMENT OF COMPREHENSIVE INCOME
Quarter Ended
30 September
2009
2008
US$M
US$M
Net loss after tax from operations
(20.0)
(5.1)
Net loss on available for sale financial assets
(1.6)
(6.4)
Foreign currency translation
55.4
(200.4)
Income tax on items of other comprehensive income
(1.0)
(1.2)
Total comprehensive income/(loss) for the period
32.8
(213.1)
Quarter Ended 30 September 2009
References to 2008 and 2009 refer to the equivalent 3 months ended 30 September 2008 and 2009
respectively.
Net Loss after Tax from Operations is discussed under the Income Statement section and is an
increase in the loss in the comparative period.
PALADIN ENERGY LTD
Management Discussion and Analysis
For the Quarter Ended 30 September 2009
(All figures are in US dollars unless otherwise indicated)
146410_9
18
Net Loss on Available for Sale Financial Assets in 2009 of a US$0.6M decrease primarily relates to
the revaluation decrement in Deep Yellow Ltd (DYL) (net of tax and foreign exchange movements)
attributable to the small decrease in DYL share price.
Foreign Currency Translation relates to the foreign currency translation reserve movement as a
result of the translation of subsidiaries with Australian dollar functional currencies into the Company
presentation currency of US dollars on an ongoing basis and for the comparative period.
STATEMENT OF FINANCIAL POSITION
30 September
2009
unaudited
30 June
2009
audited
US$M
US$M
Total current assets
614.0
182.0
Total non current assets
1,384.0
1,281.5
Total assets
1,998.0
1,463.5
Total current liabilities
84.0
91.3
Total non current liabilities
883.4
741.0
Total liabilities
967.4
832.3
Net Assets
1,030.6
631.2
Current Assets have increased to US$614.0M at 30 September 2009 due to an increase in cash
and inventories which is partially offset by a decrease in trade receivables.
Cash and cash equivalents has increased to US$494.5M at 30 September 2009 as a result of
US$364.5M net proceeds from the share placement and US$132.0M proceeds from the drawdown
of KM project finance facilities and by US$10.9M cash inflow from LHM operations. This has been
partially offset by expenditure on the construction of KM and Stage II expansion at LHM, exploration
and evaluation project expenditure, additional NGM share investment, finance costs and corporate
costs for the quarter ended 30 September 2009.
The cash and cash equivalents is currently invested over a range of maturities with Australian
banks with a minimum AA Standard & Poor's credit rating
.
Trade and other receivables have decreased to US$25.7M during the quarter ended 30 September
2009. Trade receivables have decreased by US$13.2M reflecting the timing of deliveries and
therefore recognition of sales as compared to June 2009. This has been partially offset by an
increase in GST/VAT receivable and prepayments.
Inventories have increased to US$92.8M at 30 September 2009 as a result of higher production
levels compared to contracted sales volumes during the three months ended 30 September 2009.
Finished goods at cost as at 30 September 2009 have increased by US$3.7M to US$42.3M. No
PALADIN ENERGY LTD
Management Discussion and Analysis
For the Quarter Ended 30 September 2009
(All figures are in US dollars unless otherwise indicated)
146410_9
19
inventory has been recognised for KM as the project was in ramp-up as at 30 September 2009. All
contracted sales are made in accordance with delivery schedules agreed with each customer from
time to time and, as a result, delivery quantities and revenues are not evenly distributed between
quarters.
During the September 2008 quarter, the uranium held by Paladin Nuclear Ltd, the Company's
marketing entity, was reduced to net realisable value resulting in an impairment loss of US$3.7M.
There were no further adjustments made to the uranium held by Paladin Nuclear Ltd.
Non Current Assets have increased to US$1,384.0M at 30 September 2009 primarily as a result of
the foreign exchange movement on the Australian dollar denominated exploration assets and
capital expenditure at LHM and KM.
Following a review of KM's capitalised construction work in
progress there was a reallocation of US$23.8M to mine development to more accurately reflect the
nature of the expenditure.
Current Liabilities have decreased from US$91.3M to US$84.0M at 30 September 2009 primarily as
a result of reduced construction activities at KM.
Non Current Liabilities have increased from US$741.0M to US$883.4M at 30 September 2009
primarily as a result of the US$132.0M the drawdown of KM project finance facilities.
Segment Disclosure (refer to Note 3)
In the Statement of Financial Position as at 30 September 2009, the Company reflected a decrease
in the Australian geographical segment assets and liabilities for the year as a result of the
impairment in the carrying value of Mount Isa exploration and evaluation asset which was partially
offset by an increase in cash and cash equivalents. For the Namibian geographical segment an
increase occurred in the year in assets and liabilities due to the Stage II expansion, operations and
exploration and evaluation activities for LHM. For the Malawian geographical segment, an increase
occurred in the year in the assets and liabilities as a result of mine construction and exploration and
evaluation activities for KM.
STATEMENT OF CHANGES IN EQUITY
Quarter Ended
30 September
2009
2008
US$M
US$M
Total equity at the beginning of the financial period
631.2
1,429.3
Total comprehensive income/(loss) for the period
32.8
(213.1)
Recognised value of unlisted employee options
2.7
3.5
Contributions of equity, net of transaction costs
363.9
3.4
Total Equity at the End of the Financial Period
1,030.6
1,223.1
Total Comprehensive Income for the Quarter Ended 30 September 2009 is discussed under the
Statement of Comprehensive Income section.
PALADIN ENERGY LTD
Management Discussion and Analysis
For the Quarter Ended 30 September 2009
(All figures are in US dollars unless otherwise indicated)
146410_9
20
Recognised Value of Unlisted Employee Options in 2009 of a US$2.7M. During the quarter no
employee options were exercised or granted, 177,000 were forfeited with an exercise price of
A$4.50 per share and 1,000,000 expired with an exercise price of A$5.50.
Contributions of Equity in 2009 of a US$363.9M increase relates to the share placement of
93,450,000 shares. The number of fully paid ordinary shares on issue at 30 September 2009 is
717,142,802, an increase of 93,450,000 during the quarter.
Share options of 14,050,455 remain outstanding at 30 September 2009 to the employees and
consultants directly engaged in corporate, mine construction, operations, exploration and evaluation
work.
STATEMENT OF CASH FLOWS
Quarter Ended
30 September
2009
2008
US$M
US$M
Net cash (outflow)/inflow from operating activities
(9.0)
11.3
Net cash outflow from investing activities
(51.6)
(71.4)
Net cash inflow from financing activities
489.1
3.0
Net increase/(decrease) in cash held
428.5
(57.1)
Cash at the beginning of the financial period
66.2
337.6
Effects of exchange rate changes
(0.2)
(0.8)
Cash at the End of the Financial Period
494.5
279.7
Quarter Ended 30 September 2009
Net Cash Outflow from Operating Activities was US$9.0M in 2009 primarily due to payments to
suppliers and employees of US$46.8M relating to the mine operations at LHM and KM, exploration
and evaluation project expenditure, the growth of the Company and interest payments of US$8.3M
on project finance facilities and convertible bonds which was partly offset by uranium sales receipts
of US$51.5M.
Net Cash Outflow from Investing Activities was US$51.6M in 2009 as a result of mine construction
at KM, Stage II expansion at LHM and the acquisition of shares in NGM. The net cash outflow of
US$71.4 million in 2008 as a result of mine construction at the KM, Stage II expansion at LHM, the
acquisition of additional investments in Deep Yellow Ltd and third party uranium purchases.
Net Cash Inflow from Financing Activities of US$489.1M in 2009 is attributable to the US$364.5M
net proceeds from the share placement and US$132.0M proceeds from the drawdown of KM
project finance facilities. The net cash inflow of US$3.0M in 2008 was attributable to proceeds from
the exercise of 500,000 unlisted employee options and proceeds from external parties from the
Summit Resources Ltd renounceable rights issue.
PALADIN ENERGY LTD
Management Discussion and Analysis
For the Quarter Ended 30 September 2009
(All figures are in US dollars unless otherwise indicated)
146410_9
21
Net Increase in Cash in 2009 was US$428.5M, as compared to the net decrease in cash over the
previous corresponding period in 2008 of US$57.1M. The change is predominantly the result of the
net proceeds from the share placement of the US$364.5M and the drawdown of KM project
financing facilities of US$132.0M in 2009.
Effect of Exchange Rate Changes is a loss of US$0.2M for 2009.
LIQUIDITY AND CAPITAL RESOURCES
The Company's principal source of liquidity as at 30 September 2009 is cash of US$494.5M (30
June 2008: US$66.2M). The cash is currently invested over a range of maturities with Australian
banks with a minimum AA Standard & Poor's credit rating.
The Company's principal sources of cash for the quarter ended 30 September 2009 were uranium
sales receipts, interest received from cash investments, proceeds from a share placement and
drawdown of borrowings.
The Company has in place LHM project finance facilities of US$54.1M which have been fully drawn
down.
For KM, the Company has financing totalling US$167M. At 30 September 2009, US$132M had
been drawn of the project finance facilities leaving available facilities of US$35M.
The following is a summary of the Group's outstanding commitments as at 30 September 2009:
Total
Less than 1 yr
1 to 5yrs
5yrs+ or
unknown
Payments due by period
US$M
US$M
US$M
US$M
Tenements
23.8
10.4
13.4
-
Mine construction
6.9
6.9
-
-
Operating leases
6.4
0.9
3.0
2.5
Manyingee acquisition costs
0.7
-
-
0.7
Total commitments
37.8
18.2
16.4
3.2
In relation to the Manyingee Uranium Project, the acquisition terms provide for a payment of
A$0.75M (US$0.7M) by the Company to the vendors when all project development approvals are
obtained.
In addition to the outstanding commitments above, the Company acquired a call option on 19 June
1998 in relation to the purchase of the Oobagooma Uranium Project and, in turn, granted a put
option to the original holder of the project. Both the call and put options have an exercise price of
A$0.75M (US$0.7M) and are subject to the Western Australian Department of Minerals & Energy
granting tenements comprising two exploration licence applications. The A$0.75M (US$0.7M) is
payable by the Company within 10 business days of the later of the grant of the tenements or the
exercise of either the call or put option. The options will expire three months after the date the
tenements are granted.
The Company has no other material off balance sheet arrangements.
PALADIN ENERGY LTD
Management Discussion and Analysis
For the Quarter Ended 30 September 2009
(All figures are in US dollars unless otherwise indicated)
146410_9
22
As at 12 November 2009 Paladin had 717,142,802 fully paid ordinary shares issued and
outstanding. The following table sets out the fully paid ordinary outstanding shares and those
issuable under the Company Executive Share Option Plan and in relation to the Convertible Bonds:
As at 12 November 2009
Number
Outstanding shares
717,142,802
Issuable under Executive Share Option Plan
14,050,455
Issuable in relation to the US$250 million Convertible Bonds
32,530,904
Issuable in relation to the US$325 million Convertible Bonds
49,317,147
Total
813,041,308
CRITICAL ACCOUNTING ESTIMATES
The preparation of financial report in conformity with generally accepted accounting principles
requires management to make estimates and assumptions that affect the reported amount of assets
and liabilities and disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amount of revenues and expenses during the reporting period.
Significant areas requiring the use of management estimates relate to the determination of the
following: carrying value or impairment of inventories, financial investments, property, plant and
equipment, intangibles, mineral properties and deferred tax assets; carrying value of rehabilitation,
mine closure, sales contracts provisions and deferred tax liabilities; calculation of share-based
payments expense and assessment of reserves. Actual results could differ from these estimates.
FINANCIAL INSTRUMENTS
At 30 September 2009 the Company has exposure to interest rate risk which is the risk that the
Company's financial position will be adversely affected by movements in interest rates that will
increase the cost of floating rate project finance debt or opportunity losses that may arise on fixed
rate convertible bonds in a falling interest rate environment. Interest rate risk on cash and short-
term deposits is not considered to be a material risk due to the short-term nature of these financial
instruments.
The Company's main foreign currency translation risk is for monetary assets and liabilities of the
Namibian and Malawian operations. These are deemed to have a functional currency of US dollars,
and the Company has adopted a presentation currency of US dollars therefore eliminating any
foreign currency translation risk for non-monetary assets and liabilities. The Company also has
significant foreign currency translation risk for non-monetary assets and liabilities of the Australian
exploration and evaluation operations as these are deemed to have a functional currency of
Australian dollars, and the Company has adopted a presentation currency of US dollars. The
Company has no significant monetary foreign currency assets and liabilities apart from Namibian
dollar cash, receivables, payables and provisions and Australian dollar cash, payables and deferred
tax liabilities.
The Company currently does not engage in any hedging or derivative transactions to manage
interest rate or foreign currency risks.
The Company's credit risk is the risk that a contracting entity will not complete its obligation under a
financial instrument that will result in a financial loss to the Company. The carrying amount of
financial assets represents the maximum credit exposure. The Company trades only with
PALADIN ENERGY LTD
Management Discussion and Analysis
For the Quarter Ended 30 September 2009
(All figures are in US dollars unless otherwise indicated)
146410_9
23
recognised, credit worthy third parties. In addition, receivable balances are monitored on an
ongoing basis with the result that the Company's exposure to bad debts is not significant.
The Company's treasury function is responsible for the Company's capital management, including
management of the long term debt and cash as part of the capital structure. This involves the use of
corporate forecasting models which enable analysis of the Company's financial position including
cash flow forecasts to determine the future capital management requirements. To ensure sufficient
funding for operational expenditure and growth activities, a range of assumptions are modelled so
as to provide the flexibility in determining the Company's optimal future capital structure.
OTHER RISKS AND UNCERTAINTIES
Risk Factors
The Company is subject to other risks that are outlined in the Annual Information Form 51-102F2
which is available on SEDAR at
www.sedar.com
TRANSACTIONS WITH RELATED PARTIES
During the quarter ended 30 September 2009 no payments were made to Director related entities.
Directors of the Company receive standard personal based compensation.
DISCLOSURE CONTROLS
The Company has applied its Disclosure Control Policy to the preparation of the Consolidated
Financial Report for the quarter ended 30 September 2009, associated Management Discussion
and Analysis and Report to Shareholders. An evaluation of the Company's disclosure controls and
procedures used has been undertaken and concluded that the disclosure controls and procedures
were effective.
INTERNAL CONTROLS
The Company has designed appropriate internal controls over financial reporting (ICFR) and
ensured that these were in place for the quarter ended 30 September 2009. An evaluation of the
design of ICFR has concluded that it is adequate to prevent a material misstatement of the
Company's Consolidated Financial Report as at 30 September 2009.
During the quarter the Company continued to have an internal audit function externally contracted
to Deloitte Touche Tohmatsu. Internal audit reports and follow-up reviews were completed during
the quarter and the Company continues to address their recommendations. The resultant changes
to the internal controls over financial reporting have improved and will continue to improve the
Company's framework of internal control in relation to financial reporting.
SUBSEQUENT EVENTS
Since the end of the quarter, the Directors are not aware of any other matter or circumstance not
otherwise dealt with in this report, that has significantly or may significantly affect the operations of
the Consolidated Entity, the results of those operations or the state of affairs of the Consolidated
Entity in subsequent quarters with the exception of the following, the financial effects of which have
not been provided for in the 30 September 2009 Financial Report:
PALADIN ENERGY LTD
Management Discussion and Analysis
For the Quarter Ended 30 September 2009
(All figures are in US dollars unless otherwise indicated)
146410_9
24
New Langer Heinrich and Kayelekera Expansion - Production Increase for 2012 to 2014
On 29 October 2009, the Company announced its uranium production expansion plans for both the
Langer Heinrich and Kayelekera Mines beyond the current annual production target of 8.5Mlb
U
3
O
8
by mid 2012. A major component of Paladin's stated strategy is focused organic growth
through long term commitment and planning. Paladin has a rigorous expansion programme
planned which, when complete, is expected to place the Company firmly amongst the Tier 1
uranium producers. This development programme is expected to result in Paladin having an
annual production of approximately 13.8Mlb U
3
O
8
by mid 2014 from its African projects alone and
will demonstrate a progressive increase in production beyond the Stage 3 expansion at Langer
Heinrich (see Paladin news release of 30 June 2009).
Appointment of New Chief Financial Officer
On 2 November 2009, the Company announced the appointment of Garry Korte as Chief Financial
Officer. Garry commenced employment with Paladin on 2 November 2009 with his appointment as
Chief Financial Officer effective 16 November 2009. Garry is a Chartered Accountant with 20 years
experience in mining and related industries, including at Director level.
The accompanying Consolidated Financial Statements for the quarter ended 30 September 2009
and 30 September 2008 have been prepared in accordance with International Financial Reporting
Standards. The effective date of these Consolidated Financial Statements is 12 November 2009.
146410_9
25
PALADIN ENERGY LTD AND CONTROLLED ENTITIES
CONSOLIDATED INCOME STATEMENT
EXPRESSED IN US DOLLARS
Quarter Ended
30 September
Notes
2009
2008
US$M
US$M
Revenue from continuing operations
Revenue
4(a)
38.6
52.4
Cost of sales
(18.6)
(24.1)
20.0
28.3
Depreciation and amortisation
(3.4)
(3.9)
Product distribution costs
(0.6)
(0.6)
Royalties
(1.1)
(1.8)
Gross profit
14.9
22.0
Other income
4(b)
-
2.3
Exploration and evaluation expenses
10
(5.1)
(3.6)
Other expenses
4(c)
(8.6)
(12.2)
Finance costs
4(d)
(5.2)
(9.2)
Movement in financial assets held for
trading
-
(0.2)
Loss before income tax
(expense)/benefit
(4.0)
(0.9)
Income tax expense
(16.0)
(4.2)
Net loss after tax from operations
(20.0)
(5.1)
Net loss attributable to:
Minority interests
15
(0.6)
(0.4)
Members of the parent
(19.4)
(4.7)
(20.0)
(5.1)
Loss per share
Loss after tax from operations
attributable to ordinary equity holders of
the Company
- basic and diluted
US$
(0.03)
US$
(0.01)
The above Consolidated Income Statement should be read in conjunction with the accompanying notes.
146410_9
26
PALADIN ENERGY LTD AND CONTROLLED ENTITIES
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
EXPRESSED IN US DOLLARS
Quarter Ended
30 September
Notes
2009
2008
US$M
US$M
Net loss after tax from operations
(20.0)
(5.1)
Other comprehensive income
Net loss on available-for-sale financial
assets
(1.6)
(6.4)
Foreign currency translation
55.4
(200.4)
Income tax on items of other
comprehensive income
(1.0)
(1.2)
Other comprehensive income/(loss)
for the period, net of tax
52.8
(208.0)
Total comprehensive income/(loss)
for the period
32.8
(213.1)
Total comprehensive income/(loss)
attributable to:
Minority interests
15
(0.6)
(0.4)
Members of the parent
33.4
(212.7)
32.8
(213.1)
The above Consolidated Statement of Comprehensive Income should be read in conjunction with the
accompanying notes.
146410_9
27
PALADIN ENERGY LTD AND CONTROLLED ENTITIES
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
EXPRESSED IN US DOLLARS
30 September
30 June
Notes
2009
Unaudited
2009
Audited
US$M
US$M
ASSETS
Current assets
Cash and cash equivalents
5
494.5
66.2
Trade and other receivables
6
25.7
29.0
Inventories
7
92.8
85.8
Financial assets held for trading
1.0
1.0
TOTAL CURRENT ASSETS
614.0
182.0
Non current assets
Trade and other receivables
6
2.6
2.2
Inventories
7
28.9
24.9
Other financial assets
74.2
69.2
Deferred borrowing costs
-
8.2
Property, plant and equipment
8
464.0
457.8
Mine development
9
99.5
54.2
Exploration and evaluation expenditure
10
689.4
635.5
Deferred tax asset
-
3.9
Intangible assets
11
25.4
25.6
TOTAL NON CURRENT ASSETS
1,384.0
1,281.5
TOTAL ASSETS
1,998.0
1,463.5
LIABILITIES
Current liabilities
Trade and other payables
60.5
67.1
Unearned revenue
0.2
0.2
Interest bearing loans and borrowings
12
14.2
14.2
Provisions
13
9.1
9.8
TOTAL CURRENT LIABILITIES
84.0
91.3
Non current liabilities
Unearned revenue
0.2
0.2
Interest bearing loans and borrowings
12
698.4
572.0
Deferred tax liabilities
151.5
136.5
Provisions
13
33.3
32.3
TOTAL NON CURRENT LIABILITIES
883.4
741.0
TOTAL LIABILITIES
967.4
832.3
NET ASSETS
1,030.6
631.2
Equity
Contributed equity
14(a)
1,475.5
1,111.6
Reserves
82.2
31.9
Accumulated losses
(600.6)
(581.2)
Parent interests
957.1
562.3
Minority interests
15
73.5
68.9
TOTAL EQUITY
1,030.6
631.2
The above Consolidated Statement of Financial Position should be read in conjunction with the
accompanying notes.
146410_9
28
PALADIN ENERGY LTD AND CONTROLLED ENTITIES
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
EXPRESSED IN US DOLLARS
Contributed
Equity
US$M
Reserves
US$M
Accumulated
Losses
US$M
Minority
Interests
US$M
Total
US$M
Balance at 1 July 2008
1,088.4
234.1
(101.0)
207.8
1,429.3
Changes in equity for the three months
to 30 September 2008
Recognised value of unlisted employee
options over vesting period
-
3.5
-
-
3.5
Exercise of unlisted employee options
0.8
(0.8)
-
-
-
Contributions of equity, net of
transactions costs
2.3
-
-
1.1
3.4
Total comprehensive loss for the three
months, net of tax
-
(177.7)
(4.7)
(30.7)
(213.1)
Balance at 30 September 2008
1,091.5
59.1
(105.7)
178.2
1,223.1
Balance at 1 July 2009
1,111.6
31.9
(581.2)
68.9
631.2
Changes in equity for the three months
to 30 September 2009
Recognised value of unlisted employee
options over vesting period
-
2.7
-
-
2.7
Contributions of equity, net of
transactions costs
363.9
-
-
-
363.9
Total comprehensive income/(loss) for
the three months, net of tax
-
47.6
(19.4)
4.6
32.8
Balance at 30 September 2009
1,475.5
82.2
(600.6)
73.5
1,030.6
The above Consolidated Statements of Changes in Equity should be read in conjunction with the
accompanying notes.
146410_9
29
PALADIN ENERGY LTD AND CONTROLLED ENTITIES
CONSOLIDATED STATEMENT OF CASH FLOWS
EXPRESSED IN US DOLLARS
Quarter Ended
30 September
2009
2008
US$M
US$M
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers
51.5
50.1
Payments to suppliers and employees
(46.8)
(26.6)
Exploration and evaluation expenditure
(5.6)
(4.2)
Interest received
0.2
1.1
Interest paid
(8.3)
(9.1)
NET CASH (OUTFLOW)/INFLOW FROM OPERATING
ACTIVITIES
(9.0)
11.3
CASH FLOWS FROM INVESTING ACTIVITIES
Payments for property, plant and equipment
(50.5)
(55.2)
Payments for available-for-sale financial assets
(1.1)
(10.4)
Proceeds from sale of property, plant and equipment
-
0.2
Payments for third party uranium
-
(6.0)
NET CASH OUTFLOW FROM INVESTING ACTIVITIES
(51.6)
(71.4)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from rights issue
-
1.1
Proceeds from exercise of share options
-
2.3
Proceeds from share placement
374.2
-
Equity fundraising costs
(9.7)
(0.1)
Project finance facility establishment costs
(7.4)
(0.3)
Drawdown of borrowings
132.0
-
NET CASH INFLOW FROM FINANCING ACTIVITIES
489.1
3.0
NET INCREASE/(DECREASE) IN CASH AND CASH
EQUIVALENTS
428.5
(57.1)
Cash and cash equivalents at the beginning of the financial period
66.2
337.6
Effects of exchange rate changes on cash and cash equivalents
(0.2)
(0.8)
CASH AND CASH EQUIVALENTS AT THE END OF THE
FINANCIAL PERIOD
494.5
279.7
The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying
notes.
PALADIN ENERGY LTD AND CONTROLLED ENTITIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE QUARTER ENDED 30 SEPTEMBER 2009
EXPRESSED IN US DOLLARS
146410_9
30
NOTE 1. CORPORATE INFORMATION
The financial report of Paladin Energy Ltd (the Company) for the quarter ended 30 September 2009
was
authorised
for
issue
in
accordance
with
a
resolution
of
the
Directors
on
6 November 2009.
Paladin Energy Ltd is a company limited by shares incorporated and domiciled in Australia whose
shares, are publicly traded on the Australian Securities Exchange with additional listings on the
Toronto Stock Exchange in Canada; Munich, Berlin, Stuttgart and Frankfurt Stock Exchanges in
Europe; and the Namibian Stock Exchange in Africa.
The nature of the operations and principal activities of the Group are described in the Management
Discussion and Analysis on pages 13 to 24.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Basis of preparation
This financial report for the quarter ended 30 September 2009 has been prepared in accordance with
Australian Accounting Standards Board (AASB) 134 Interim Financial Reporting, the Corporations Act
2001 and other mandatory professional reporting requirements.
In addition to these Australian requirements further information has been included in the Consolidated
Financial Statements for the quarter ended 30 September 2009 in order to comply with applicable
Canadian securities law, as the Company is listed on the Toronto Stock Exchange.
This financial report does not include all the notes of the type normally included in an annual financial
report. Accordingly, this report is to be read in conjunction with the Annual Report for the year ended
30 June 2009 and any public announcements made by Paladin Energy Ltd during the interim reporting
period in accordance with the continuous disclosure requirements of ASX listing rules.
The accounting policies adopted are consistent with those of the previous financial year unless
otherwise stated.
The financial report is presented in United States dollars and all values are rounded to the nearest
hundred thousand dollars (US$100,000) unless otherwise stated under the option available to the
Company under Australian Securities and Investments Commission (ASIC) Class Order 98/100. The
Company is an entity to which the class orders applies.
PALADIN ENERGY LTD AND CONTROLLED ENTITIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE QUARTER ENDED 30 SEPTEMBER 2009
EXPRESSED IN US DOLLARS
146410_9
31
NOTE 3. SEGMENT INFORMATION
The Group's primary segment reporting format is geographical segments as the Group's risks and
rates of return are affected predominately by differences in the particular economic environments in
which it operates. The Group does not separately disclose any financial information for business
segments (secondary reporting) as it only operates in the resources industry.
Geographical segments - primary reporting
The Company operates in Australia, Namibia and Malawi. The principal activity in these locations is
the exploration, evaluation, development, construction and operation of uranium projects. The
Group's geographical segments are determined based on the location of the Group's assets.
The following tables present revenue, expenditure and certain asset, liability and cash flow information
regarding geographical segments for the quarter ended 30 September 2009 and 30 September 2008.
Quarter Ended
Australia
Namibia
Malawi Consolidated
30 September 2009
US$M
US$M
US$M
US$M
Sales to external customers
-
38.3
-
38.3
Other revenue
0.1
-
-
0.1
Total segment revenue
0.1
38.3
-
38.4
Unallocated revenue
0.2
Total consolidated revenue
38.6
(Loss)/Profit before income tax and
finance costs
(10.1)
11.5
(0.2)
1.2
Finance costs
(5.2)
Loss from continuing operations
before income tax benefit/(expense)
(4.0)
Income tax benefit/(expense)
0.4
(15.5)
(0.9)
(16.0)
Loss from continuing operations
after income tax benefit
(20.0)
Segment assets/total assets
1,145.1
334.9
518.0
1,998.0
Segment liabilities/total liabilities
625.1
85.6
256.7
967.4
Acquisitions of non current assets
2.0
8.2
43.6
53.8
Cash flow information:
Net cash (outflow)/inflow from operating
activities
(12.3)
10.9
(2.0)
(3.4)
Net cash outflow from investing activities
(6.5)
(11.3)
(39.4)
(57.2)
Net cash intflow from financing activities
364.5
-
124.6
489.1
Non cash expenses:
Depreciation and amortisation
0.2
3.4
-
3.6
Share-based payments
2.3
0.1
#
-
2.4
Borrowing costs
3.7
0.5
-
4.2
#
Recognised in cost of goods sold
PALADIN ENERGY LTD AND CONTROLLED ENTITIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE QUARTER ENDED 30 SEPTEMBER 2009
EXPRESSED IN US DOLLARS
146410_9
32
NOTE 3. SEGMENT INFORMATION (continued)
Quarter Ended
Australia
Namibia
Malawi Consolidated
30 September 2008
US$M
US$M
US$M
US$M
Sales to external customers
-
51.0
-
51.0
Other revenue
-
0.1
-
0.1
Total segment revenue
-
51.1
-
51.1
Unallocated revenue
1.3
Total consolidated revenue
52.4
(Loss)/Profit before income tax and
finance costs
(10.6)
20.0
(1.1)
8.3
Finance costs
(9.2)
Loss from continuing operations
before income tax expense
(0.9)
Income tax benefit/(expense)
0.8
(5.0)
-
(4.2)
Loss from continuing operations
after income tax benefit
(5.1)
Segment assets/total assets
1,889.0
238.1
175.3
2,302.4
Segment liabilities/total liabilities
1,028.8
18.4
32.1
1,079.3
Acquisitions of non current assets
11.6
16.1
60.8
88.5
Cash flow information:
Net cash (outflow)/inflow from operating
activities
(6.2)
22.0
(0.3)
15.5
Net cash outflow from investing activities
(20.8)
(13.3)
(41.5)
(75.6)
Net cash inflow/(outflow) from financing activities
3.3
-
(0.3)
3.0
Non cash expenses:
Depreciation and amortisation
0.3
2.9
-
3.2
Impairment of inventory
3.7
-
-
3.7
Share-based payments
2.8
0.4
#
0.3
3.5
Borrowing costs
3.7
0.5
-
4.2
#
Recognised in cost of goods sold
PALADIN ENERGY LTD AND CONTROLLED ENTITIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE QUARTER ENDED 30 SEPTEMBER 2009
EXPRESSED IN US DOLLARS
146410_9
33
NOTE 4. REVENUE AND EXPENSES
Quarter Ended
30 September
2009
2008
US$M
US$M
(a) Revenue
Sale of uranium
38.3
51.0
Interest income from non-related parties
0.2
1.3
Database licence revenue
0.1
0.1
Total revenue
38.6
52.4
(b) Other income
Foreign exchange gain (net)
-
2.3
Total other income
-
2.3
(c) Other expenses
Corporate and marketing costs
(2.6)
(3.5)
Employee benefits expense
(2.2)
(1.6)
Share-based payments expense
(2.3)
(3.1)
Minimum lease payments operating lease
(0.1)
-
Impairment of inventory
-
(3.7)
Foreign exchange loss (net)
(1.2)
-
Depreciation property, plant and equipment
(0.2)
(0.3)
Total other expenses
(8.6)
(12.2)
(d) Finance costs
Interest expense
(1.0)
(5.0)
Accretion relating to convertible bonds (non-cash)
(2.8)
(2.8)
Mine closure provision discount interest expense
(0.5)
(0.2)
Facility costs
(0.9)
(1.2)
Total finance costs
(5.2)
(9.2)
PALADIN ENERGY LTD AND CONTROLLED ENTITIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE QUARTER ENDED 30 SEPTEMBER 2009
EXPRESSED IN US DOLLARS
146410_9
34
NOTE 5. CASH AND CASH EQUIVALENTS
30 September
30 June
2009
2009
US$M
US$M
Cash at bank and in hand
40.2
18.8
Short-term bank deposits
454.3
47.4
Total cash and cash equivalents
494.5
66.2
Total cash and cash equivalents includes US$6.7M restricted to social responsibility projects in Malawi
and US$13.3M in respect of the LHM and KM project finance facilities.
NOTE 6. TRADE AND OTHER RECEIVABLES
Current
Trade receivables
-
13.2
Less provision for doubtful debts
-
-
Net trade receivables
-
13.2
Prepayments
7.5
2.7
GST and VAT
15.2
11.1
Sundry debtors
3.0
2.0
Total current receivables
25.7
29.0
Non Current
Sundry debtors
2.6
2.2
Total non current receivables
2.6
2.2
NOTE 7. INVENTORIES
Current
Stores and spares (at cost)
15.8
12.8
Stockpiles (at cost)
3.0
2.3
Work-in-progress (at cost)
3.6
4.0
Finished goods (at cost)
42.3
38.6
Third party uranium purchased:
Finished goods (at net realisable value)
28.1
28.1
Total current inventories at the lower of cost and
net realisable value
92.8
85.8
Non Current
Stockpiles (at cost)
28.9
24.9
Total non current inventories at the lower of cost and
net realisable value
28.9
24.9
PALADIN ENERGY LTD AND CONTROLLED ENTITIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE QUARTER ENDED 30 SEPTEMBER 2009
EXPRESSED IN US DOLLARS
146410_9
35
NOTE 8. PROPERTY, PLANT AND EQUIPMENT
30 September
30 June
2009
2009
US$M
US$M
Plant and equipment at cost
181.3
169.4
Less provision for depreciation
(22.6)
(22.4)
Total plant and equipment
158.7
147.0
Land and buildings at cost
6.8
6.4
Less provision for depreciation
(0.7)
(0.6)
Total land and buildings
6.1
5.8
Construction work in progress at cost
299.2
305.0
Total property, plant and equipment
464.0
457.8
NOTE 9. MINE DEVELOPMENT
Mine development
103.3
57.4
Less provision for depreciation
(3.8)
(3.2)
Total mine development
99.5
54.2
PALADIN ENERGY LTD AND CONTROLLED ENTITIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE QUARTER ENDED 30 SEPTEMBER 2009
EXPRESSED IN US DOLLARS
146410_9
36
NOTE 10.
EXPLORATION AND EVALUATION EXPENDITURE
The following table details the expenditures on interests in mineral properties by area of interest for the quarter ended 30 September 2009:
Areas of interest
Valhalla Isa
Fusion
Angela
Bigrlyi
KM
LHM
Other
Total
/Skal
(1)
North
Pamela
Uranium
Projects
US$M
US$M
US$M
US$M
US$M
US$M
US$M
US$M
US$M
Balance 30 June 2009 (audited)
494.386
117.740
8.055
-
14.283
-
-
1.071
635.535
Acquisition property payments
-
-
-
-
-
-
-
-
-
Project exploration and evaluation expenditure
Tenement costs
0.001
0.025
0.009
-
-
-
-
-
0.035
Labour
0.399
0.158
0.058
0.032
0.010
0.043
-
0.192
0.892
Consultants and contractors
0.067
0.007
0.007
-
-
0.706
-
0.092
0.879
Materials and utilities
0.079
0.009
0.001
0.001
0.001
0.020
-
0.005
0.116
Transportation and communications
0.048
0.013
0.019
0.004
0.004
0.029
-
0.045
0.162
Outside services
0.445
0.252
-
-
-
-
0.276
0.089
1.062
Legal and accounting
-
0.018
-
0.001
-
-
-
0.007
0.026
Camp expenses
0.008
0.005
0.005
-
-
0.046
-
0.014
0.078
Overheads
0.092
0.027
0.003
0.007
0.015
0.009
-
0.014
0.167
Joint venture contributions
-
-
-
1.101
0.516
-
-
-
1.617
Other expenses
0.074
0.050
0.001
-
-
0.025
-
0.005
0.155
Total expenditure
1.213
0.564
0.103
1.146
0.546
0.878
0.276
0.463
5.189
Exploration expenditure expensed
(1.213)
(0.564)
(0.103)
(1.146)
(0.546)
(0.771)
(0.276) (0.463)
(5.082)
Exploration expenditure capitalised
-
-
-
-
-
0.107
-
-
0.107
Foreign exchange differences
41.834
9.977
0.678
-
1.210
-
-
0.152
53.851
Transferred to Mine Development
-
-
-
-
-
(0.107)
-
-
(0.107)
Balance 30 September 2009 (unaudited)
536.220
127.717
8.733
-
15.493
-
-
1.223
689.386
(1)
Summit has a 50% interest in the Valhalla/Skal Projects with the other 50% interest held by the Paladin Group. As a consequence of the takeover of the Summit
Group, the above table now reflects 100% of the Valhalla/Skal Projects with the minority interest reflected on the face of the Consolidated Statement of Financial
Position.
PALADIN ENERGY LTD AND CONTROLLED ENTITIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE QUARTER ENDED 30 SEPTEMBER 2009
EXPRESSED IN US DOLLARS
146410_9
37
NOTE 11. INTANGIBLE ASSETS
30 September
30 June
2009
2009
US$M
US$M
Cost
27.8
27.8
Accumulated amortisation
(2.4)
(2.2)
Net carrying amount of non current intangible assets
25.4
25.6
NOTE 12. INTEREST BEARING LOANS AND BORROWINGS
Maturity
Current
Secured bank loan
14.2
14.2
Non Current
Unsecured convertible bonds
2011
229.8
227.5
Unsecured convertible bonds
2013
306.0
304.6
Secured bank loan
2012
39.9
39.9
Secured bank loan
2015
122.7
-
Total non current interest bearing loans and borrowings
698.4
572.0
The above figures include deferred borrowing costs.
NOTE 13. PROVISIONS
Current
Social responsibility
6.7
7.7
Employee benefits
2.4
2.1
Total current provisions
9.1
9.8
Non Current
Social responsibility
2.0
2.0
Employee benefits
0.1
0.1
Rehabilitation provision
17.2
16.7
Mine closure
12.1
11.7
Demobilisation provision
1.9
1.8
Total non current provisions
33.3
32.3
PALADIN ENERGY LTD AND CONTROLLED ENTITIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE QUARTER ENDED 30 SEPTEMBER 2009
EXPRESSED IN US DOLLARS
146410_9
38
NOTE 14. CONTRIBUTED EQUITY
(a) Issued and paid up capital
30 September
30 September
2009
2008
2009
2008
Ordinary shares
Number of Shares
US$M
US$M
Issued and fully paid
717,142,802
613,997,369
1,475.5
1,091.5
____________________________________________________________________________________________________________________________________________________________________
(b) Movements in ordinary shares on issue
Date
Number of Shares
Issue
Exchange
Total
Price
Rate
A$
US$ : A$
US$M
Balance 30 June 2008
613,497,369
1,088.4
July 2008
Option conversions
400,000
5.50
1.04005
2.1
September 2008
Option conversions
100,000
2.80
1.16633
0.2
Transfer from reserves
-
-
-
0.8
Balance 30 September 2008
613,997,369
1,091.5
Balance 30 June 2009
623,692,802
1,111.6
September 2009
Share placement
93,450,000
4.60
1.14890
374.2
Transaction costs
(10.3)
Balance 30 September 2009
717,142,802
1,475.5
PALADIN ENERGY LTD AND CONTROLLED ENTITIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE QUARTER ENDED 30 SEPTEMBER 2009
EXPRESSED IN US DOLLARS
146410_9
39
NOTE 14. CONTRIBUTED EQUITY (continued)
(c) Options
Issued unlisted employee options outstanding to the employees and consultants directly engaged in
corporate, mine construction, operations and exploration and evaluation work for the Company are as
follows:
30 September 2009
Number
Number of unlisted employee options
14,050,455
Consisting of the following:
Exercise price
Number under
Date options granted
Exercisable
Expiry date
of options
option
1 February 2007
1 February 2010
1 February 2012
A$8.77
2,697,970
29 January 2008
29 January 2011
29 January 2013
A$4.50
7,377,485
15 February 2008
15 February 2009
15 February 2011
A$5.37
700,000
15 February 2008
15 February 2011
15 February 2013
A$5.37
450,000
18 April 2008
18 April 2011
18 April 2013
A$4.59
1,075,000
14 October 2008
14 October 2011
14 October 2013
A$2.54
750,000
11 December 2008
11 December 2011 11 December 2013
A$2.07
300,000
24 June 2009
24 June 2012
24 June 2014
A$4.48
700,000
Total
14,050,455
PALADIN ENERGY LTD AND CONTROLLED ENTITIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE QUARTER ENDED 30 SEPTEMBER 2009
EXPRESSED IN US DOLLARS
146410_9
40
NOTE 15. MINORITY INTERESTS
30 September
30 June
2009
2009
US$M
US$M
Minority interests comprise:
Share capital
22.0
22.0
Opening accumulated losses
(108.3)
(12.1)
Reserves
160.4
155.2
Current period loss
(0.6)
(96.2)
Total minority interests
73.5
68.9
The minority interests recognised relate to the 18.0% interest in Summit Resources Ltd not acquired
from the takeover bid that closed on 1 June 2007 and the 15% interest in PAL held by the
Government of Malawi as at 26 June 2009.
NOTE 16. CONTINGENT LIABILITIES
No change has occurred in the contingent liabilities for the Company from those reported in the
Annual Report for the year ended 30 June 2009 except as noted below.
(a)
Legal actions
(i)
Mount Isa Uranium Joint Venture
On 3 August 2007 the Company's wholly owned subsidiary, MIU entered into a settlement agreement
with respect to proceedings which had been commenced by SRA (which had, by the time of the
settlement, become ultimately 82.0% owned by the Company) against MIU and the unrelated entity,
Resolute Pty Ltd (Summit Proceedings). The Summit Proceedings related to alleged breaches of
confidentiality provisions in the Mount Isa Uranium Project joint venture agreement. If successful in
the Summit Proceedings, SRA would have been entitled to the transfer of MIU's 50% interest in the
Mount Isa Uranium Project joint venture for 85% of its market value.
Areva NC (Australia) Pty Ltd (Areva), being a 10.01% shareholder of the parent company of SRA
subsequently applied to the Supreme Court of Western Australia for, relevantly, orders under Section
237 of the Corporations Act 2001, to be granted leave to intervene in and effectively re-open the
Summit Proceedings, notwithstanding the settlement. The trial of the Areva intervention proceedings
was heard over the period from 18 May 2009 to 3 June 2009 and the Court reserved its decision.
The Company does not expect the Areva intervention proceedings to be successful.
In any event, even if the Summit Proceedings are re-opened as a consequence of the Areva
intervention proceedings, the Company has always remained confident that the Summit Proceedings
could be successfully defended. Further, the Company has the benefit of an indemnity from Resolute
Mining Ltd (the parent of Resolute Pty Ltd) and an ultimate 82% interest in SRA. As a consequence,
a change in the ownership of the 50% interest in the Mount Isa Uranium joint venture from MIU to
SRA would not be of significance to the Company.
PALADIN ENERGY LTD AND CONTROLLED ENTITIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE QUARTER ENDED 30 SEPTEMBER 2009
EXPRESSED IN US DOLLARS
146410_9
41
NOTE 17. EVENTS AFTER THE BALANCE SHEET DATE
New Langer Heinrich and Kayelekera Expansion - Production Increase for 2012 to 2014
On 29 October 2009, the Company announced its uranium production expansion plans for both the
Langer Heinrich and Kayelekera Mines beyond the current annual production target of 8.5Mlb U
3
O
8
by mid 2012. A major component of Paladin's stated strategy is focused organic growth through long
term commitment and planning. Paladin has a rigorous expansion programme planned which, when
complete, is expected to place the Company firmly amongst the Tier 1 uranium producers. This
development programme is expected to result in Paladi | 
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