New Malawi uranium mine on track for 2009 start-up

ASX- and TSX-listed Paladin Energy has not delayed its Kayelekera uranium project, in Malawi, and is on schedule to start commissioning and ramping up production in the March quarter of next year, Toronto-based spokesperson Greg Taylor said on Tuesday.

The schedule was unchanged from previous forecasts, he said in response to press reports that the project had been hit by delays.

“Nothing has changed...construction will be completed at the end of this year, and we will then start the commissioning process,” he said in an interview.

Civil works and foundation preparation were already under way, Paladin said in a quarterly update on Tuesday.

Prestripping mining work would start early this year, as soon as weather conditions permitted, and "significant progress" had been made on the government's commitments to upgrade an access road to the mine.

The Kayelekera mine, in northern Malawi, will have a nameplate capacity of 3,3-million pounds a year of uranium, and will be the first mine in the Southern African country to produce the nuclear fuel.

Paladin owns an 85% stake in the project and the balance is held by the government of Malawi.

The company signed a development agreement with the State in February last year, in which it agreed to hand over the stake in return for permission to build the mine, as well as a number of fiscal incentives.

These included a 2,5% reduction in the corporate tax rate, a reduction of the resource rent tax to 0%, a reduction in the royalty rate to 1,5% for years one to three and 3% thereafter, no import VAT or duty during the first ten years, and a 100% capital write-off for tax purposes.

During the initial ten-year 'stability period', the government has committed to not increase taxes or royalties to the mine.

Paladin also agreed at the time to provide social infrastructure in the Kayelekera region, and in particular schooling and health facilities.

A mining licence was granted for Kayelekera in April 2007, for an initial 15 years, and renewable for further 10-year periods.
GOOD NEWS FROM NAMIBIA

Paladin said that its Langer Heinrich uranium mine, in Namibia, which started production in late 2006, and experienced problems ramping up output last year, had reached nameplate production for the first time in December.

The project, situated in the Namib desert, about 80 km east of Swakopmund, produced 390 807 lb of uranium in the last three months of last year.

The company is currently working on an engineering design for the second stage of the project, which envisages an increase in production to 3,7-million pounds a year, Paladin said.

Construction is expected to start in the first half of this year, with mechanical completion scheduled to be achieved by the end of 2008.