PALAF Q1 2026 Earnings Call
Operator: Thank you for standing by, and welcome to the Paladin Energy Limited September 2025 Quarterly Results Call. [Operator Instructions] I would now like to hand the conference over to Mr. Paul Hemburrow, CEO. Please go ahead.
Paul Hemburrow: Good morning, everyone, and thank you for joining Paladin Energy's September 2025 quarterly investor conference call. With me today are Anna Sudlow, Chief Financial Officer; Alex Rybak, Chief Commercial Officer; and Paula Raffo, our Head of Investor Relations. We had a solid start in the first quarter of the financial year at Langer Heinrich with mining activities increasing significantly to the overall ramp are progressing steadily in line with our plan. I'd like to note some highlights achieved at Langer Heinrich during the quarter. Record quarterly production of 1.07 million pounds of uranium, the highest since the mine restart. Total material mined was up 63% from the previous quarter of the mine. Average realized price increased to $67.40 per pound while unit production costs were $41.60 per pound. Total recordable injury frequency rate of 3.2 per million hours worked on a 12-month moving average basis, better than the company's safety target. There were no serious environmental or radiation incidents or breaches of environmental compliance requirements during the period. Importantly, for Paladin's future growth, we have made significant progress at Patterson Lake South Project with completion of a comprehensive review during the quarter, confirming robustness of the project and derisking development and operation. The strong economics support our unwavering commitment to bring the PLS projects into production by early next decade, while continuing to derisk the development through feed and conducting further exploration to identify future expansion opportunities. An important step moving forward with the development of PLS was the appointment of Dale Huffman as President, Paladin Canada. Dale will be joining the company on the 20th of October. Additionally, the team in Canada continues to progress permitting activity for PLS, including the final environmental impact statement. We have also been progressing consultation with indigenous nations and local communities while continuing engagement with provincial and federal regulators. As the newly appointed MD and CEO, I was personally pleased to see the strength of investor and market support through our fully underwritten $300 million equity raising completed in September, which provides the balance sheet flexibility to support both the PLS developments and the LHM ramp-up to full mining and processing plant operations planned for FY 2027. Looking ahead, our focus remains on completing the Langer Heinrich ramp-up by the end of FY 2026 and advancing the development of the PLS project. I'll now open the call to questions.
Operator: [Operator Instructions] Your first question comes from Rahul Anand from Morgan Stanley.
Rahul Anand: Look, just wanted to test a bit of the cost base, really good cost performance at least versus my numbers. Just wanted to test how we should think about the fixed cost variable splits going forward? Obviously, you step into the main part of the mine next year, and wanted to understand what type of cost performance we can expect going forward? That's the first one, and I'll come back with the second.
Anna Sudlow: Rahul, thanks for the call, and we haven't guided on the split, but I think you should probably assume that the fixed variable split is probably 20% to 30% fixed with the remainder variable. If you look at the -- one of the key costs being the reagents, and they're a key contributor to that mix.
Rahul Anand: Got it. Okay. And then, I guess, any sort of clarity into what's going to change in terms of the fixed cost base going into next year. I would think that you probably get a bit more fixed component in your cost base as you kind of ramp up the mine more as opposed to stockpiles? Is that the right way to think about it, or are you there or thereabouts in terms of your fixed...
Anna Sudlow: I think if you look at next year, we'll be moving into more mining than we currently are. So I don't see really -- and the majority of that mining cost is going to be the variable cost, right? So I think overall, the balance is probably going to remain pretty much as it is.
Rahul Anand: Got it. Okay. Now that's very helpful. And look, for the second one. Obviously, a new uranium sales contract and then also sales volumes a bit weaker than us in consensus. Obviously, there's a bit of variability in terms of how you achieve those. Is there any further color you can provide as to how the analyst community in general can kind of forecast the sales a bit better? And then maybe a bit of an update on that new contract, and how you're seeing the market?
Paul Hemburrow: I'll hand over to you, Alex?
Alexander Rybak: Yes, thanks. So obviously, we've talked about it at length. Our sales are quite lumpy, and they can be anywhere between 200,000 and 500,000 pounds for any particular sale. In this particular quarter, we had a customer -- we had a shipping delay, which meant that a customer delivery got pushed out from the September quarter into the current quarter, and that was the main reason for that lower sales number. However, we have -- you would have seen we've built up quite a significant inventory balance of 1.8 million pounds. And of that -- all of that is earmarked for customer deliveries. And of that, about 1 million pounds is currently in transit on the water. And in fact, we've received cash for close to half of that 1 million pounds that's in transit already. So uranium is -- does have quite a long working capital cycle as we've previously discussed. But what it means is that it's a timing issue and these sales will come through in this quarter. So that's sort of on your first question. In terms of the additional sale agreement that we executed in the quarter, relatively small sale agreement, but with a very high-quality counterparty, which we've been targeting for quite some time. We're very pleased to have secured that offtake agreement. It doesn't materially move our pounds under contract from 24.1 million to 24.5 million pounds under contract to 31st of December 2030. And within that amount, obviously, we maintain a market-related price bias, but we also have quite a significant base escalated projection in our contract book, which is I think not unexpected in quite a high volatile environment. But we are seeing very strong sort of fundamentals in the pricing at the moment with TradeTech and JORC have increased their term pricing, spot pricing has strengthened which is great news for us because our book does remain tilted towards market-related pricing, and we do expect to realize the benefit of that.
Operator: Your next question comes from Alistair Rankin from RBC Capital Markets.
Alistair Rankin: Just the first on that total material moved of 5.27 million tonnes was really solid, given you've still only got about 50% of the fleet commissioned at the moment. So you must be very pleased with the team on that. So this strong performance given you a bit of a buffer in terms of the G-pit stripping schedule for FY '26? Or were you expecting to hit this level of material moved over this quarter?
Paul Hemburrow: Yes. Thanks for the question, Alistair. We are really pleased with the results. We're seeing really good levels of availability and utilization of the 100-tonne fleet, and it was in line with our expectations for the quarter, but a very pleasing result.
Alistair Rankin: Okay. That's great. Then just also on your primary non-low-grade ore. I just noticed that you had about 430 kilo tonnes mined over this quarter. So was all of that fed into the processing plant over this quarter, or did some of it go into stockpile?
Paul Hemburrow: Yes. We do a bit of rehandle the outcome of the stockpile, and we blend to make sure we get the best throughput that we possibly can. So there is a bit of stockpile movement. So some drawdown of the MG3 and some of the fresh mine ore go into stockpile.
Alistair Rankin: Okay. So I guess, in the next quarter for December, given you're still going to be doing quite a bit of G-pit stripping, do you have a plan to access similar volume of primary ore in the next quarter so you can keep those feed grades around where they are?
Paul Hemburrow: Yes. We haven't guided on a quarter-by-quarter basis, but the expectation that we set when we delivered the guidance that the first half of this financial year would be in line with what we saw in the last quarter. And I think that's what we've delivered in this quarter. So my expectation is that the result for the remainder of this half will be in line with what we've seen in quarter 1.
Alistair Rankin: Yes. Yes. Understood. And then maybe just lastly, could I just get a reminder on the current sequencing for which pits you're planning to mine? So obviously, doing the G-pit at the moment. You mentioned that you've done a little bit of work on the F-pit. And I think in your guidance for FY '26, you mentioned the J-pit as well. So could you just give us a quick refresher on what the plans are on the sequencing of the pits that you're going to mine?
Paul Hemburrow: Yes. So most of our work is focused on G and F at the moment, and we may move into the J as well. We've got quite a well-developed 12-week schedule, and we're doing some reoptimization on the base of the new fleet we're getting. So we'll talk more about that as we get through the year. But fundamentally focused on G and F.
Operator: Your next question comes from Regan Barrows from Bell Potter Securities.
Regan Burrows: Congratulations on a good quarter in line with what you said. Just following on from Alistair's questions before on total material moved. At full capacity in the second half, what sort of run rate will you be targeting there?
Paul Hemburrow: So we provided guidance for the full year at 4 million to 4.4 million, and we absolutely stand behind that. Regan, it actually depends on how quickly we're able to commission the new fleet. We got to go through the receivable of that mobilization of the fleet, recruitment, training, commissioning. So there's a few ifs. But by and large, we expect to stand behind the guidance at a 4 million to 4.4 million pounds rate for the full financial year.
Regan Burrows: Sorry, just on -- as in if we sort of had a look at the material move in 1 million tonnes per annum annualized basis, I mean what's 100% operating capacity for that fleet that you're looking at?
Paul Hemburrow: Yes. We haven't done -- we haven't guided on that.
Regan Burrows: That's right. Okay. And just in terms of, I guess, mill performance over the quarter, can you give us a bit more of a breakdown on that blending strategy. And I guess what was fed into the mill, were you sort of 50-50, I guess, with the stockpile and fresh ore? How does that sort of shape out?
Paul Hemburrow: Yes. The blend strategy varies as we go. As I've mentioned before, we typically got 4 types of feed going into the crusher, dry and wet coarse and dry and wet fine clay material. And we blend on the basis of what gives us the best throughput numbers. So as we progress through the MG3 stockpile and find different types of materials, and our blending strategy is adjusted accordingly. So we don't actually have blend strategy. It also depends on the material coming out of the pit and that, of course, depends on how it presents itself. So that blend strategy has varied quite significantly over the quarter. And just interestingly, it's produced the same 437 ppm this quarter as it did last quarter.
Regan Burrows: Right. And if I could just squeeze one in there. You mentioned water availability over the quarter was managed well. Can you sort of elaborate on what you sort of mean by that? Were there any issues, I guess, with water availability coming out of the desal plant or your sort of allocation?
Paul Hemburrow: Yes. So in terms of our infrastructure on site, we've got our 2 bladders. We're pretty much operating 2 bladders at full capacity. The NamWater system is able to supply at or above our contracted rates. There has been some challenges in the Orano desal system. But by and large, we've been unaffected by that with utilization of our on-site capacity, but we've also improved our unit consumption rates on site as well. So we're progressively having fewer and fewer impacts even considering the system variations from the Orano desal and the NamWater system. So it's going exceptionally well on the waterfront.
Operator: Your next question comes from Milan Tomic from JPMorgan.
Milan Tomic: Just a question on the sustaining CapEx. It was quite low compared to the previous quarter. Is this just a function of the movement in the stockpile ore? And is the expectation for the next quarter expected to be broadly in line with this quarter. I'll come back with the next one.
Anna Sudlow: Yes. Look, I think the main reason the number is just low this quarter is really just a function of the timing. So we're still standing behind the guidance of the kind of [indiscernible] for the full year. It's not to do with the low-grade stockpile or capitalized stripping. They weren't included in that guidance. We've also got some kind of chunky capital numbers in there around in drilling and exploration. So that capital is not going to be evenly allocated over the year.
Milan Tomic: Yes. Understood. And just going -- touching on the previous question regarding the water management strategy. Can you just remind me how many days of water buffer do you have on site?
Paul Hemburrow: Yes, it's about 8 or 9 days. It depends on our water consumption per cubic meter of feed into the crusher. So it's 8 or 9 days.
Milan Tomic: Yes. And has that issue with NamWater being resolved, or are you still relying on the capacity you have on site to provide water to the mill?
Paul Hemburrow: Yes. We don't have any outstanding issues with NamWater.
Operator: Your next question comes from Glyn Lawcock from Barrenjoey.
Glyn Lawcock: Paul, can I just clarify, I think one of the questions or the answers to one of the earlier questions. Just when you look at the costs, obviously lower in the quarter, is it fair just to simply assume that you've got your guidance and as we move into the second half, you'll basically be staying to process what you mine as opposed to capitalizing it. And it's really just that drives the cost higher, or is there some opportunity maybe to do better than your guidance?
Anna Sudlow: Yes, Ken, I think you're right. I think we will be ramping up mining. And so as you would imagine, the actual cost will increase because we are using a medium grade stockpile now. So yes, I think it's reasonable to assume that the costs are going to increase as the mining fleet comes on, and there's greater marked proportion of mine material.
Glyn Lawcock: Okay. And then, Paul, just I know you've been mining a lot more waste than ore during the quarter, but just how is the pit shaping up? I mean, obviously, clay presence, et cetera. Is it sort of -- are you seeing what you expected to see as you mine through the pits in these early days?
Paul Hemburrow: Yes. The G-pit is absolutely in line with expectations. So we don't have a lot of clay material in that area. So it's actually shaping up very, very well. Probably slightly lower weight than anticipated, but it's looking good. So I'm very excited about next quarter and particularly the second half of the year.
Glyn Lawcock: Yes. And if I could just squeeze a third one in quickly. I mean everyone now globally is talking about support for critical minerals. I'm sort of unclear where uranium falls a little bit in that. But just what we're seeing, has it provided any more impetus for discussions with local governments here at WA, Queensland to maybe overturn mining? Or are you not really in any active discussions at the moment?
Paul Hemburrow: Look, I think we've got plenty to keep us occupied at the moment, particularly finishing to ramp up this year at Langer Heinrich and pushing forward with PLS. So we're not really in the space where we're actively engaged in pushing forward in WA or Queensland at this time.
Operator: Your next question comes from Dim Ariyasinghe from UBS.
Dim Ariyasinghe: Just a couple of quick ones from me. Number one, on the plant and maybe recoveries, noted it's trended lower over last few quarters. Just wondering if there's anything to read into that as you ramp up, I presume it's all within range, but just any clarity on that?
Paul Hemburrow: Yes. Thanks for the question. So typically, our target range is 85% to 90%, and we're in that range. In most plants like this, it's very, very dependent on your plant stability and that's particularly with respect in this circumstance to feed grade. With the stockpile ore and blend strategy that we use to focus on throughput, we do get a bit of feed grade variability, which does drive variability in the overall recovery rate. But as long as it performs within the 85% to 90% target range, we're pretty happy.
Dim Ariyasinghe: Yes. And then the other one, so obviously, a bit of focus on the fleet pickup. Just in terms of what you can put through the plant. So you put that was kind of unchanged quarter-on-quarter. Can you -- I guess what's the bottleneck there to start running the plant more even as you're continuing to process stockpiles. Can you go into a bit more detail there, please?
Paul Hemburrow: Yes, I can go into detail on this one. Look, there's a couple of different bottlenecks. And of course, it depends on what type of feed you're putting into the plant. So if you put wet clay materials, then the crush is going to be in the bottleneck. What we found is if we put dry coarse material in, then we can increase our plant throughput, and that doesn't become the bottleneck. Similarly, at the CCD, if we have low density feed that we have low settling rate and that becomes a bottleneck in the plant. The leaching circuit is not a bottleneck. Classification is not a bottleneck and the final recovery and packaging facility is not a bottleneck in the plant. So it really depends on the type of feed that we put through as to where the bottleneck appears.
Dim Ariyasinghe: And I'm assuming, sorry, just kind of hard to hear a little bit. But as you get into the fresh ore that bottleneck lifts effectively, is that the way to dumb it down?
Paul Hemburrow: Yes. Again, it depends on the type of material that we feed into the plant. So it's the feed grade lithology is heavily clay and wet, and that's going to be more difficult to process, and that means we adopt a blend strategy that optimizes our crusher throughput. So although fresh ore largely would be very helpful for us.
Operator: Your next question comes from [ Josh Barr Jonathan ] from Canaccord.
Unknown Analyst: Congrats on the results. In the last 2 updates, you mentioned how the mine plan has been optimized to now deliver medium- and high-grade ore to the processing plant, while stockpiling the low-grade ore. I was just wondering if you could provide some context around this change and maybe add some color on what this can mean for production during the initial mining phase.
Paul Hemburrow: So what we've been doing is we've done several optimizations of the mine. And -- but every time we get a change in new price, for example, we can do some reoptimization to see if we can increase the pit shell as well as doing infill drilling around the fringes of the existing pit gives us a few more opportunities. So we continue to run optimization strategy to determine our feed to the pit. That will be an ongoing process over the life of the mine.
Unknown Analyst: And the inventory level obviously appears quite strong at 1.8 million pounds. I was just wondering if there's an optimal level that you'll target moving forward as a buffer against any potential challenges.
Anna Sudlow: Yes. I think the inventory level is not a deliberate strategy. It's really just a function of shipping availability and the working capital cycle. So Alex, as Alex said on the earlier Q&A, all of that material that's produced is in marked for sale. It's really about getting it from site to point of sale. So that drives that balance. We don't have a deliberate strategy around inventory other than I'd like it to be as low as possible, but it's a function of the shipping schedule ultimately.
Operator: Your next question comes from Milan Tomic from JPMorgan.
Milan Tomic: Just wanted to ask more of a high-level question. How is the performance of the pit performing versus the restart plan? I guess do you still see chances of getting to 6 million pounds. And maybe if anything else has changed relative to that study?
Paul Hemburrow: Yes. I think what you will see or what we are seeing is that the performance is exactly what we thought it would be. So we guided on that 4 million to 4.4 million pounds full production rates for this financial year. And G-pit is performing exactly how we thought it would. My expectation as we progress through the year is a slightly stronger second half than first half. And when we get to July, we'll be in a position to provide you with the guidance for FY '27. At this point in time, I expect FY '27 to be very strong.
Operator: There are no further questions at this time. I'll now hand back to Mr. Hemburrow for closing remarks.
Paul Hemburrow: So we're really pleased with the results for the quarter and our performance is in line with our expectations. We appreciate the support from investors through the fundraise, and we're excited about the rest of the year and achieving the guidance that we've set. Thank you very much for joining us on the call today.
Operator: Thank you. That does conclude our conference for today. Thank you for participating. You may now disconnect.