Paladin offloads majority stake in Kayelekera uranium mine to Lotus

According to Mining News Pro - The 85 per cent stake in Kayelekera will be sold for $5 million, comprising $200,000 in cash and $4.8 million in Hylea shares to be issued to Paladin.

This will include $1.8 million upon completion, which is subject to a 12-month voluntary escrow, as well as $3 million on the third anniversary of completion.

The issue price will be based on the lower of the 30-day volume-weighted average price at the time of issue, or the price of Hylea capital raising in the 90 days preceding.

Paladin chief executive officer Scott Sullivan said the transaction allowed the company to focus on restarting its Langer Heinrich operation.

“The sale is a positive result that will enable Paladin to focus all of its resources on restarting our flagship asset Langer Heinrich by releasing restricted cash resources of approximately $US10 million and realising significant care and maintenance cost savings of approximately $US5 million per annum,” he said.

“Kayelekera has been an asset that has produced 10.9 million pounds of uranium and now provides the opportunity for the new owner to generate a commercially viable operation once the uranium price has recovered.”

Palandin will receive 3.5 per cent royalty based on revenues form future production at Kayelekera, capped at $5 million.

It will also be repaid the funds advanced to provide security for the $US100 million ($144.2 million) environmental performance bond issues to the Government of Malawi for Kayelekera.

The transaction is subject to Hylea shareholder approval, Paladin noteholder consent and other customary terms including Government of Malawi approvals. It is expected to be completed by late 2019, with Hylea’s capital raisings associated with the deal being underwritten for $8 million.