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Paladin Energy Targets First Uranium Deliveries to China in 2011, CEO Says

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By James Paton

Paladin Energy Ltd. said it is targeting uranium shipments to China in 2011 after signing a preliminary accord with the nation’s second-biggest builder of nuclear power plants.

Paladin, the Australian mining company producing uranium in Africa, aims to convert a memorandum of understanding with China Guangdong Nuclear Power Group Co. into supply contracts later in 2010 or early next year, Chief Executive Officer John Borshoff said in a telephone interview today. Paladin may then be able to begin shipments in the “latter part” of next year, he said.

“Demand in China is strong,” Borshoff said. “The equation of what they will need to what they’re getting doesn’t stack up.”

The initial agreement with China Guangdong Nuclear may lead to partnership opportunities, expansion of a joint venture in Australia’s Northern Territory and long-term sales, Perth-based Paladin said in an Aug. 5 statement on the deal. The accord is a “natural match” because China has less than 10 percent of its uranium needs by 2020 covered by contracts or mine ownership, Citigroup Inc.’s Sydney-based analyst Clarke Wilkins said Aug. 6.

Paladin rose as much as 3.2 percent to A$3.83, the biggest gain since Aug. 5, and was at A$3.82 a 12:13 p.m. in Sydney trading. That’s more than the 1.7 percent increase in the benchmark S&P/ASX 200 Index.

Paladin expects uranium demand to outpace supplies, driving prices higher from their “stubbornly static” levels this year, Borshoff said in a conference call with analysts earlier today. “Fewer and fewer of the undeveloped uranium deposits remain available to be exploited,” he said.

In July, Paladin bid A$27 million ($24 million) for NGM Resources Ltd. The Australian uranium producer will continue to pursue potential mergers and acquisitions, Borshoff said on the analyst call.

Paladin plans to double uranium oxide production to almost 14 million pounds by its 2016 financial year, from a projected 7 million pounds in the 12 months ending June 30, 2011, the company said in a presentation accompanying the teleconference.