Shares in Paladin Energy slid yesterday after the uranium miner again disappointed the market with a shortfall on guidance.

Paladin told the market that it had missed production targets yet again and had been forced to reduce its annual production targets.

The shares eased 3c to $1.775 by the close yesterday.

The company told the ASX that uranium production at its flagship Langer Heinrich mine (in Namibia) was 10% below the company's target during the first three months of 2012, while its secondary mine also missed its production targets.

Paladin has earned a reputation in the past for missing targets, and the company blamed the latest poor result at Langer Heinrich on bottlenecks.

"This shortfall was mainly due to early quarter commissioning bottlenecks and the planned lower grade feed in line with the mine plan. These bottleneck issues have now been rectified," the company said in a statement.

Problems at the secondary mine, Kayelekera (in Mali), were blamed on a new chemical reagent, which was being trialled as part of Paladin's cost-cutting drive.

"Production for the quarter was slightly down on target at both sites. At Kayelekera, a new reagent, which has potentially significant cost savings, was tested with negative results.

"This test resulted in approximately a 40,000lb loss of production at Kayelekera. At Langer Heinrich, early quarter issues with ramping up the additional CCD circuit caused delays, as did the tailings thickener.

"For the reasons outlined, Paladin now expects FY12 production to be about 2% below the previously announced lower guidance of 7.1Mlb," the company said yesterday.

The previous target was itself a reduced figure from original estimates.

Overall production for the first quarter of 2012 was 1.77 million pounds, down 2.6% from the level in the December quarter.

"Langer Heinrich produced 1,052,364lb U3O8 (uranium oxide), 10% short of internal target for the quarter. Over a 6- month period, 86% of Stage 3 design capacity achieved. - crushed 680,369 tonnes (t) of ore, an all-time record and an increase of 8% from the previous quarter.

" Kayelekera delivered a record 724,551lb U3O8, a 15% increase over the previous quarter and 88% of nameplate," the company said.

The company said it made sales of 1,137,477 pounds of uranium oxide at average price of US$59.17/lb, worth around $US67.3 million.

The 40,000 pounds of loss of production at the Kayelekera mine was worth around $US2.3 million at the average price.

Copyright Australasian Investment Review.
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