Paladin postpones commissioning of Malawi uranium project

Production at Paladin’s Kayelekera Uranium project will now start in the March 2009 quarter and not 4Q 2008 as earlier reported. No reason has been given for the put-back of the production date but the poor condition of the road to the mining site seems to be the likely reason for the delay.

Perth-based Paladin Energy Limited (ASX, TSX:PDN) will not roll-out production at its Kayelekera Uranium project in the northern region district of Malawi in the last quarter of 2008 as earlier planned, instead, commissioning and ramp-up of output will now begin in March 2009.

However the company said today in its quarterly report that the Kayelekera Uranium Project - which will be Paladin's second producing African project - is on budget and mine construction is scheduled to be completed by end 2008. It however did not say why production starts in March and not in the September quarter of 2008 as earlier reported.

But the Malawi government on January 17 said one of the critical problems facing the project was the delay in the construction of the Karonga-Chitipa road that connects to the mining site. Construction of the road which was initially being funded by Taiwan has since been abandoned after Malawi severed its ties with the island nation opting for China, which has promised to complete the road's construction.

"One major logistical concern is accessibility to the mining site that has been caused by the slow pace in the construction of the Karonga-Chitipa road," Malawi's deputy Minister of Irrigation and Water Development Frank Mwenefumbo told the press recently. "Part of the equipment cannot be moved to the mining site because of poor transport infrastructure and Paladin wants the assurance that the road would be completed soon."

The Paladin report indicates that procurement of major mining equipments has already been done and that financing of the project is due to be arranged during the March 2008 quarter.

The company is expected to carry out an upgraded resource and reserve estimation during this March quarter after all assay results are available. It says grade control drilling on the Kayelekera ore body is underway to prepare for pre-strip and mining operations scheduled to start in April 2008.

Paladin Energy's share price fell 24 cents to trade at A$4.83 at the Australia Stock Exchange but gained 0.09 cents or 2.01 percent to trade at C$4.47 at the Toronto Stock Exchange.