The piece “Paladin suspends uranium exploration work in Malawi” featured below was initially published in Malawi’s Mining Review Issue Number 28 2015 that is circulating this August 2015.

The full edition is available for download here. This monthly publication is edited by Marcel Chimwala.

Paladin suspends uranium exploration work in Malawi

By Marcel Chimwala

Dual listed miner, Paladin Energy, has announced the suspension of uranium exploration work in Malawi following complications over its five exclusive prospecting licences covering areas in the proximity of the Kayelekera deposit.

MD and CEO for the firm, which is listed on Australian and Canadian Stock Exchanges, John Borshoff says in the company’s quarterly report for the quarter ending June 2015 that there have been delays to renew five of the company’s exclusive prospecting licenses (EPLs) that expired in December 2012.

Says Borshoff:

The anticipated early approval by the Department of Mines of applications for five EPLs covering areas North, South and East of Kayelekera Mine that would have enabled exploration activity to commence in June 2015 did not eventuate.

The Department has informed Paladin that the Government of Malawi has imposed a moratorium on applications and grants of all mining and exploration tenements while it introduces a new cadastral system and a new Minerals Act.

Paladin anticipates that its five EPL applications are unlikely to be granted before the March quarter 2016. As a result, the company has suspended exploration activities in Malawi until there is clarity on the provisions on the new mining code and its EPL applications have been granted.

General Manager for Paladin Africa, a subsidiary of the Paladin group which runs Kayelekera Uranium mine, Gregory Walker explains that after the government failed to renew Paladin’s EPLs, it granted coal licenses for the same area to other companies.

Walker, however, explains that Paladin successfully persuaded the coal tenement holders to permit the company to continue exploring for uranium while they pursue the coal deposits.

We, however, doubt if this arrangement with the coal firms will work because it appears the new law will not allow that licenses for different minerals overlap,

says Walker.

The Kayelekera Mine, touted as Malawi’s largest mineral sector investment, is, currently, on care and maintenance after the company suspended production at the site due to poor prices of uranium oxide on the world market.

Borshoff says in the report that quarterly activities at the site focused on treating and discharging water in order to reduce Kayelekera Mine’s water balance prior to the onset of the next rainfall season and on maintaining idled plant and equipment in good working order.

He reports that controlled treated water release commenced in mid April 2015 and continued without incident but in late June, discharge was suspended due to the very low receiving water level in the local river system.

The feasibility study for recommencement of production at Kayelekera Mine is near completion with a final interval review of the study underway. The study to date has confirmed that the Kayelekera Mine remains a valuable strategic asset that can be quickly returned to production when justified by a higher uranium price environment,

he says.

Borshoff says Kayelekera Mine will provide an additional 2.5Mlb per annum in production and has clear potential to produce strong cash flow for at least six years as more than 50% of the project’ total reserves and resources remain for future development.

Further regional exploration has the potential to provide additional upside,

he says.

Following the suspension of exploration activities, Paladin Africa has retrenched its exploration staff only retaining two senior officials who have been posted to work at the mine.