Paladin Energy Ltd (ASX:PDN)
Australia flag Australia · Delayed Price · Currency is AUD
10.01
+0.18 (1.78%)
Sep 21, 2026, 2:19 PM AEST
← View all transcripts

Earnings Call: Q4 2026

Jul 22, 2026

Summary

Langer Heinrich achieved stable operations and exceeded FY 2026 production and sales guidance, while Patterson Lake South advanced key permitting and exploration milestones. FY 2027 guidance targets higher production and disciplined cost control amid a strengthening uranium market.

Operator

I would now like to hand the conference over to Paul Hemburrow, CEO. Please go ahead.

Paul Hemburrow
CEO, Paladin Energy

Good morning, everybody, and thank you for joining us today. I have Anna Sudlow, our CFO, with me this morning. On the line, we also have Scott Barber, our COO, and Alex Rybak, our Chief Commercial Officer. There are two areas I want to cover today on the call. First, I'll take you through the June quarterly results and the key achievements from FY 2026. Then I'll move into the FY 2027 guidance for Langer Heinrich, which builds directly from the operating platform we established throughout this last year. At a high level, FY 2026 was about transforming Langer Heinrich from a restart project into a stable operating uranium mine while laying the foundation through our next phase of growth through Patterson Lake South. I'm pleased to report that we successfully completed the ramp up of Langer Heinrich Mine during the quarter. This was a commitment we made to shareholders.

We've now delivered on that commitment. For the June quarter, production was 1.23 million pounds of U3O8, bringing full year production to 4.82 million pounds, right at the upper end of our revised 2026 production guidance range. Sales were strong. We sold 1.35 million pounds during the quarter and 4.35 million pounds for the full year, exceeding the top end of our guidance range. Operationally, the business continued to improve throughout the year. Total mined material increased steadily and reached 7.45 million tonnes in the quarter, the highest quarterly mining rate since the restart. The full mining fleet is now operational and positioned to support our 2027 objectives. Processing performance remains consistent, with plant recovery averaging 90% during the quarter, demonstrating a stable operation and plant performance at the top end of our recovery targets.

During the quarter, we achieved an average realized price of $70.60 per pound, with FY 2026 averaging $70 per pound. From a cost perspective, FY 2026 cost of production was $43.30 per pound, outperforming our guidance range of $44-$48 per pound. Quarterly costs increased to $51.60 per pound as a result of the mine development work and transition to full mining activities and mining lower grade areas in line with our mine plan. The successful completion of ramp up provides a strong platform as we move into FY 2027. Langer Heinrich remains our producing asset today, Patterson Lake South represents a significant component of Paladin's future growth strategy. During the quarter, we reached one of the most important permitting milestones since acquiring the project. The Canadian Nuclear Safety Commission confirmed that our construction license application had achieved sufficiency status.

This means the application has met the required completeness and technical standards and can now progress through the formal regulatory assessment process. Subsequent to the quarter end, we signed an administrative protocol with the CNSC, which establishes a targeted pathway aimed at completing construction license hearing by the end of calendar year 2027. This provides greater clarity around the permitting process and represents another important de-risking milestone. At the same time, our Canadian team continued progressing the FEED study and advancing engineering activities while maintaining strong engagement with indigenous partners and local communities. We also executed a binding term sheet with the Birch Narrows Dene Nation as part of the Mutual Benefits Agreement process, further strengthening our relationship and social license in the region. A highlight during the quarter was the Atlas discovery.

Atlas is a new high-grade uranium ore body located approximately 3.5 kilometers south of the Triple R deposit at Patterson Lake South. Seven of eight exploration holes intersected significant uranium mineralization, confirming the existence of an entirely new mineralized system within the broader Saloon Trend. Importantly, Atlas remains open along strike and at depth. We believe this discovery reinforces the significant exploration potential across the broader PLS land package and supports our view that there are opportunities to enhance the long-term value and development potential of the project beyond what is currently contemplated. We ended the quarter with cash and investments of $265 million and an undrawn $70 million revolving credit facility. This strong financial position provides flexibility to continue advancing Patterson Lake South, support our exploration programs, and optimize Langer Heinrich as we enter the next stage of growth.

In summary, the June quarter closed out a year of delivery for Paladin. We successfully completed the ramp up of Langer Heinrich, met the upper end of guidance range on production and exceeded guidance on sales, costs and cost performance. We advanced Patterson Lake South through major regulatory milestones, established a clear pathway towards licensing, strengthened indigenous partnerships and delivered significant exploration discovery at Atlas. That delivery gives us the right platform for 2027. With Langer now through ramp up, the focus shifts from restart execution to disciplined operating performance, safe production, cost control, mine and plant optimization and of course, reliable delivery to customers. I'll now turn to FY 2027 guidance for Langer Heinrich. For FY 2027, we expect Langer Heinrich to produce between 5.1-5.6 million pounds of U3O8 on 100% basis. Sales volumes are expected to be between 4.8-5.3 million pounds of U3O8.

Production will not be evenly weighted across the year. We expect lower production in the first half due to planned maintenance shutdowns, as well as lower grades from the mine in September and December quarters. Production is expected to improve in the second half as higher ore grade feed to the plant increases. Cost of production is expected to be between $44-$48 per pound. We expect cost to trend towards the upper end of the range in the first half, reflecting lower production volumes and the additional cost impact of planned maintenance. It's also important to note that all ore processed in FY 2027 will be sourced from the mine following depletion of the previously mined MG3 stockpile.

This means longer haul distances compared with FY 2026, whilst ongoing removal of overburden and waste will continue to open up future mining areas. Operationally, our focus remains on mining and plant optimization through FY 2027. Medium and high-grade ore will be delivered to the processing plant while lower-grade material will be stockpiled for future processing. This supports improved grade outcomes and provides operational flexibility over the life of mine. We'll continue to report actual costs associated with capitalized stripping and the building of low-gradable stockpiles on a quarterly basis. These items are not included in the cost of production guidance. On capital expenditure at Langer Heinrich is expected to be between $29 million-$35 million for FY 2027. The key areas of expenditure include tailings storage facility design and construction, process improvement studies and infill drilling, as well as the completion of selected capital exploration activities deferred from FY 2026.

On sales and pricing, Paladin's contract book continues to provide leverage to a strengthening uranium market. During FY 2027, sales are expected to reflect both customer delivery schedules and our intention to repay part of the current uranium product loan balance. As at 30 June 2026, Paladin had 400,000 pounds of U3O8 in outstanding uranium product loans. Consistent with industry practice, we maintain access to short-term uranium product loans and swap facilities to support operational and delivery flexibility. Realized pricing will vary from quarter to quarter depending on customer delivery nominations, contract pricing mix, individual contract terms, shipping schedules, and prevailing spot prices. Based on the contract book as at 1 July 2026, we have updated the realized price sensitivity table. In summary, FY 2027 is about disciplined delivery from Langer Heinrich following the successful completion of ramp-up.

We have provided clear guidance on production costs, capital, and sales while retaining the flexibility to manage quarter-on-quarter movements in production and deliveries. We remain focused on safe operations, reliable production, disciplined cost management, and leveraging our contract book as the uranium market continues to strengthen. With that, I'm happy to take any questions.

Operator

Thank you. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star two. If you're on a speakerphone, please pick up the handset to ask your question. Your first question comes from Alistair Rankin with RBC. Please go ahead.

Alistair Rankin
Analyst, RBC

Hey, thanks, Paul, Scott, Anna, and Alex, and the broader team, for taking my question. Just firstly on Langer. You mentioned the maintenance work in the first half of FY 2027. Can you just confirm what you're actually doing there? Is this something that is just a periodic piece of maintenance you have to do, or is it something a little bit more structural?

Paul Hemburrow
CEO, Paladin Energy

Yeah, thanks, Alistair. It's really just periodic planned preventative maintenance work. Typically in these sorts of plants, you have wear and tear on things like the scrubbers, crushing circuit. We're also updating our furnace in the final packaging and recovery plant. It's all planned preventative work.

Alistair Rankin
Analyst, RBC

Okay. Understood. That's clear. Just also on Langer, the pit performance at the J-pit so far. You said you're looking to lift to higher-grade ore for the second half of FY 2027. I guess what do you need to do between now and then to achieve that?

Paul Hemburrow
CEO, Paladin Energy

Yeah. I might hand over to Scott to answer that one then, Alistair.

Scott Barber
COO, Paladin Energy

Sure. Thanks, Paul. Basically, we've got all of our mining equipment in the pit right now and are developing a few different mining fronts. Some of the material is coming out as high-grade right now, and the other material is still developing. We've got multiple levels of grade coming out of the pit. The next six months will essentially see us stabilize the feed that's going to be going into the mill as more high-grade, medium, and high-grade. Whereas for right now and the last quarter, we're still in that upper level of weathered and lower-grade material. Basically, it's just continuing to mine and develop the J-pit.

Alistair Rankin
Analyst, RBC

Okay. I might just sneak in one quick one on PLS. Interesting you got that agreement with the CNSC. I understand it's non-binding, but is this something they've done before? Or is this the CNSC acknowledging that they want to try to speed up these processes to get these construction licenses through a bit faster?

Paul Hemburrow
CEO, Paladin Energy

Yeah, that's a really good question, Alistair. I was in Ottawa recently, spoke to a number of government departments, and everyone is really keen on advancing uranium projects and CNSC are trying their best to support them as well. I met with the president of CNSC, and they're very keen to make sure that the right work is done to help us

Deliver the project according to the schedule that we published. It's really a concerted effort by the Canadian government to get these projects up and running as efficiently as possible.

Alistair Rankin
Analyst, RBC

Good. Thank you.

Operator

Thank you. Your next question comes from Hugo Nicolaci with Goldman Sachs. Please go ahead.

Hugo Nicolaci
Analyst, Goldman Sachs

Morning, Paul, Anna, and team. Thanks for the update today. Look, first one on the missing pieces around CapEx for FY 2027. From the guidance, just firstly at Langer, that you spent $56 million on stripping and low-grade stockpiling in FY 2026, but you don't guide that on a forward basis. Given that your strip ratio is probably flat to slightly higher next year, your plant maintenance, maybe you build a little bit of stockpiles. Is it fair to assume that $56 million is higher in FY 2027?

Anna Sudlow
CFO, Paladin Energy

Look, we're obviously, Hugo, not guiding on those numbers. They will be variable quarter to quarter. We will give you actuals on a quarterly basis. I think if you look at our Q4 FY 2026 outcomes, that's not an unreasonable representation going forward.

Hugo Nicolaci
Analyst, Goldman Sachs

Got it. That's helpful. Also on CapEx, on Patterson Lake. How much of the $115 million pre-FEED spend that you were planning on spending before the end of calendar 2027 do you expect to spend in FY 2027?

Anna Sudlow
CFO, Paladin Energy

Yeah. Again, Hugo, we haven't guided on that number. We've said in our quarterly that we've spent $20 [million] to date of that amount that we disclosed in the use of funds. I can say that you can expect those costs to increase over the 18-month period. It'll definitely be weighted into half one FY 2028.

Hugo Nicolaci
Analyst, Goldman Sachs

Got it. That's helpful. Just if I could squeeze in a third, just on the pricing sensitivity. Appreciate the updated table there. I just wanted to dig into the comment in the footnotes that the sensitivity table takes into account the flexibility under your contract terms. Does that mean that in that table, you've assumed that you'll sell more volume if prices are higher? Is our math broadly right that if you're selling roughly 2 million pounds under legacy contracts, at mid-$60s a pound, to sort of back solve into that pricing sensitivity?

Paul Hemburrow
CEO, Paladin Energy

That's a question for you, Alex.

Alex Rybak
Chief Commercial Officer, Paladin Energy

Thanks, Paul. On the first part, we've run that sensitivity table on the basis of a midpoint of the sales range, which is 5.05 million pounds. We're essentially assuming nominal contract volumes, but obviously some contract volumes do have flexibility. Where those contracts are in the money, we've assumed that those flex options will be exercised by the utility. Sorry, could you just clarify the second part of the question?

Hugo Nicolaci
Analyst, Goldman Sachs

It was more just sense-checking the maths that if you're delivering a bit over 2 million pounds under the fixed legacy agreements, that pricing on those agreements must be in the mid-$60s today. Is that what that table assumes?

Alex Rybak
Chief Commercial Officer, Paladin Energy

Yeah. Look, we're obviously not providing the pricing on a price mix basis. On average, I think if you look at that sensitivity table, I think you're on the right track. You can pretty much work out what the base escalated and fixed price contract pricing is implied within that book.

Hugo Nicolaci
Analyst, Goldman Sachs

Got it. Thanks, guys. Just lastly, if I can just, apologies if I've missed, if you put out a cash flow piece separately today, but the $265 million cash and investments, how much of that is actually cash?

Anna Sudlow
CFO, Paladin Energy

Of the $ 265 [million]?

Hugo Nicolaci
Analyst, Goldman Sachs

Yeah.

Anna Sudlow
CFO, Paladin Energy

Yeah. It's all cash other than funds held in term deposits.

Hugo Nicolaci
Analyst, Goldman Sachs

Got it. That's helpful. Thanks, guys. I'll pass on .

Operator

Thank you. Your next question comes from Daniel Roden with Jefferies. Please go ahead.

Daniel Roden
Analyst, Jefferies

G'day, guys, Thanks for taking my question. I just wanted to start, first of all, just with following up on the half one, half two production split. I know you talked about it, but just wanted to get a better sense on the, I guess the half two exit rates and, I guess, kind of looking forward into FY 2028 and beyond. What that implies on what a, I guess, a midpoint annual production rate would be over the life of mine. Are you able to kind of articulate and clarify what that would look like, please?

Paul Hemburrow
CEO, Paladin Energy

That's a good question, Daniel. What we've done is provide an annual guidance as we did last year. What will happen in the year to come is that with the two plan maintenance shut and development of that J- pit, according to the mine sequence, we have slightly lower grades in that first half and about a week less production on each quarter, plus or minus. It is going to be a game of two halves. What we're not going to do is guide on a quarter-by-quarter basis, but what we will do is be absolutely transparent, as we have been in the last 12 out of 18 months, on our actual performance at the end of each quarter. We do expect a fairly significant uplift in the second half of the year. The mine plan does show

Absolutely solid grade coming through for that second half. Our plan is to stick to the plan, do the shafts properly, mine the ore as it comes in sequence, exercise a high level of operating discipline, manage our costs as best we can, and deliver on the annual target. I know I haven't answered your question directly, but we're committed to the guidance range that we have set for production.

Daniel Roden
Analyst, Jefferies

No, that makes sense. I appreciate the color there. Thanks, mate. Just wanted to touch on as well, I know it's not in our FY 2027 guidance, I guess thresholds, but in FY 2028, if I look back at your restart plan and life of mine plan, you are expecting to do a little pre-work on H- pit, and TSF 1 relocation at the end of FY 2027 and come start of FY 2028. Just wanted to get a bit of color and commentary on, are you seeing anything in the life of mine process that would either accelerate or defer works going into the H -pit and TSF 1 relocation and just noting that H -pit is a pretty meaningful step-up in strip ratio, and on the disclosed tables, it goes to 4.1% from J- pit, which is 1.8% at the moment.

Are you seeing that inflection point still in the same process, or is there anything that you're seeing that changes that kind of sequencing?

Paul Hemburrow
CEO, Paladin Energy

That's one for you, Scott.

Scott Barber
COO, Paladin Energy

Yeah. Thanks for that. I think that the best way I can answer that is that the TSF strategy, with our TSF 6 lift that we're currently doing right now, then we will be moving into the H -pit early in next year to start stripping that. That would be the next source once J is depleted. That becomes a long-term tailings facility as well. The H -pit will be fully mined out over a few years, then that becomes one of our tailings ponds. The TSF strategy is constantly being looked at based on volumetrics and what we actually need. We've moved the TSF 1 relocation out a little bit, and that's to allow the mining in J and H pit to progress the best possible and most economic. Does that answer your question?

Daniel Roden
Analyst, Jefferies

Yep. No, mate. Just a really quick follow-up, and sorry, I probably asked it poorly, but I guess, is part of the TSF 1 relocation and H -pit pre-strip, are they included in the back end of FY 2027 guidance, or is that exclusively an FY 2028 item?

Scott Barber
COO, Paladin Energy

It's not in FY 2027. It would be in FY 2028 and beyond.

Daniel Roden
Analyst, Jefferies

Sorry. Thanks for the color. I'll pass it on. Thanks.

Operator

Thank you. Your next question comes from Branko Skocic with JP Morgan. Please go ahead.

Branko Skocic
Analyst, JPMorgan

Yeah. Morning, guys. Thanks for your time. Plant recoveries were strong again in that 90s range. Is there any reason we shouldn't be assuming recoveries stay in the low to mid 90s moving forward, particularly as grades start to lift?

Paul Hemburrow
CEO, Paladin Energy

Thanks for the question. Our typical target range for recovery is 85%-90%, and when we have stable conditions, I'm actually really happy with anything within that range. Above that range is more difficult to maintain continuous operations. It's always a balance, too. We'll continue to operate it as stably as we can, and if we stay at that upper end of our target range, I'll be really happy.

Branko Skocic
Analyst, JPMorgan

Just a final question from my end, just on the production versus sales waiting. I understand the prepayment coming into this, should we expect the two to, I guess, closely match moving forward, I'm thinking to 2028 onwards? Or are we still expecting a bit of a mismatch medium term here?

Anna Sudlow
CFO, Paladin Energy

I missed the first part of your question, Branko, I think if it's around the working capital cycle and the kind of movement quarter to quarter, we are going to see ongoing ups and downs quarter to quarter. That's really just a function of the working capital cycle and the shipping schedule, and the particular deliveries in the quarter. I think you'll continue to see that movement quarter to quarter.

Branko Skocic
Analyst, JPMorgan

I think it was more just on the annual numbers. The last couple of years, you've been guiding sales less than production, and I guess during ramp up, that also makes sense. When we think about FY 2028 onwards, should we expect the two on an annual basis to closely match? Should we still be expecting a bit of a mismatch?

Anna Sudlow
CFO, Paladin Energy

I think, Branko, there is always going to be a slight mismatch because it is, as I said, a function of those shipping schedules. I think, theoretically, you would expect over the years as we kind of get into the cycle, that they should be more closely aligned. I think what we are also seeing this year is, in the guidance, the repayment of the loan, which is increasing that gap between the two as well.

Branko Skocic
Analyst, JPMorgan

That makes sense. Thank you.

Operator

Thank you. Your next question comes from James Bullen with CGS. Please go ahead.

James Bullen
Analyst, CGS

Good morning, Paul and team, and thank you for taking my question. Just on PLS.

BHP has been picking up tenements that's pretty proximal to your project. I know you've got a lot of prospectivity within your current permits, and that's clear from the Atlas resource . Are you looking at picking up additional acreage in that area?

Paul Hemburrow
CEO, Paladin Energy

Thanks for the question, James. It's always have good neighbors. What I think it does show is, I think it demonstrates the prospectivity of the region. What's good for us is we've got absolutely fantastic ground. We've got a lot of ground that's still unexplored. There's loads of potential in the ground that we do have. When the team in Saskatchewan puts holes in the ground, we're having a high level of success. Never say never to pegging more ground. We already have a lot of highly prospective ground that is demonstrating the capacity to produce more and more value for PLS.

James Bullen
Analyst, CGS

Yeah, understood. Congrats on getting the Birch Narrows Dene Nation MBA in place. How are you going also with MNS, and are they the final one that you have to put in place?

Paul Hemburrow
CEO, Paladin Energy

Yeah. First of all, it's a binding term sheet. We haven't quite got the MBA yet, but that's the obvious next step. As you rightly point out, James, there are four First Nations groups in the area where we operate, and we've now completed two of those MBAs. Now we have the binding term sheet with Birch Narrows. We have a really good relationship with Métis. We're working with them very closely. In due course, we'll have an agreement with the remaining two groups. What we do think is important is making sure that the relationships that we have with them are, by definition, mutually beneficial and sustainable. We're committed to supporting the First Nations groups as well as other stakeholders in the regions where we operate.

James Bullen
Analyst, CGS

Thank you very much. That is my questions.

Operator

Thank you. Your next question comes from Glyn Lawcock with Barrenjoey. Please go ahead.

Glyn Lawcock
Analyst, Barrenjoey

Good morning, Paul. Just going back to Langer Heinrich guidance for 2027, just on the production. Can you help me just think about how that is made up, just throughput grade recovery? If I think about it, you have been running, I think it is 4.8 million tonnes of throughput. Your recovery is now up around 90%. You now move into a pit that has got the high grade and medium grade component, which is about 570 ppm in grade. I am assuming you will put the rest of the low grade to the waste or to your stockpile, sorry. How do I think about that? You have also said you are looking at optimization. Where is the best lever you can pull to flex that volume and maybe do better as you have done through 2026 as well? Thanks.

Paul Hemburrow
CEO, Paladin Energy

They are really good questions, Glyn, which I am probably going to try and dodge most of them. The key levers, of course, are grade, recovery, and throughput. I think what we have done is we have demonstrated the ability to operate the plant very, very consistently. Of course, the grade is highly dependent on what presents itself in the pit. We will operate the pit as efficiently as we can from a trucking perspective. Whatever grade comes out is whatever the grade that comes out, besides the fact that we can divert a low and have it change the cutoffs. That will provide us with the opportunity to operate the plant in a fairly stable way and get those recoveries in the high- 80%s and maybe even sort of the low- 90%s.

Like every other place, I know that Scott Barber and I have worked, you're always working on optimizations and ways to improve. The biggest lever that we've got is the grade. The second is, of course, throughput. Throughput is complicated by the fact that we have varying ore feed types, fine, coarse. We've talked about this on a number of occasions before. Finding the best blend that gives us the best throughput, and we'll continue to optimize that blend for both throughput and grade as we progress. What we've done is we've demonstrated the ability to be able to do that so far. What we've got now, though, is we've got tonnes down of the mining fleet, and what we delivered this year was 7.48 million tonnes of total movement.

That gives us a bit of flexibility above what we had last year to deliver more tons to the crusher. I think I've managed to dodge most of your questions, and I'm unlikely to give any more detail than that.

Glyn Lawcock
Analyst, Barrenjoey

Maybe just if I can push you a little bit, though. Your resource statement for the J -pit had a high zone and a mid-grade zone of about 14 million tons at about 570 ppm. Obviously, you've drilled it. You're not mined it yet. Is there anything to suggest so far what you've seen that the resources you provided for the pit are not coming through as expected?

Paul Hemburrow
CEO, Paladin Energy

The reconciliation is actually very good. The challenge, of course, is when does it present itself? Yeah. The sequence actually is going to determine how the year flows, which is why it's going to be a game of absolutely two halves. With slightly lower grades presenting in the first half with the reduction in number of operating days, high grades in the second half with absolute maximum number of operating days. The pit is what it is. The reconciliations are about right. Yeah.

Glyn Lawcock
Analyst, Barrenjoey

No worries, Paul. I think I've pushed you as far as I can. One other question, but now moving to Canada, just on PLS. Assuming it all goes to the new plan, which is you get the hearings done by the end of calendar 2027, what's the timeline look like beyond that? What's left? If we think through it, when could you FID and start construction if you get this timeline of an end of 2027 hearings completed?

Paul Hemburrow
CEO, Paladin Energy

There's a few things to do. Over the next 18 months, of course, thinking about our financing options, starting to populate the contract book. We get to FID. Construction window is heavily dependent on weather. Assuming it all goes to plan, I still believe that the 2031 first production is realistic and achievable.

Glyn Lawcock
Analyst, Barrenjoey

Sorry, what would that mean? You start construction when to achieve first production in 2031?

Paul Hemburrow
CEO, Paladin Energy

2028.

Glyn Lawcock
Analyst, Barrenjoey

All right. Thanks very much.

Operator

Thank you. Your next question comes from Dim Ariyasinghe with UBS. Please go ahead.

Dim Ariyasinghe
Analyst, UBS

Thanks, Paul. Just, I guess on PLS. You do have the Strategy Day coming up. Can you give us any granularity as to what to expect there and maybe what to watch out for?

Paul Hemburrow
CEO, Paladin Energy

Oh, sorry, Dim, do you mean the Investor Day?

Dim Ariyasinghe
Analyst, UBS

Yep. Yeah.

Paul Hemburrow
CEO, Paladin Energy

There's nothing really. By then, we should actually be past the next quarter. I guess we'll continue working through Langer performance, continue working through the CNSC process, continue working with First Nations groups.

Anna Sudlow
CFO, Paladin Energy

Yeah. I think, Dim, we'll have the full year results just prior to that Investor Day also.

Dim Ariyasinghe
Analyst, UBS

Yeah. Okay, cool. Just, we spoke about this, I guess, earlier in the year, it's less of a focus now, but on the cost base impacts from what's going on in the Middle East, which have flared up again, I think you guys mentioned that at the start of the year, you had three to nine months of supply of all your inputs. Has that eased at all? Maybe just an update there, both in terms of availability and impact on your cost base.

Anna Sudlow
CFO, Paladin Energy

Yeah, Dim, I think what we're seeing is that we have reflected the current cost base in the FY 2027 guidance, that I would say. I don't think it's having a material impact on our cost base. I think when we look at this quarter, it's definitely probably more of an outcome of grade than the cost per pound than necessarily, the Middle East conflict. We continue to monitor and probably Scott can give you a view as to line of sight of those inputs. From a cost perspective, we're reflecting the current pricing. We're not seeing massive shifts at this point in time, but we obviously continue to monitor.

Dim Ariyasinghe
Analyst, UBS

All right, cool. Thanks.

Operator

Thank you. Your next question comes from Andrew Hines from Shaw and Partners. Please go ahead.

Andrew Hines
Analyst, Shaw and Partners

Hi, guys. Perhaps a question for Alex, just to give us a bit of an update on what you're seeing out there in the broader uranium market in terms of contracting activities. It seems like it's still very quiet out there. The level of contracts that have been reported by UxC still extremely low for the first half of this year. Paul mentioning that you're probably starting to engage already now with PLS offtakes for next decade. What are you seeing? What's the current terms in these contracts that are being discussed now, and when do you expect to see levels of activity pick up?

Alex Rybak
Chief Commercial Officer, Paladin Energy

Thanks, Andrew. Look, I mean, the backdrop is really strong, in the U.S., the loans that the U.S. government has announced, $17 billion for the U.S. utilities is good wind in the sails. When we speak with our customers, that's exactly the support they're looking for, as well as some backstop on cost blowouts. It's certainly a move in the right direction. In terms of other markets, China is really powering ahead with their construction of reactors and their procurement of supply. India is now in the mix, as you've noted as well in your notes, with sort of implications for Australia as well. In terms of our discussions with utilities, v ery strong interest, very cognizant of the tightness in supply and some of the challenges that some other producers are having with ramp-up and startup issues. That's positive for the short-term window to 2030s.

Really, that supply-demand deficit in the 2030s is coming home to roost and the utilities are really chasing supply out in the 2030s, and it's not really clear where they're going to meet those requirements. The volumes are still, as you've noted, Andrew, below replacement levels. It's interesting because even at those lower volumes, we're seeing stronger term pricing. Term pricing at $97 reported by UxC. In reality, from our discussions with utilities, we're seeing prices more in the $100 + range, which is very encouraging. I think it just shows that the utilities are willing to pay more, pretty much every quarter, for the uranium they procure. I think for me, also, an interesting delta between term and spot that's emerged, with obviously term leading the pricing environment and the spot is largely expected to catch up to term.

I really like that dynamic where the fundamental market is really leading the spot market. Very positive developments and we always looking to monetize that sentiment in our contracting discussions for more Langer Heinrich contracts and PLS as well.

Andrew Hines
Analyst, Shaw and Partners

What's your preference these days, Alex, for the nature of the contract? Is it for the market-based contracts with the floors and ceilings, or is it for fixed price contracting?

Alex Rybak
Chief Commercial Officer, Paladin Energy

Very much a balance book approach, which we're continuing. The utilities preference has definitely swung into the base escalated favor, given that they are concerned with ever-increasing prices. There's that element, but of course, they recognize they need to pay a premium to secure more fixed volumes, which again is positive for the pricing and for any additional contracts that we'll layer into our book.

Andrew Hines
Analyst, Shaw and Partners

Thanks, Alex. A follow-up question for Paul on PLS. That was pretty exciting discovery, Atlas, in the quarter and still at the early days and no sign yet on how big that will end up being. What's the plan of action going forward, Paul, on Atlas? How many rigs are you going to get going? How quickly are you going to drill that out? When are you thinking about maybe the first resource being declared there?

Paul Hemburrow
CEO, Paladin Energy

Good question, Andrew. We've got three priorities for drilling around PLS. Number one is the resource upgrade of the Triple R deposit. Number two is the extension drilling of Triple R, because that still remains open along strike and at depths as well. The third priority is close proximity exploration like Saloon East, like Atlas, and others. We'll just adopt a very sensible, pragmatic approach to these three priorities and drill them out, I guess, at an appropriate time and pace.

Andrew Hines
Analyst, Shaw and Partners

Great. Thanks, Paul. I'm looking forward to the Investor Day coming up where we get all the insights on PLS. Looks like a really exciting project going forward. I'll leave it there. Thanks, Paul.

Paul Hemburrow
CEO, Paladin Energy

Thanks, Andrew.

Operator

Thank you. There are no further questions at this time. I'll now hand back to Paul for closing remarks.

Paul Hemburrow
CEO, Paladin Energy

Thanks very much. Look, I'm really pleased with the performance from Langer Heinrich in FY 2026 and the delivery against the revised guidance. Importantly, it sets a solid foundation for ongoing improvement and delivery. More importantly, I'm excited about de-risking and driving further value of Patterson Lake South through the CNSC process, through close proximity exploration, through continuing to develop relationships with First Nations and closing out the FEED study. Thank you once again for joining us and for your ongoing support.

Operator

Thank you. That does conclude our conference for today. Thank you for participating. You may now disconnect.