Thank you. Good morning, everyone. Good afternoon, everyone. Ladies and gentlemen, my name is Cliff Lawrenson, and I'm the Chair of the Board of Paladin Energy. I have the pleasure in welcoming you to the Annual General Meeting of Paladin Shareholders, and thank you for your attendance. This meeting is also being webcast, so a very warm welcome to those who have chosen to join us online. It is now the appointed time for the meeting, and a quorum is present. I declare the meeting open. I would like to take this opportunity to introduce the other members of the board: Peter Main, Peter Watson, Jonathan Hronsky, and Lesley Adams. Our CEO, Ian Purdy, CFO, Anna Sudlow, Chief Operating Officer, Paul Hemburrow, Chief Commercial Officer, Alex Rybak, and our Company Secretary, Jeremy Ryan, are also present.
We also have Helen Bathurst and Johan van Dyk from our auditors, PwC, and Rod Soames from Computershare Investor Services in attendance. A warm welcome to all. Before we begin, I would like to take this opportunity on behalf of the board to thank Joanne Palmer for her contribution as a Director and Chair of the Audit and Risk Committee. The board and I wish Joanne all the best in her future endeavors. Jo will not be seeking re-election at this meeting and will therefore conclude her directorship at the close of the AGM. Thank you. I ask that all shareholders ensure that they have registered their attendance with Computershare at the entrance to the meeting. Further, I would ask that you turn your mobile phones to silent or off so that there's no disruption in the meeting. The meeting is also being webcast.
However, shareholders joining online will not be able to vote via their webcast facility. You'll be able to submit online written questions during the meeting. All questions not related to a resolution within the formal business of the meeting will be addressed after the CEO's presentation. I will now read my Chairman's address, which was posted online today. Good morning and welcome to Paladin Energy's 2024 Annual General Meeting being held in Perth. On behalf of everyone at Paladin, I would first like to acknowledge the traditional custodians of the land we are meeting on today, the Whadjuk people, and pay our respects to the elders past and present. I would like to acknowledge and respect their continuing culture and the contribution they make to the life of this city and this region.
I would also like to acknowledge the traditional owners and local communities across our operations in Namibia, Canada, and Australia. The 2024 financial year was a remarkable year for our company and included the critical milestone of the Langer Heinrich Mine returning to production in March. This achievement was the culmination of much hard work and a significant step forward in our path to becoming a globally significant independent uranium producer, assisting the transition to a low-carbon global economy. Nuclear energy is the second largest source of global clean energy with almost zero carbon emissions. It is the only economically and socially viable long-term source of low-carbon emission baseload power. More and more governments around the world are recognizing the importance of uranium's baseload power capabilities to power grids that are becoming increasingly supplied by intermittent renewable power.
During the COP28 conference held in December 2023, more than 20 countries from four continents launched the declaration to triple nuclear energy. Recently, at COP29, six more countries endorsed the declaration, bringing the total number of countries endorsing to 31. The declaration recognizes the critical role of nuclear energy in achieving global net zero greenhouse gas emissions by 2050 and keeping alive the goal of restricting global warming to a 1.5-degree limit. Nuclear energy has also received bipartisan political support in the United States of America and widespread government support across Europe, where it's been recognized as a green source of energy by the EU. Globally, there are more than 60 new uranium reactors under construction, and in China, the commitment to nuclear energy continues to strengthen, with nuclear energy demand expected to grow from 15% to 33% of global requirements by 2040.
With limited investment in new uranium mines, there is a growing supply deficit that is anticipated to increase to over 50 million pounds per annum during the next decade. Diversity of supply is also becoming increasingly important as a response to recent global geopolitical activities, including the recent U.S. ban on Russian suppliers. The Langer Heinrich Mine in Namibia is delivering production into an increasingly supportive demand and price environment, and Paladin is proud to be on course to become an important part of a sustainable future for the planet. The Langer Heinrich Mine returned to production. The return of the Langer Heinrich Mine to commercial production in March 2024 was completed on time and within forecast costs. Importantly, it is done safely, with more than 2.5 million hours worked with no serious injury or environmental incident.
The first customer shipment from Langer Heinrich Mine departed Walvis Bay, Namibia, in July 2024, and shipments are now going under the company's long-term offtake agreements with top-tier industry counterparts. Our operations are now approximately eight months into a planned 21-month ramp-up period. There is growing confidence across the business that by following our plans and applying our skills, experience, and effort, we will achieve our goal of full production run rate by the end of calendar 2025. I note the recent downgrade to financial year 2025 production guidance due to a range of ramp-up issues, but I'm also pleased to note the positive performance of the upgrade processing plant. Paladin is committed to a best practice, globally accredited environmental, social, and governance framework that sets standards of organizational behavior and holds us firmly accountable.
ESG is core to our business, an essential source of value creation, not only for our organization, but also for our stakeholders and host communities. We are committed to meeting international standards in managing and reporting ESG outcomes while providing the necessary resources to improve our sustainability performance. The structured implementation of the SASB, GRI, and TCFD frameworks and compliance with IFRS Accounting Disclosure Standards will increase the level of detail reported as we ramp up production at the Langer Heinrich Mine, and we'll provide a more complete representation of Paladin's performance to our stakeholders. I hope that shareholders have taken the opportunity to read our 2024 sustainability report, which is providing increasing insights into our operational and other activities, monitoring and reporting as we continue the journey to full production.
From a people perspective, we continue to put the health and safety and well-being of our people and all stakeholders at the forefront of our activities on site at the Langer Heinrich Mine and wherever in the world we have employees based or traveling. Our sustained focus on positive safety culture underpins all of our decisions and actions. Paladin has a policy of prioritizing local employment, and the Langer Heinrich Mine restart project provided local and regional employment opportunities wherever possible. The Langer Heinrich Mine continues to provide many jobs and opportunities to Namibian nationals in operations with 98% local employees. Additionally, 99% of the Langer Heinrich Mine employees and mining contractors reside within the local communities, contributing significantly to the economic well-being of the local population and the overall Namibian economy.
I would like to take the opportunity to thank the team at Paladin, led by CEO Ian Purdy, for their dedication and hard work during the year. We are building an exceptional team at Paladin across three continents, and the continued commitment from all our people and contractors will ensure that we can maximize the potential of our asset base and create lasting value for our shareholders. Paladin values workplace diversity, understands the significant advantages that arise from recruiting, developing, and retaining a talented, diverse, and motivated workforce. Central to our business success is our recognition that individuals and teams play a critical role in our future growth, and we are deeply committed to supporting their ongoing development while fostering a positive culture of employee engagement and inclusivity. Paladin also understands the advantages that diversity brings to our board of directors.
A varied combination of skills, expertise, experiences, perspective, ages, and views fosters diversity of thought, enhancing our ability to consider opportunities, issues, and risks, which ultimately lead to better decision-making. Importantly, as a company operating in multiple jurisdictions, our approach to board diversity must also ensure that we have a deep understanding of and connections with the nations where we are active. These principles will guide our search for two highly skilled directors to join the board and replace outgoing members. Considered and careful selection of both directors and executive staff is vital at Paladin as Paladin matures into a globally significant player in the uranium sector. In June 2024, Paladin announced the acquisition of Fission Uranium Corporation by way of an all-share plan of arrangement, and I note that the acquisition remains subject to the Investment Canada Act clearance.
Fission is a natural fit for our portfolio with a shallow high-grade PLS project located in Canada's Athabasca Basin. The addition of PLS will create a leading Canadian development hub alongside Paladin's Michelin project, with exploration upside across all Canadian properties within Paladin and Fission. With the restart of production at Langer Heinrich mine, an achievable timeline for the ramp-up to full production by the end of the 2025 calendar year, supported by a strong balance sheet, robust uranium market fundamentals, and identified growth opportunities, Paladin is exceptionally well positioned to continue to grow value for our stakeholders. Finally, I would like to thank my fellow directors for their commitment during a busy year and to all our shareholders for your ongoing support as we grow Paladin into a leading independent global uranium producer. We'll now move to the formal business of the meeting.
Proxies are held by me as chair, and as it was noted in the notice of meeting, it is my intention to vote all available proxies in favor of each resolution. Displayed on this screen is the current position in relation to the proxies received. This is the position prior to any revocations that may have occurred at registration. I do not propose to read them up. There's only three resolutions. For this annual general meeting, all resolutions will be decided by poll rather than by show of hands. Each shareholder present, either in person or by proxy, attorney, or representative, has one vote for every ordinary share owned. Mr. Rod Soames from Computershare Investor Services has agreed to act as returning officer for the poll. At the time of registration for this meeting, those persons eligible to vote were given a green voting card.
The voting boxes are on the back of the green card. If you're eligible to vote and have not received a green voting card, please raise your hand now. If you're a proxy holder, a summary of your voting instructions has been attached to the green card you've received. By signing and lodging the voting card, you will be taken to a vote in accordance with the instructions that have been given. The summary also shows any open votes that have been given to vote as you consider appropriate. Shareholders who wish to cast all their votes for or against a resolution should place a mark in the for box or against box for that resolution.
Proxy holders who have been given open votes, being votes where a person appointing you has not instructed you on how to vote, should place a mark in the appropriate box to indicate whether you're voting the open votes in favor of or against the resolution. For convenience, the poll will be conducted at the end of the meeting once all business has been dealt with. However, I formally declare the poll open. The notice of meeting was dispatched to shareholders within the time provided for in the Corporations Act, and it's been released to the Australian Securities Exchange. Consequently, unless there are any objections, I propose that the notice be taken as read. The first item on the agenda is to receive and consider the financial report and the reports of the directors and auditors for the year ended 30th of June 2024.
There are spare copies of the annual report available should anyone require one. The annual report is also available on our website. Questions in relation to each resolution, including the remuneration report, will be addressed during the formal business as each resolution is presented to the meeting. Would anyone like to discuss or ask questions about the financial statements, the directors' report, or the auditor's report? Our auditor, Ms. Helen Bathurst of PwC, is with us today. Should you have any questions to address to her? I'll then move to the first resolution. The first resolution deals with the adoption of the remuneration report under the following resolution that, for purposes of Section 250R(2) of the Corporations Act and for all other purposes, approval is given for the adoption of the remuneration report as contained in the company's annual financial report for the financial year ended 30th of June 2024.
This is a non-binding resolution as required by Section 250R(3) of the Corporations Act. The remuneration report can be found on page 52 of your annual report. In accordance with Section 250A of the Corporations Act, I now invite shareholders to ask questions about or make comments on the remuneration report. There being no discussion, I conclude the discussion on this item of business. As noted at the start of the meeting, it is our intention to call a poll for all resolutions, with the poll to be conducted on all resolutions once the business has been dealt with. Resolution 2 deals with the re-election of Mr. Peter Main as a director under the following resolution. That Mr. Peter Main, who stands for re-election in accordance with Listing Rule 14.5 and being eligible, offering himself for re-election, be re-elected as a director. Information on Mr.
Main's background and experience was provided to you in the notice of meeting. The proxies for Resolution 2 are tabled on the screen. Are there any questions on this resolution? There being no questions or discussion, I conclude the discussion on this item of business now and move on to Resolution 3. The third resolution deals with the re-election of Mr. Peter Watson as non-executive director under the following ordinary resolution. That Mr. Peter Watson, who stands for re-election in accordance with Listing Rule 14.5 and being eligible, offering himself for re-election, be re-elected as a director. Information on Mr. Watson's background and experience was provided to you in the notice of meeting. The proxies for Resolution 3 are tabled on the screen. Are there any questions or discussion on this resolution? There being no questions or discussion, I conclude the discussion on this item of business.
As the business of this meeting is now being dealt with, we'll now conduct a poll on all resolutions as we previously stated. As all resolutions have been put to the meeting, it is now time to complete your voting cards. Please complete your voting cards and place them into the poll boxes being circulated by Computershare. Good, right? Yep. Everyone okay? Everyone's handed in? Those that have green cards? I believe those persons who wish to vote in the poll have done so now. If there's any individual present who has not yet had their completed voting card collected by Computershare staff, please raise your hand. I think everyone's good. Yep.
Super.
I now declare the poll process closed. Ladies and gentlemen, that concludes the ordinary business of this meeting, and on behalf of the board, I would like to thank you for your support.
The results of the poll will be announced on the ASX as soon as practicable. I now take the opportunity to hand over to Ian Purdy, our CEO, who will present an update of the company, followed by a question and answer session. Thank you.
Thank you, Mr. Chairman, and good afternoon to everyone here with us today in Perth, and also hello to everyone on the webcast. Thank you so much for the opportunity to provide an update on Paladin, and I always find the AGM is a great chance to reflect on what we've achieved over the last year, and I was reflecting on our last AGM, and certainly this time last year, the questions we were facing was, "Will your project in Namibia complete on time, on budget?" Because at the time, it was 80% complete, and we still had a lot of work to do.
Another question we were facing from our shareholders was, "Do you have enough liquidity to get through the project and the ramp-up? And will you have enough liquidity to get through to first production?" And you reflect on the time that's passed and all we've achieved, and I'm really pleased today to give you that update, but it's also mixed blessing because we're never satisfied. We're completely driven with our next set of challenges, and we're completely driven to move the company forward. So the presentation today will be a little bit of looking forward, looking back, but more importantly, telling you what our laser focus is going forward and what I look forward to updating you on when I stand here this time next year. So for those on the webcast, I will go through the presentation.
At the end of the presentation, I'll hand back to my chairman, who will then field questions from the room, but also from the webcast. Firstly, this slide shows our global portfolio, and 99% of our focus over the last five years has been returning Langer Heinrich to production. It's right there in the middle of the map, and I'm pleased to say we've been incredibly successful in our endeavors, and it's incredibly pleasing to see all the hard work that's been done by the whole team, not only in Namibia, but around the whole company and the board in supporting that endeavor, and I'm pleased to say I'll be heading over there next week with our Chief Operating Officer, Paul, and it's always a pleasure to see the progress we're making on the ground. We do have world-class assets around the rest of the world.
While most of our attention has been Langer Heinrich, we're starting to now look at other opportunities and map out our pathway for growth, not only in Namibia, but with our other opportunities. The photo we're showing here is the photo of first production. Paul, our Chief Operating Officer, is standing on the left-hand side of the photo, and our Project Director, Johan Coetzee, is on the right-hand side, and the whole drying and packaging team is there in the middle. They're the first drums of production we produced. I'm pleased to report that they were sold to one of our customers, and we received cash for those drums as we have for all of our other production. An amazing achievement, and the work behind that photo spans four and a half years and is immense. But again, as I mentioned, that's the start of the journey.
Once we turn the plant on, we don't look back. We're completely focused on driving through to full production. We've been transformed since I last stood at this podium, and those questions that were asked at the time, I'm pleased to report back, we do have the financial flexibility. We did raise enough liquidity. We're very comfortable. We reported last quarter that we had $55 million US in cash and $55 million in undrawn facilities, debt facilities. I'm pleased to report that this current quarter, we have multiple cash receipts coming in due to the ramp-up of our sales and logistics, and we expect to be cash flow positive for the current quarter, and we look forward to reporting that to you when we report our quarterly results. We are in commercial production, and we are achieving a ramp-up. The production we're producing today is world-class.
The volumes we're producing today, we are the second largest producer of any independent listed company in the world, but we're not satisfied with that. We have a lot of work to do to drive to full production, and we're totally committed to that program. We have proven relationships and offtakes with all of the top players in the global nuclear market. And looking forward, we've got projects in all of the top Western jurisdictions in the world, Canada, Australia, and Namibia, as well as an opportunity to bring one of the best projects in the world into our portfolio through the Fission acquisition. We've implemented world-class ESG reporting, as our chairman indicated, and we have exceptional expertise around the globe, not only operationally, but also in marketing, corporate, and leadership across our portfolio.
I'd like to talk about the uranium market and, in particular, the changes we've seen in nuclear energy over the last few years. This graph shows, firstly, on the left-hand side, it shows the emissions intensity by energy source, and the wonderful thing about nuclear energy, it's baseload. It's 24/7, 365 days a year, and you can see its emissions intensity is some of the best in the world. That makes it a key part of the push for global decarbonization, and we've seen a renaissance in not only sentiment towards nuclear energy, but that's been backed up by political and commercial will, which is driving growth across the global energy system. You can see on the right-hand side the number of operating units around the world, as well as those currently under construction, which is quite remarkable.
There are 66 reactors under construction now, as well as hundreds in the pipeline. So not only is the demand strong today, but there is a very strong pipeline of mid-term and long-term growth as well. Looking at the supply side, there is a structural supply-demand deficit. This has been well known and well talked about over the last few years, but what's happened in the last two years in particular, that structural deficit has translated into a significant recovery in pricing across the industry. You can see from the graph at the right-hand side that today there's a supply deficit of 40 million pounds, and that is expected to grow over the next two decades. There's been disrupted project development due to the poor economics in the uranium market over the last decade, and we've also seen geopolitical issues impacting on supply.
That sets us in an incredibly strong position as a company who's not only bringing production into a very strong market today, but also has the opportunity to bring new projects into a structural supply deficit. To play in the uranium space and the nuclear space, you have to have customers, and we have the best in the world. We now have 10 offtakes secured with tier-one industry counterparties across Europe, across the U.S., and in Asia. Approximately 50% of our life-of-mine production is contracted, which is exactly what we targeted at this point in the cycle. We have approximately 87% life-of-mine production is exposed to spot prices, but we also have the other 13% contracted with what is the best-priced contract book in the market. That is a fact. The reason we've maintained our significant upside to the spot market, we're still incredibly early in this cycle.
It's only just begun, and we see plenty of opportunity and plenty of strength in the market for years to come. Talking more about Langer Heinrich, it's been quite a journey for Langer Heinrich, and certainly we get a lot of feedback from our employees. Over half our employees previously worked at Langer Heinrich. Langer Heinrich produced uranium for 10 years until 2017, and from 2017 until 30th of March this year, not one pound was produced from that mine. And the consistent feedback I get from all of our employees that have returned is, "We never believed this mine would come back.
We thought this mine was finished, and we're just so pleased to be back and to see the mine up and running again." It is a remarkable achievement what's been done in Namibia, and it's a credit to Paul and his operating team as well as our project team. So there's a journey we've been on, but the most recent milestones, which were extremely pleasing for us, is commercial production on the 30th of March, followed by our first shipment in July. And I think it's really important to note that every pound of production that we've produced has been shipped to customers, and we've received full value for that product. One of the really pleasing things we've seen in our operations to date is the performance of the upgraded plant.
We put close to $120 million into the project, and we're really pleased to say that all of the upgrades we made to the plant have worked as expected, and the plant is running exceptionally well. From the crushing to the classification, the leaching, right through the back end to the final product recovery, every single upgrade has worked to expectations, and we have proven the enhanced capability and the performance of the plant end to end. So the project delivery has been a complete success. The production to date has been really pleasing, but there's a lot more work to go. We've still got a lot of work to go to get to our end game. I sometimes have to remind ourselves, the team and our shareholders, that we're only eight months into a 21-month ramp-up. It's still very early days.
We set very high expectations of ourselves, and we drive ourselves, as do our shareholders, which is totally appropriate. Some highlights, if you look at the metrics on the right-hand side, as I mentioned, we're the second largest independent listed producer of uranium today at our current run rate. And what's really pleasing, we're producing on a cash-positive margin. So if you look at the cost of production, just shy of $45, we're realizing $73 a pound on those pounds we're producing. There are not many operations in the world that come into production and start producing a cash margin that quickly. So we've produced just over 800,000 pounds. It's been lower than we would have liked, primarily due to two issues. We've had variable grade with one of the historic stockpiles, and our ramp-up of our water infrastructure has taken a bit longer.
Our view is they are ramp-up issues. We're very confident those issues will come to an end, and we are still right on track with our full production target. So our primary guidance has been full production by the end of next calendar year. So we hit that run rate of 6 million per annum by December next year, and we are right on target with that. Unfortunately, we had to reduce our interim production guidance, which was 4-4.5 million for the current year, and we've trimmed that back to 3-3.6 because of those ramp-up issues. We're currently undertaking a planned shutdown, and we look forward to providing all our shareholders with an update when Paul and I return from Namibia next week. In terms of our customers, we are delivering our product globally. As I mentioned, we're delivering into our world-class offtake book.
We have met all customer delivery obligations. We've shipped over 820,000 pounds around the globe. We've shipped to all three Western converters as well as our Asian conversion facility, and our material has been accepted by all converters, and Paladin is receiving cash payments as per the contracts for every pound of product we've produced and shipped. Looking forward, Langer Heinrich will be a top 10 uranium mine globally. We're targeting 6 million pounds per annum, which is approximately 4% of global production. We have a 17-year life with existing reserves, and that will make us not only a top 10 uranium mine amongst all mines, but, as I mentioned, the second largest independent miner that's listed on any exchange around the world. Briefly looking at our growth pathway, firstly, our Paladin and Fission Transaction, which we announced in June.
We have an all-share acquisition to purchase Fission Uranium Corp by plan of arrangement. That is now six months in that project. I'm pleased to say that we've completed all of our shareholder and court processes. So the shareholder approval is now complete. The court processes are complete, and the court has ordered that the plan is to be implemented. The last outstanding hurdle is Investment Canada Act clearance, which is very similar to a FIRB clearance in Australia. We've been told that we can expect to have feedback on that process by the end of this calendar year. So we look forward to that feedback. In the meantime, we're planning for success. So we're working hard with the Fission team, with the whole Paladin team on achieving an effective integration, and we look forward to receiving feedback from the Canadian government.
As well as a Fission opportunity, we've got a global high-grade exploration portfolio. As I mentioned, we've got projects in the three best Western jurisdictions in the world for uranium mining, and you can see from the slide on the right, it really is a world-class portfolio, and the particularly pleasing part about those projects is they are all high-grade. At Langer Heinrich, Paul has started looking for growth opportunities in and around the existing mine and the existing plant, so we said from the start we'd be disciplined with growth. We needed to get Langer Heinrich back up and running. We need to deliver our base case, and then we'd start looking for growth. We intend to start exploration drilling on our tenements in the second half of this year.
We're continuing to see opportunities for further plant optimization, and we're continuing looking for opportunities to expand our reserves and our resource base at this world-class operation. Just quickly on our Michelin Project in Canada, it's based in Labrador. It's on the east coast of Canada. Again, another world-class uranium deposit. We've done substantial work on that asset over the years, and I'm pleased to say we've reopened an exploration office in St. John's. We've got a fantastic on-the-ground team that started working the project again, and we've commenced framing up a pre-feasibility study to map out the pathway of bringing that asset into commercialization. So in summary, we are completely focused and committed to delivering sustainable value for all our shareholders.
We're very pleased to have returned the Langer Heinrich Mine back to production, to have had early success in getting production, and our process is underway, but as I mentioned, we've got a lot more work to do. We're delivering development and exploration potential across our global portfolio, and we've got growth via M&A. We've worked hard on this Fission transaction, and we look forward to the feedback from the Canadian government. But most importantly, we'll always make decisions that embed sustainable returns for all of our shareholders. So thank you for your time today. I'll now hand back to my chairman.
Thank you, Ian. So we'll do a Q&A now. We have some subject matter experts in the room here, some of the executives and some of the board, and so I'll take questions, and as appropriate, I'll direct them to the subject matter experts so we can get to the core of issues if anyone has anything that they would like to discuss. There should be a roving microphone if anyone in the room has some questions, and Jeremy has control of the questions that are coming from the webcast.
Yes, sir.
We'll get to you, Mike.
Right, we're online. Good.
Thank you. David Brooke from the Australian Shareholders' Association. I've got several questions. One, I think, was the disappointing recoveries we should have, which was 73% from memory, and I believe you put a lot of effort into changing the process to an ion exchange process, and typically recoveries are there in the sort of 90%. I know there's been a bit of a problem with waste being mixed in with stockpile ore, but what are the problems? I mean, there's a massive difference between 73% and the sort of mid-to-low 90s% that other people are getting.
Ian, you're good or?
Yeah, thanks, David. Thanks very much for your question. Look, we acknowledge that during the ramp-up, it always takes a little bit of time to stabilize the plant, and recoveries really are driven by, in a large way, the stability of the plant, the water balance, and other factors. I'm really pleased to report that for October, we had exceptional recovery outcomes, so for October, we achieved 87% recovery for the whole month. Prior to that, due to ramp-up issues and water balance issues, we didn't achieve the recoveries we were hopeful of, but pleased to say that since October, we've been seeing recoveries in the range of our guidance, which was 85%-90%. Certainly, when we're feeding the fresh ore into the stabilized plant, we fully expect to see the 90% recovery range you're referring to.
So we're a little bit slow off the mark due to ramp-up issues. We saw a fantastic turnaround in October, which has carried through, and we're very confident of hitting our 90% longer term.
Thank you, Ian. That was just an initial question, actually.
It's fine.
I'm sorry.
Keep going. You're welcome. You're welcome.
I mean, one of the other issues, of course, is that you're using stockpiles now, which has been mixed with some waste, I believe, from your reports, and that's obviously good in the production because of that. But eventually, we're going to have to get around to doing mining, and I think that's a 2026, something like that, that you're anticipating right now. That's going to put up our costs significantly, and I know that you're currently saying that you're about $45 a pound there. But how is obviously you'll get a little bit of a push on getting better recoveries, but on the other hand, when you actually have to include your mining cost in there, that's going to jack up your costs significantly. What amount, if you can tell us, is that going to impact our costs?
Yeah, look, David, thanks very much again for the question. There's several factors that drive our costs at the moment. So firstly, we're doing stockpile rehandling, and as you noted, that is cheaper than mining, number one, because it's already been mined and it's quite close to the processing plant. So you are saving dollars spent on the stockpile rehandling and putting it into the plant. Offsetting that, we're running the plant at less than half volume, and also the grades are lower. So it's interesting. So when we move to fresh mining, we will be seeing higher grades and higher volumes and higher unit production. So there'll be swings and roundabouts. I would point all our shareholders to an independent piece of work that was done by AMC.
So as part of our Fission acquisition, we did a NI 43-101, which is the Canadian reserve statement, and in there, AMC estimated all of our economic life of mine year by year, and they were suggesting an estimated cost of production somewhere between, I think it was about $35-$40 over the life of mine. That seemed reasonable to us. So we think from where we are today, our costs will come down because of that volume and grade, and we think that'll more than offset the cost of mining.
Thank you, Ian. One of the other issues was I noticed that you're selling the contract right now, I think 31%, I think was the amount that you had on your CNNC is a 25% shareholder. Did 25% of that 31% go to CNNC?
Yeah, so we have a 25% offtake life of mine with our Chinese customer, which is a very, very good offtake for us. Just a bit of information, that was signed back in 2014, and at that time, the uranium price was incredibly low. I think it was around $15 a pound. At the time, the team at Paladin were trying to convince the customer to put a floor and ceiling in, and the customer said, "No, we'll only do market pricing." In hindsight, I'm really pleased that Paladin failed in that negotiation because we're receiving full spot price for that contract, and at the moment, the spot price is close to $80 US a pound.
So we're delivering into that contract, and we have that 25% contract life of mine, and then roughly the other 25% we've got is other contracts with European and U.S. utilities, but most importantly, we're fully contracted in the short to midterm. So we don't deliver into the spot market. We only deliver into our customers, and the marketing team led by Alex Rybak also built flexibility into the delivery schedule during the ramp-up phase, which means despite the production ramp-up challenges we've had, we're still meeting all of our customer requirements.
Thank you, Ian. Another question that I've got is about water. I've worked in Botswana next door to you for many years, and the water is a major problem in the Kalahari Desert around there. I've been reading the fact that most of the other mines around there actually have their own desalination facilities, and they have pipelines, I believe, from the sea to try and produce that. Are we going to be faced with large capital costs down the line because we may have to do the same? Because it does seem to me that the water supply which we have is enormously fragile.
Yeah, David, look, thank you again. Another very good question. I'm pleased to say that we have access to the desalination plant in Swakopmund, which services us and all the other mines in Erongo. It's a massive desalination plant that was originally built by Orano and now is fully committed and utilized by the local water authority, NamWater. So there is more than enough water to go around, and we receive the vast majority of our water from the Orano desalination plant. We also have access to groundwater as well as water returns from the tailings, but the vast majority comes from desalination, as it does for all of the mines in the region. We've upgraded all our infrastructure. NamWater have upgraded all their infrastructure, and we've proven that our infrastructure and the capability in the system is more than enough for what we need.
What's actually challenged us to date is the NamWater part of the upgrade project has been running behind schedule and has had a few hiccups along the way. So it was only in September that NamWater completed the physical upgrade of all the booster stations and the pumps and the pipe work, but pleased to say that's all completed now, and now we're working with them on optimizing the whole system. So the main challenge we've had with water has been ramp-up issues as opposed to underlying availability and structure, and we're looking forward to the water situation improving further. It's already improved markedly over the last few months, and we're confident that given our infrastructure, given our reservoirs on site, and given the improvements we're making to our other water supplies, we will have stable long-term water supply to our mine.
I might have some notes off the off.
Sure, sure. You're welcome, David.
You're good.
You're good with your questions? Thank you. Hi. Nice to see you again.
Nice to see you.
Once a year.
It's a pleasure to be here. Emily Shareholder, thank you for the update, Ian. My question is in relation to the Fission acquisition. You mentioned the ICA will provide feedback probably by the end of Q3. In the unforeseen circumstance that they need additional time, how much time is available before it prevents the deal from going ahead?
Yeah, thank you. So technically, they could continue their process until the 20th of January, and the deal long-stop date is the end of February. So even if they were to take the extra 20 days, it's still within the window of the deal. So where we're sitting today, we're really pleased to have finished all the shareholder processes, the court processes. We see this as a single hurdle transaction, and we think it comes down to the Canadian government approving our acquisition or rejecting our acquisition. We're not seeing any other factor in the mix that will impact the outcome of the transaction.
Carrying on from that, Ian, my understanding talking to a number of people in the industry is that it's the CNCC involvement in the Orano mine, which is what's causing the sensitivity to some extent from the Canadian government. My understanding also is that that's confined to the Orano mine. It's nowhere outside. What concerns do they have about the Chinese presence? From my understanding, that's the confusion. It's only confined to the Orano mine.
Yeah, thank you, David. Look, I think concern's the wrong word. I think it's fair to say that in Canada, and certainly across the Canadian government, a very topical issue is national security and in particular, critical minerals. And in Canada, uranium is a sensitive critical mineral. And I think you would have seen in other processes the Canadian government being particularly thorough and taking their time with all approvals of all critical mineral transactions. We've seen new legislation come into Canada just this year called the Net Benefit Test, where that also is another consideration for a lot of the critical mineral acquisitions that are occurring. So we see it not as concerns, but as the Canadian government being very thorough and certainly ensuring that our acquisition is in the best interests of not only the project, but also Canada as a whole.
So we've worked very constructively and openly with the Canadian government. We fully respect their process, and we're pleased to say we're now towards the back end of that process, and we look forward to their feedback.
Any more questions on the floor? Jeremy, some questions?
Thanks, Cliff. So just in relation to guidance that was revised recently, so there's a question here around.
Speak up, please, Jeremy.
We put our quarterly report out recently, the September quarterly report, and then not long after that, guidance was revised. When did we become aware of those issues, and were we aware of those issues at an earlier point in time?
Thank you, Ian.
Thanks very much for the question. When we put out our September quarterly report, you would have seen it was a very straightforward, detailed, open report, and we put our hand up that said we were a little bit behind where we wanted to be, and we were very specific for the reasons. Our message to all our shareholders through the report and through all of the conversations and the roadshows and the conferences we had at that time was we did see guidance as being potentially at risk because we were prima facie behind where we wanted to be, but we acknowledged that it was too early to call whether the guidance was reasonably achievable or not. When you do a ramp-up, there are two factors. The first factor is the production that's happened year to date, which is an important factor, but it's not the most important factor.
Because in a ramp-up, you have increasing compounding production every month, our production profile in the second half of the year is far more impactful on our guidance than the first half of the year. So we have to project, analyze, and take a reasonable judgment on what's the probability of hitting those targets in the second half of the year. So it's a constant review. So when we put out our September quarterly, we put our hand up, said we're behind, but too early to call, but it's at risk and we'll need to look at it. We then got more information on the October results after that event, as well as we did a complete refresh of all of the different outcomes, probabilities, and sensitivities.
We then went through a thorough internal process, and we came to the conclusion that on balance, despite there being an opportunity to still hit the range, we thought it was prudent and sound business judgment to put our hand up and to lower the expected guidance range for the year. We also acknowledged that given we were still early in a ramp-up, we needed quite a wide range, 3 to 3.6, recognizing the potential outcomes that could occur throughout the rest of the year. So I think from a shareholder point of view, looking with hindsight, if we could have done the two announcements together, we would have, and if we were in a position certainly in September to make that judgment, we would have, but we weren't in a position.
It was too early to call, and then the information we received during October and at the end of October, we went through due process and we updated the guidance. So I understand the impact that's had on our share price. I'd like to make the comment firstly, we are very dissatisfied with our share price performance at the moment. I personally apologize to every shareholder I've spoken to, and I apologize to all the shareholders on the call today. We're not satisfied with where we are. We see a disconnect between our share price and our fundamentals, and we're absolutely committed to driving that value back into our share price.
Thanks, Ian. Next question. How's Paladin managing the short trading that appears to be impacting the share price at the moment?
You want to go, Ian?
Thank you for the question. My pleasure to answer this one. One of the reasons we see the disconnect is we're in the middle of a cross-border all-share transaction to acquire Fission Uranium Corp. That has brought shareholders into our register and into the Fission register, which has changed the trading dynamics of our company. And one of the reasons we believe there's a disconnect between our news flow and our fundamental value is because of the excessive amount of shorting that has come into our business because of the particular mechanics of this transaction. Our advisors agree with us, and our advisors have proven that the volatility factors have fundamentally changed since we announced the transaction, and in particular, since the transaction was delayed.
We also acknowledge that there is a large amount of structural shorting across the whole uranium sector, and we're no different to any other highly liquid, highly traded uranium company. First and foremost, the best thing we can do for our shareholders and ourselves is to bring the Fission transaction to completion, and we're very, very keen to see that occur by the end of this year, and we believe we'll see an unwinding of all of those transaction-specific positions that have been created due to the nature of the transaction, and we think that'll be a fundamental opportunity for us to return to more normalized trading. In relation to the structural short across the industry, good luck to them.
They're not only betting against us, they're betting against the uranium market, and the best thing you can do when you're heavily shorted is deliver performance and see a strong commodity market. I mean, what is a very strong shorting play one day can be a scramble to unwind those positions the next day, and we look forward to bringing that date forward as quickly as we can.
Thanks. You go ahead. So just in relation to the Fission transaction, was the Canadian government's decision to undertake a security review a surprise to Paladin, and did we take that into account going into the acquisition?
I'd say it wasn't a surprise, but we were hopeful that we could get approval sooner, and I'll read on that. As I mentioned, the Canadian government are being very, very thorough with every critical mineral decision. There's new legislation, the Net Benefit Test, and the government is showing that they are serious of ensuring that any foreigner, wherever they come from, if you are going to buy a critical mineral asset in Canada, the minister has to be satisfied that it's in the best interests of Canada for that acquisition to occur. So again, whilst we would have liked the deal to have gone quicker, we're not surprised, and we're very supportive of the process. We're working cooperatively, we're working openly, and we look forward to that process coming to an end. This process will come to an end very soon.
We're hopeful by the end of December, but as we mentioned, even if it is extended beyond that, it's the 20th of January is the date by which that process finishes.
David, do you want to go again? You still have more, Jeremy? You can come back. Okay. No, go ahead. No, go ahead. Please, David.
It was really a follow-on from the former question that was there, and some of the arguments you just put to us just didn't gel in my mind because of the fact that you cite that the major component was the transaction that you were hoping would go through with Fission, and your Boss Energy, for example, is actually shorted to a greater extent, slightly, than yourselves, and it appeared to me that much of the reason that you just forwarded just didn't gel in my mind when you consider the position you're in compared to, not a competitor, but another company, which has had such a successful run-up.
Yeah, David, look, great question, and that allows me maybe to give more color to my answer. Well, there's numerous shortages in the market, and there's two categories, I think, that reflect where we're at. There's what I would call the structural shortages, which we've seen in Boss and we've seen on our register as well as other Australian uranium companies. And then there's what you would call active short sellers who are highly motivated to maybe disrupt and cause disruption to the trading of a company. At the moment, we have both sorts of shortages on our register. We have the structural and the active. And the active are there because of the transaction, because of the mechanics of the transaction, and that active shorting element we believe will unwind once the transaction comes to completion.
Jeremy, back to you.
Thanks, Cliff. Just back on to the Fission transaction. Did we consider what the Canadian government's stance would be on the 25% Chinese ownership at the Langer level?
Yes, thank you for the question. Absolutely. And more importantly to the Canadian government, Paladin is a completely independent ASX 100 company with an independent register, an independent board, an independent executive team, and has no ties whatsoever to China. They also will consider the Fission company. I'll also consider the Chinese ownership and influence of the Fission company. And the Canadian government is considering all factors in relation to the transaction, in relation to us, in relation to critical minerals in Canada, in relation to their policy regarding uranium exports. So it's a very comprehensive process. We have not been surprised by anything in this process. And as I mentioned, we see it as a quality process with the government being incredibly thorough and taking their time, and we're fully supportive of their process.
Next question. Could you just comment on the jurisdictional risk for Langer Heinrich in Namibia, please?
We're extremely pleased to be operating in Namibia. I think it's fair to say when we started this project a couple of years ago, a lot of the questions we were receiving is, how can you get approval to start a project and come back to commercial operations within a couple of years? We've done that. We wouldn't have done that without the support of the local communities, without the support of the local governor, the local government, the local mayor, as well as all of the ministers and the whole government of Namibia. It's quite remarkable what we've managed to achieve, and the support we've had from all levels of government has been outstanding, and I would challenge anyone to show a better jurisdiction to achieve what we've achieved, and that's evidenced by facts. It's not an opinion.
We are up and running with the full support of government, the full support of the community, and the full support of all stakeholders. So it's a wonderful jurisdiction, and we look forward to growing our footprint in Namibia over time.
Will Mr. Watson work in Perth or Namibia?
I'm based on the east coast of Australia. It's where I live, and I travel according to requirements to support the company and the specific role that I have within the company.
How much more capital is required to get to nameplate production levels?
I might hand over to Anna Sudlow, our CFO.
Yeah, sure. Thanks for the question. Look, we put in place a debt facility at the beginning of this year with a number of counterparties, Nedbank and Macquarie. That debt facility we've been utilizing, as we said at the end of the September quarter, we've still got $55 million of undrawn debt capacity. We don't expect we're going to need any additional liquidity to get through to the nameplate production at the end of next year. Thanks.
Thanks, Anna. There's just a general question around water supply risk in Namibia, which we've already touched on. Is there anything else you want to add to that point?
No, Jeremy, but I think I just will stress again, the majority of the issues we've seen to date relate to the ramp-up of water supply as opposed to the ongoing water supply. We recognize that in the ordinary course of business, there are disruptions to the desalination plant, which is why we've built two water reservoirs as part of our project upgrade, and when those water reservoirs are full, we'll have up to eight days interruptible cover for water, so we're confident that we'll receive reliable water that will meet all of our production needs, and what we've seen to date has largely been ramp-up issues.
Thanks, Ian. There's a question around the share price fluctuation coming down from a high of around AUD 18 or so. How do we see Paladin getting back to those levels?
I think very similar, very simple. We have to perform. I can talk and talk about everything we're doing. At the end of the day, we believe that actions speak louder than words. We've had great success to get us to where we are today. We've got a lot more work to do, and we're absolutely committed to driving performance and returning fundamental value to our company. We feel that we're not being valued fundamentally. We feel that it's incumbent upon us to drive that performance and return us to those value levels. So I'd suggest just watch what we do over the next six months.
Just another question is to share price. How do we think that might impact the merger with Fission and going forward?
It has no impact on the merger whatsoever, apart from the fact that Fission are equally driven alongside us to improve the share price. All of the share voting has been completed. All the court process has been completed. The share price of Paladin and/or Fission has no impact on the deal. The only outstanding hurdle is Investment Canada approval.
Thanks, Ian. Just a question about stockpile grade. Were we aware of the poor grade before we put it through the processing plant?
Short answer is we've been surprised by the variability in the stockpile. As was mentioned earlier, there appears to have been some waste mixed into the old stockpile. It appears to be isolated to that particular stockpile, which was created during a time back in 2015 when the company was under duress. Pleased to say we are still receiving good production off that stockpile, although it is slightly lower than we expected, and we are making healthy cash margins off that stockpile. So whilst the grade is lower than we had hoped for and we'd modeled, and it was a surprise, we're still committed to processing the stockpile. We still see it as a very important part of our ramp-up, and we expect to make strong cash margins off the rest of that stockpile before we return to mining and we start processing fresh ore during financial year 26.
Can I just extend on that answer there? Ian? You can hear me now. Can I just extend on that answer you just gave us? I don't know how many stockpiles you've got. I'm seeing there's at least one stockpile that suffered from bad practice back in 2015. How confident are we that the other stockpiles, which you say there isn't, have got the assay, which you currently are looking forward to? Have we done some further tests? Because some of that bad practice may have gone elsewhere at the time.
Yeah, thanks for the question. Look, we are highly confident that the issues we're seeing are related to this one stockpile. Extremely unusual for waste to be mixed with ore. Certainly, Paul has got 30 years' experience in some of the largest open pits in the world. Our in-country manager, Andrew Pullella, has run some of the largest open pits in Australia. Never seen it before. It's a very basic control. Now, clearly, Paladin in 2015 were under duress. They didn't advance mining campaign so they could rush to shut down the mine and save money, and they really were in financial trouble. So clearly, there was a breakdown of controls, which we've seen with the composition of this stockpile. The other stockpiles we have are what we call low-grade stockpiles, which were created in the preceding years to that.
We intend to process those stockpiles at the end of our mine reserve. It's many, many years into the future, but we're confident that we won't see those issues with those particular stockpiles. The reason we believe this practice happened at this particular stockpile is because of its proximity to the plant. The mining contractor was incentivized to deliver waste to that stockpile because of its proximity to where the mine was. We don't have that issue with the other stockpiles. It makes no sense for that to have occurred. We're very confident, and I'll also say we did a complete independent assessment twice by two different parties of our resources and reserves. We've reconciled them back to all of the mining reconciliations over the 10 years of mining, and we have extremely high levels of confidence in our resources and our reserves as well.
I think that you don't really still see the plans for when you would start mining in 2026 as being the actual plans and essentially one of the solutions to the problems you're facing. But now you're telling me that the other stockpiles are actually probably not going to be addressed until you're actually willing to mine. Do you see that mining date coming forward because of the bad quality of the stockpile which you're working?
The short answer is no. It makes sense for us to continue to process the stockpile. And as I mentioned, we're making a very healthy margin on that. Paul's working hard with the ramp-up of the mining, which is on program. And it makes sense for us to bring the fresh mine material into the plant in around the middle of next year. So while we can bring it forward, possibly delay it a bit, it still makes sense for us middle of next year. And it still makes sense for us to work through this stockpile because, as I mentioned, we are receiving good returns on that stockpile, and we are still ramping up the plant and settling down the plant.
So our plan is solid, but we look forward to the fresh mining material coming in, and we'll see the cessation of this variable when we do go to our mining. And that fresh mine material will actually make the running of the plant easier, more stable, and more predictable. So as part of our ramp-up to full production at the end of next year, we look forward to the mining phase, which starts in the middle of next year.
You don't, Jeremy?
Just a couple more. Thanks, Cliff. So just to the CFO, when you mentioned that you didn't expect any further liquidity requirement, does that mean that the $50 million remaining facility is undrawn, or are you forecasting the remaining $50 million loan to be drawn?
Thanks, Jeremy. Look, the drawdown of the debt facility will be variable over time depending on our cash flows over the quarter. The key reason we put that in place was really to manage our working capital over the period because the sales and the revenues are quite lumpy. So there'll be some variability over time, but we certainly don't expect any additional liquidity required. As Ian said, we will be cash flow positive this quarter, and we expect there to be future quarters where we'll be also. So we can't predict what ultimately those numbers will be. Thanks.
Thanks, Anna. Just in relation to reserves and resources, what's the status of those? And we talked about the issues on the stockpiles. Have they been assayed, or will they be assayed to ensure that the issue doesn't occur again?
Extremely high levels of confidence and independent verification of both our reserves and our resources. Keep in mind that this mine was running and mined for 10 years. So every pound that came out of that mine in 10 years was reconciled back to the resource model by an independent, competent person. Now, we've reflected that reconciliation into our reserves and resources. So this is probably one of the best-understood ore bodies out there, given that it's actually been mined for 10 years. So incredibly high level of confidence in our reserves and resources, also independently verified and modeled by AMC as part of the NI 43-101 and our ongoing annual reserves and resources governance processes, and as I mentioned, we see the issues we're facing with the stockpile being restricted to that particular stockpile for very specific reasons, which will not reoccur.
Thanks, Ian. There are no further questions. Chair.
Thank you. Question from the floor?
Thank you. I'm Roger McGuire from Brisbane. We've just had a change of government. Thank God. Do you see Queensland as a sovereign risk jurisdiction? And how far away do you think we are from action in relation to Mount Isa?
Mr. Hewitt, join us.
Thank you for your question. We see our Australian assets, both in Queensland and Western Australia, as being excellent long-term opportunities for us. We're fortunate that we've got our hands full at the moment with our opportunities in Namibia and Canada. But having said that, we would welcome a change of policy in either Queensland or Western Australia, and we would welcome the opportunity to recommence working those particular assets. The asset we've got in Western Australia is an in-situ leach asset, similar to Boss Energy, very similar style ore body. So we see great opportunities there. And the Mount Isa asset we've got is one of the largest undeveloped deposits in the world, over 140 million pounds of uranium in-situ in resources. So we would welcome a change of policy.
Our main focus is obviously Langer Heinrich plus our plans in Canada, but we definitely see an opportunity to start working those other assets if we get a favorable policy setting.
Jeremy.
Sorry, just one more question. What action is being taken to convert indicated into measured and proven resource?
Say that again, please, Jeremy.
What action is being taken to convert indicated into measured and probable resource?
Look, I think our main focus at the moment is twofold. One is we have a very high-quality, proven, well-reconciled, and modeled reserve in Namibia. Clearly, we've had a lot of drilling of that ore body. There's been a lot of mining activity. Paul is ramping up the in-pit drilling, all the usual good mining practices you would expect. So we'll work through that process as we prepare and mine the ore body in Namibia. We're also looking for extensions. We have a second mining lease in Namibia, which hasn't been drilled, that we'll commence drilling in the next period. If you look at our Michelin project, there's been a lot of drilling, over $120 million of good quality resource there, and the focus on Michelin is more the, what I'll call, the pre-feasibility study. The focus not so much is infill drilling. There's been a lot of drilling done.
Likewise, in our Australian assets, there's been a lot of drilling done as well. So I think the priorities for us are extension drilling in Namibia, focused on increasing our reserves. In Michelin, it's more the pre-feasibility study work as opposed to the drilling. And in the Australian assets, if we're given the opportunity, the focus will be on more the study work than the drilling. Likewise, we note if we're successful with Fission, they have over 90 million pounds of reserves. So again, if we are successful with Fission, the focus will be on moving the FEED study forward as opposed to any drilling.
Thanks, Ian. There's just one further question, just in relation to the timing of the Fission deal and any potential closing.
Look, we're planning and working towards a successful closing by the end of the year, sometime in December. As I mentioned, the last substantive hurdle is the Investment Canada Act, and we wait for that decision, but we're certainly planning and hoping that we get an affirmative decision by the end of the year.
Thanks, Ian. There's no further questions.
Any more questions from the floor? Thank you, everyone. There's some tea and coffee at the back. Please feel free to approach any of the executives or the board members or Ian if you want to speak directly. We're very inclusive and very encouraging of hearing from our shareholders going forward, so if you don't feel like asking at this way, you're more than welcome to ask any of us anything you like. Thanks for coming, everyone, and thanks for your support. We look forward to a robust year.