PERTH (miningweekly.com) – Uranium miner Paladin Energy has abandoned its plans to sell a stake in its Langer Heinrich mine, in Namibia, opting instead for a capital raising.

Paladin announced in June that it would sell a minority stake in the Langer Heinrich project as part of a strategic initiative to unlock value from the company’s assets.

But MD and CEO John Borshoff said on Friday that the company had now called off negotiations with all parties interested in the purchase, saying that the current depressed uranium price meant that it was unlikely that the sales price would reflect the asset’s strategic value.

“Although there remains interest in the asset, Paladin believes that the current weakness in the spot uranium price should not overly influence the valuation of a flagship asset such as Langer Heinrich,” he added.

Borshoff added that Paladin could generate greater shareholder value through postponing the sales process until there was a more favourable uranium price environment.

“More generally, Paladin believes that the current low uranium price compromises the capacity for supply to reach clearly stated global demand growth targets. It is generally recognised in the industry that the process for recovery of supply growth can only reasonably start when a sustainable $70/lb threshold for uranium is reached, and Paladin supports this long-term price expectation.”

Instead, Paladin announced that it would undertake an institutional private share placement for up to 15% of the company’s issued share capital.

The placement would be conducted by way of a variable price bookbuild.

At the end of June, Paladin had some $78.1-million cash on hand, compared with the $112.9-million held at the end of March this year. The miner said that the equity raising, along with other cost-saving initiatives would provide it with adequate funding into the September quarter, even in the event that the spot uranium price was to remain at its 12-month average of $42.50/lb.

“While Paladin’s uranium market analysis indicates likely uranium price increases over the near and medium term, the board has decided to pursue this equity raising to provide the company with enhanced funding flexibility,” Borshoff said.

He noted that the raising would also allow Paladin to defer consideration of a potential divestment of equity in Langer Heinrich until a price reflective of the asset’s fundamental value could be obtained.

The placement would be subject to all regulatory approvals.