Paladin Energy (PDN) – When it rains, it pours

Paladin Energy is a uranium miner with operations in Australia, Canada, and Namibia, where the company’s main project, the Langer Heinrich mine, is located. Paladin Energy Ltd was incorporated in 1993 and is headquartered in Perth, Australia.

Paladin Energy has resumed operations at Langer Heinrich following disruptions caused by heavy rainfall across Namibia. A combination of road damages limiting site access, flooding of the intended G-starter pit, and saturation of existing stockpiles have forced Paladin to rescind its FY25 production guidance of 3.0–3.6 million pounds (Mlb) of uranium concentrate (U308) – the product created when uranium ore has been mined and milled and commonly known as ‘yellowcake’.

Ord Minnett had downgraded its FY25 production estimate to 2.5Mlb from 3.1Mlb post the company announcement. Mining of higher-grade ore will now be deferred – we estimate to the December quarter of this year. Paladin will depend on its stockpiles in the interim, although we note the variable grades of this source will hamper performance. The company’s production guidance overly optimistic and unreliable, noting the latest cut is the third downgrade in FY25to date.

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Given this, we apply more a more conservative mining ramp-up at Langer Heinrich in our model, which halves our FY26 forecast for operating earnings (EBITDA), and reduces our FY27 estimate by 6%. This leads us to cut our target price to $9.00 from $9.60. We still see value in Paladin, however, and maintain our Buy recommendation.

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