Monsters of Rock: Welcome back to the uranium game, Paladin

Paladin Energy returns to the producer ranks with commercial production declared at Langer Heinrich mine in Namibia
Whitehaven completes multi-billion dollar acquisition of BHP’s Daunia and Blackwater coal mines
Gold miners enjoy another strong morning on record bullion prices

Welcome back to the big leagues, Paladin Energy (ASX:PDN).

PDN, the equivalent of a star full forward who missed successive seasons after blowing out their knees, announced the restart of commercial production at its 75% owned Langer Heinrich mine in Namibia this morning.

The project has a capacity of around 6Mlb U3O8, ranking as one of the largest standalone uranium operations globally. That number sits at around 3% of the volume of yellowcake consumed by global nuclear utilities each year.

PDN shares equalled a five year high of $1.44 — market cap of about $4.3b — on the news this morning, lifting over 5% despite spot uranium prices sitting exactly US$20/lb below their 2024 highs of US$107/lb.

How quickly Langer Heinrich can return to its former glory remains to be seen.

It has been shut since 2018, when the company required a DOCA to save the once (and now again) high flying Paladin from administration.

A clear market event is looming in July when PDN plans to deliver guidance for the next financial year.

Concentrate production and drumming has begun, but PDN won’t make shipments to customers until its built a decent runway of finished product inventory onsite.

“Achieving first production at the Langer Heinrich mine is an important milestone for Paladin,” CEO Ian Purdy said.

“I would like to thank all our staff and contractors for their hard work and dedication in returning this globally significant uranium mine to production.

“I would also like to thank the Namibian Government and our local communities in the Erongo region for their continued support.

“With a return to production, a strong balance sheet and supportive uranium fundamentals, Paladin is exceptionally well positioned to generate sustainable returns for all our stakeholders.”

With prices still multiples of the cyclical lows seen post-Fukushima and term prices around decade highs, a number of Aussie players are dusting off studies in the hope of following early movers Paladin and Boss Energy (ASX:BOE) into production.

READ: Which ASX uranium stocks are in the development pipeline?

Paladin Energy (ASX:PDN) share price today

Whitehaven grabs met coal keys

BHP (ASX:BHP) will bank as much as $6.4 billion including US$2.1 billion (~$3.2b) immediately after hiving off its Daunia and Blackwater mines in a sell down of its met coal business to Whitehaven Coal (ASX:WHC).

The deal sparked a battle between Whitehaven and an activist hedge fund called Bell Rock Capital over the prospect the cash splash would drain its dividends and buybacks.

It later emerged Bell Rock had an undisclosed and beneficial interest in securities that benefitted from payouts, subsequently selling down its stake but not after leading a campaign to have a strike recorded against Whitehaven’s remuneration report.

The BHP deal, which will see WHC add 17Mt of annual met coal capacity to its production profile and shift its revenue mix from more than 90% thermal to 70% steelmaking, is the latest to demonstrate the hot demand for ‘undervalued’ coal assets.

South32 (ASX:S32) has also collected a pretty penny for its Illawarra Met Coal mines and 50% stake in the Baowu backed Eagle Downs project.

The rich sale price comes despite BHP saying it cannot justify allocating capex to its 50-50 Mitsubishi JV met coal division, which still contains the high quality Saraji, Peak Downs, Goonyella and Broadmeadow mines.

It has maintained that stance since mid-2022, when the Queensland Government introduced a new tiered royalty system, slugging miners 40% on each dollar earned beyond $300/t.

BHP has been trying to reduce the scale of its met coal assets in recent years to only focus on those producing premium hard coking coal, selling its Poitrel and South Walker Creek mines to Stanmore (ASX:SMR) in 2022.

The output of those mines includes lower grade semi-soft and PCI coal.

It has also announced plans to shutter its Mt Arthur thermal coal mine by 2030 after failing to find a buyer for NSW’s largest producing asset.

Energy coal is currently trading for US$133/t ($205/t), while met coal is down heavily this year but still fetching a healthy premium at US$235/t ($362/t), which places PHCC sales well above the top tier of the Queensland royalty regime.

Whitehaven Coal (ASX:WHC) and BHP (ASX:BHP) share prices today

Gold prices hit record, again

The materials sector rose more than 1% in early trade and it was, again, the gold miners leading the way.

Bullion hit a record US$2214.35/oz on the LBMA on Thursday, ensuring Aussie producers had their Easter Eggs well and truly laden with gold.

Newmont (ASX:NEM) shares lifted more than 5% and Evolution (ASX:EVN) stock was up ~4.5%, with the big iron ore miners also performing well.

The gold sub-index was up a mammoth 2.9%, with Gold Road (ASX:GOR) also more than 4% up on a production update.

It’s currently getting its hands dirty, helping the Shire of Laverton and Yilka traditional owners fix the main supply road into the Gruyere JV with Gold Fields after it was cut off by heavy flooding.

Gold Road has maintained it will hit the lower half of guidance this year after bringing forward a scheduled plant shut to March 28.

Gruyere produced 64,300oz, with GOR guiding 300,000-335,000oz for 2024 at all in sustaining costs of $1900-2050/oz.

GOR sold 32,325oz in the March quarter at an average price of $3137/oz, with the $1.75b company sitting on $146.2m in cash and equivalents and $469m in listed investments which largely comprise its stake in De Grey Mining (ASX:DEG).