Paladin Energy Ltd (PDN) Earnings Call Transcript & Summary

Thank you for standing by, and welcome to the Paladin Energy Limited September 2026 Quarterly Results Call. [Operator Instructions] I would now like to hand the conference over to Paul Hemburrow, MD and CEO. Please go ahead.

Thank you very much, and good morning, and thank you for joining us, everyone. So this quarter was about steady execution at Langer Heinrich and continued progress across our Canadian portfolio. At Langer Heinrich, full mining capability is now in place. And at Patterson Lake South, our focus remains on derisking the project and advancing its growth potential. At Langer, we produced 1 million pounds of uranium and sold 1.16 million pounds at an average realized price of USD 79.40 per pound. The stronger realized price reflects the structure of our contract book and, of course, the rising uranium market. As we have previously indicated, the first half production is expected to be below the second half, reflecting the work to open up the J pit and the planned shutdown activities. Operationally, the plant shutdown was completed successfully and throughput following the shutdown has been strong. Mining also had a solid quarter with more tonnes moved than the prior quarter as we continue to develop the J pit. Ore delivered to the plant came largely from the upper benches where the ore characteristics contributed to reduced recovery. We also rebuilt in-process inventory after starting the quarter with relatively low inventories, which will support consistent production throughout the remainder of the year. These factors drove the high cost of production of USD 61.60 per pound. The team continues implementing improvement actions in the plant while mining pushes towards the lower, southern benches and better quality ore. We saw improvement through September as mining advanced and plant throughput strengthened. This supports our expectation of higher production and lower unit costs in the second half, and we reaffirm FY 2027 guidance of 5.1 million to 5.6 million pounds at a cost of production of USD 44 to USD 48 per pound. In Canada, we continue to advance and derisk Patterson Lake South across a number of fronts. We signed a Mutual Benefits Agreement with Birch Narrows Dene Nation, our third agreement of this kind with indigenous nations and established an administrative protocol with the Canadian Nuclear Safety Commission. Together, these steps provide a targeted regulatory pathway aimed at completing construction license hearings by the end of calendar year 2027. Exploration drilling also delivered encouraging results at Atlas and Saloon East as well as extensions beyond the current R1515 West Mineral Resource. We closed the quarter with USD 209 million in cash and investments with customer receipts during the period impacted by working capital cycle and the timing of deliveries. We also maintained an undrawn USD 70 million revolving credit facility. Overall, we remain well positioned to execute the Langer Heinrich operating plan and progress our Canadian growth portfolio. Thank you very much, and I'll now hand over to you for questions.

[Operator Instructions] Your first question today comes from Rahul Anand with Morgan Stanley.

Just wanted to touch upon the production result mainly because that's the talking point, I guess. So previously, in terms of the J-Pit grades, you talked about reconciliations going fairly well. I just wanted to touch on that a bit perhaps. Is that still the case? Or have you -- are you having any sort of grade misses there? And when do you start to hit the southern benches as well?

Yes. Thanks for that. Scott here. The grade reconciliation is still in line with the block model. So there's no issue there. The upper benches do have some ore handling characteristics. So the feed going into the mill, we have mixed a little bit of low grade from stockpiles, which has put the feed grade down a little bit. That's to get crunchier harder rock into the scrubbers to help liberate some of the finer material. The upper benches in the J Pit are a little bit more weathered. The material is a bit finer. And even as we get a little bit deeper, it's continuing. However, as we go more to the south and even deeper into the ore body, I was there last week, they're starting to mine that material. It's a lot more competent, looks a lot more like the G pit. And as that comes in, in Q2 and into H2, we should see the grades increase and the recoveries bounce back.

Got it. Okay. So I guess the recovery performance, et cetera, is kind of all being driven by the fact that the ore is a bit -- there's a bit of oxidation there. Makes sense. So look, the second one is really about the uplift that you have in the second half that you've got planned. I guess, can you highlight some of the risk there, just given it's a big uplift? I mean, what type of assumptions have you made around the uplift in throughput and recovery to be able to get there? And where do you think the biggest risk lies in being able to achieve that?

Yes. So the plan is we should be back into that -- the upper range of the recoveries for H2. The grade will increase as well from the 486 ppm (sic) [ 488 ppm ] that we saw last quarter, will be above the 500 ppm mark, which is on plan. And the other thing is without having those shutdowns, we had a week-long shutdown in July. That's a full week of 0 production. Not having any shutdowns or any big long shutdowns in H2 gives us full rate for the entire 6 months. And as you've seen, even with that shutdown in Q1, we were almost on par with the tonnes processed in Q4 of FY '26. The team has done a really good job on getting throughput through the mill. And with that and the upper grades and the recovery bouncing back, that's how H2 is going to play out.

Your next question comes from Branko Skocic with JPMorgan.

Just first question on PLS, please. I was just wondering if you can update us on the timing for the FEED study. I know it's ongoing at the moment. But if I look at the original time line, it seems to suggest it was going to be finished by mid-calendar year '26.

Yes, Branko, thanks for the question. The FEED study is expected to be complete by the end of calendar year, so somewhere around November, December. What we expect after that is some final updated capital numbers probably around March.

That makes sense. And the other question I had, sticking on PLS was just any progress around the funding solution. I know it was a big focus at the Investor Day a couple of months ago, but just any updates you can share there, please?

Branko, it's Anna. I'm just reiterating our narrative at the Investor Day. As you're aware, the economics at PLS are really robust. And I think one of the things that differentiates us is our operational experience at Langer and our relationships with existing lenders and offtakers. So we're running the initial phase of the project finance at the moment, really seeking to understand appetite offtake and debt sizing and which lenders we want to move forward into a Phase 2. So that's the longest lead transaction for us on a financing. So that's our focus at the current time. I would say that our existing lenders are very keen to continue to participate not only at Langer, but also at PLS. And I think that really goes to -- into our credibility as an operator. So I think we're in a good position with lots of options.

Could I just reconfirm that the project sell-downs probably lower down your order of preference as you see it at the moment. It's more of a debt equity mix is the way you guys are thinking about the project?

Branko, I think that is still an option for us. I think we've got the capacity to fund this and operate this ourselves. But Paul, maybe you want to jump in and comment on that.

Yes. I think, as I said at the Investor Day, somebody would have to bring something to the table that we couldn't bring ourselves. So look, we're still open to the possibility. It could be someone who brings alternative and low-cost financing options. So we're open to it. But as Anna said, we went into this project on the basis that we would fund and operate it ourselves, but we're open to that possibility.

Your next question comes from Khyla Maher with Barrenjoey.

Just the first one on recoveries. I know it dipped down to 85% versus 90% last quarter. How much of that was the ore type versus the maintenance shutdowns and low in-circuit inventory? Should we expect it to return up to about that 90% level in the December quarter or that won't come through until the second half?

Yes. The shutdown didn't have anything to do with the recoveries. That would just be throughput because the plant was shut down for that week when we did the maintenance. Recovery is completely around the ore characteristics. So the finer size, we're seeing a difficulty in liberating some of the finer particles in the classification circuit. And so our beneficiation recovery is what's causing that drop in recovery. Blending in some low grade to bulk up or get some harder rock into the circuit is helping. We're also doing a lot of work on the water sprays and making sure that the classification circuit is running really, really well. That is being seen. We saw it at the end of September, and we're -- it's a bit early in October to talk about this quarter, but we are seeing the recovery start to bounce back.

Okay. And then also just any updates on your discussions with the Metis Nation progress here?

Sorry, carry on.

I was just going to say the team in Canada continuing really positive conversations and back and forth some engagements with the Metis Nation. Dale and the team did a Community Day a few weeks ago, which went really well. Yes, it's still ongoing. There's nothing definitive to say other than it is really positive and moving forward.

Your next question comes from Alistair Rankin with RBC Capital Markets.

Just sticking on PLS for a second here. I know you signed the CNSC administrative protocol this quarter. I'm just wondering if there's been any sort of further discussions around this. Any color on how they're approaching that end of year -- end of 2027 hearings targets at the moment. So if there's just been any more discussions that you've had with them?

Alistair, what I would say is that both the Saskatchewan provincial government and also of the Prime Minister and Mining Minister have been incredibly supportive. And I'm aware that the Mining Minister recently wrote a letter to the CNSC reiterating their desire to make sure that projects progress in a timely manner and that they look at ways of reducing the time line on approval process. I met with the President of CNSC, incredibly positive and supportive. The administrative protocol is really an important document for us. I know that some of our peers who have gone before us didn't have that sort of document in place. But it does reiterate CNSC's intention to work towards approvals on our time line, which is really encouraging. And we're continuing to see evidence of the way they're working between sort of Dale, his team and CNSC. So I'm feeling quite encouraged about CNSC's performance.

That's really helpful color. And then maybe just going back to Langer Heinrich quickly. Just wondering about the December quarter shutdown. Can you just give us a little bit more detail maybe around the timing when that's going to happen during the quarter, the duration. It sounds like it's going to be about a week. But then, I guess, what sort of parts of the plant are involved? You mentioned that throughput was really the only thing impacted in this most recent shutdown. But are there any other sort of considerations we should be thinking about for our models for this upcoming shutdown in the December quarter?