Paladin Energy Ltd (Toronto Stock Exchange: PDN) is an Australian uranium producer with operations in Australia and Africa.
The Langer Heinrich Mine in Namibia is Paladin’s flagship project, with production targets of 10 million pounds of U3O8 uranium by 2014. The Kayelekera Mine in Malawi was opened in April 2009 and is progressing to production of 3.3 million pounds of U3O8 per year.
In 2010, Paladin's sales revenue increased 81% to $202 million. Production increased 60% to 4.3 million pounds of U3O8 uranium, and exploration spending was up 40% to $17.1 million. In 2011, Paladin is targeting production of 7 million pounds of U3O8.
In 2010, the company also announced two mine expansions in association with China Guangdong Nuclear Power Corporation.
The 9.0 earthquake in Japan on March 11, 2011, and subsequent tsunami caused four nuclear power plants in Northern Japan to fail, leading to a radiation release and overheating in the reactors. The Japanese nuclear crisis has shaken confidence in the future of nuclear energy, with Paladin's stock falling more than 30% in the aftermath of the earthquake.
Every year since 1985, the world's consumption of uranium has been greater than its production. To help meet this shortfall, reprocessed uranium and plutonium from the dismantling of Russian and U.S. nuclear weapons has been used. The World Nuclear Association estimates that uranium mining will need to increase by almost 300% in the next two decades.
There are 440 nuclear reactors operating worldwide and a total of 111 reactors under construction or planned for completion by 2020. The demand for processed uranium continues to rise as countries throughout the world increase their reliance on nuclear energy for electricity. Paladin is poised to benefit from the inevitable increase in uranium consumption by nuclear plants.
Wind, hydroelectric energy, and solar energy all compete with nuclear power for a share of the alternative energy market. Production costs are 8.8 cents (U.S.) per kilowatt hour for nuclear, 7.4 cents (U.S.) for coal, and 10.6 cents (U.S.) for natural gas. Though renewable energy sources will need to become more affordable and more widely adopted in order to become a more serious competitor to uranium, advances in technology are making investment in renewable energy more attractive. Paladin would be harmed by major technological advancements that make wind and solar power more cost competitive with nuclear power.
|Fixed Cost (cents/kWh)||Variable Cost (cents/kWh)||Total Cost (cents/kWh)|
|Energy return on Energy Invested|
|Coal-fired power plant||2.5|
|Comparison to Competitors||Cameco (CCJ)||Rio Tinto (RIO)||BHP Billiton (BHP)||Denison Mines (DNN)||Paladin Energy LTD (PDN)|
|Total Revenue (2010)||$2,123M||$56,576M||$52,798M||$128M||$204.3M|
|Net Income (2010)||$516M||$14,324M||$12,722M||$(22.82M)||$(52.9M)|
|Net Profit Margin (2010)||24.3%||25.3%||24.1%||(17.8)%||(25.9)%|
|Uranium production (million lbs U3O8)||19.8||9.0||8.0||1.7||4.3|