I would now like to hand the conference over to Paul Hemburrow, MD, and CEO. Please go ahead.
Thank you very much, and good morning, and thank you for joining us, everyone. This quarter was about steady execution at Langer Heinrich and continued progress across our Canadian portfolio. At Langer Heinrich, full mining capability is now in place, and at Patterson Lake South, our focus remains on de-risking the project and advancing its growth potential. At Langer, we produced 1 Mlb of uranium and sold 1.16 Mlb at an average realized price of US$79.40 per pound. The stronger realized price reflects the structure of our contract book and, of course, the rising uranium market. As we have previously indicated, the first half production is expected to be below the second half, reflecting the work to open up the J Pit and the planned shutdown activities. Operationally, the plant shutdown was completed successfully, and throughput following the shutdown has been strong.
Mining also had a solid quarter, with more tons moved than the prior quarter as we continued to develop the J Pit, or delivered to the plant and largely from the upper benches, where the ore characteristics contributed to reduced recovery. We also rebuilt in-process inventory after starting the quarter with relatively low inventories, which will support consistent production throughout the remainder of the year. These factors drove the high cost of production of $61.60 per pound. The team continues implementing improvement actions in the plant while mining pushes towards the lower southern benches and better quality ore. We saw improvement through September as mining advanced and plant throughput strengthened. This supports our expectation of higher production and lower unit costs in the second half, and we have reaffirmed FY 2027 guidance of 5.1 million to 5.6 million pounds at a cost of production of $44- $48 per pound.
In Canada, we continued to advance and de-risk Patterson Lake South across a number of fronts. We signed a Mutual Benefits Agreement with Birch Narrows Dene Nation, our third agreement of this kind with Indigenous Nations, and established an administrative protocol with the Canadian Nuclear Safety Commission. Together, these steps provide a targeted regulatory pathway aimed at completing construction license hearings by the end of calendar year 2027. Exploration drilling also delivered encouraging results at Atlas and Saloon East, as well as extensions beyond the current R15-15 West mineral resource. We closed the quarter with $209 million in cash and investments, with customer receipts during the period impacted by working capital cycle and the timing of deliveries. We also maintain an undrawn $70 million revolving credit facility. Overall, we remain well-positioned to execute the Langer Heinrich operating plan and progress our Canadian growth portfolio.
Thank you very much, and I will hand over to you for questions.
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 are on a speakerphone, please pick up the handset to ask your question. Your first question today comes from Rahul Anand with Morgan Stanley. Please go ahead.
Oh, hi. Good morning, team. Thanks for the call. Just wanted to touch upon the production result, mainly because that is the talking point, I guess. Previously, in terms of the J Pit grades, you talked about reconciliations going fairly well. I just wanted to touch on that a bit, perhaps. Is that still the case, or are you having any sort of grade misses there, and when do you start to hit the southern benches as well?
Yeah, thanks for that. Scott here. The grade reconciliation is still in line with the block model, so there is no issue there. The upper benches do have some ore handling characteristics, so the feed going into the mill, we have mixed a little bit of low grade from stockpiles, which has put the feed grade down a little bit. That is to get crunchier, harder rock into the scrubbers to help liberate some of the finer material. The upper benches in the J Pit are a little bit more weathered. The material is a bit finer, and even as we get a little bit deeper, it is continuing. However, as we go more to the south and even deeper into the ore body, I was there last week, they are starting to mine that material.
It's a lot more competent, looks a lot more like the J Pit, and as that comes in in Q2 and into H2, we should see the grades increase and the recoveries bounce back.
Got it. Okay. The recovery performance, et cetera, is kind of all being driven by the fact that the ore is a bit. There's a bit of oxidation there. Makes sense. Thanks for that, Scott. The second one's really about the uplift that you have in the second half that you've got planned. Can you highlight some of the risks there, just given it's a big uplift? What type of assumptions have you made around the uplift in throughput and recovery to be able to get there, and where do you think the biggest risk lies in being able to achieve that?
Yeah. The plan is we should be back into the upper range of the recoveries for H2. The grade will increase as well from the 486 ppm that we saw last quarter will be above the 500 ppm mark, which is on plan. The other thing is, without having those shutdowns, we had a week-long shutdown in July. That's a full week of zero production. Not having any shutdowns or any big, long shutdowns in H2 gives us full rate for the entire six months. As you've seen, even with that shutdown in Q1, we were almost on par with the tons processed in Q4 of FY 2026. The team have done a really good job on getting throughput through the mill. With that and the upper grades and the recovery bouncing back, that's how H2 is going to play out.
That's good. That's clear. Thank you very much. I'll pass it on.
Your next question comes from Branko Skocic with J.P. Morgan. Please go ahead.
Yeah, morning, guys. Just first question on PLS, please. I was just wondering if you can update us on the timing for the FEED study. I know it's ongoing at the moment, but if I look at the original timeline, it seems to suggest it was going to be finished by mid-calendar year 2026.
Yeah, Branko, thanks for the question. The FEED study is expected to be complete by the end of calendar year, so somewhere around November, December. What we expect after that is, some final updated capital numbers probably around March.
That makes sense. The other question I had, sticking on PLS, was just any progress around the funding solution? I know it was a big focus at the Investor Day a couple of months ago, but just any updates you can share there, please.
Yeah. Hi, Branko. It's Anna. Just reiterating our narrative at the Investor Day. As you're aware, the economics at PLS are really robust. I think one of the things that differentiates us is our operational expertise at Langer and our relationships with existing lenders and off-takers. We are running the initial phase of the project finance at the moment, really seeking to understand appetite, off-take, and debt sizing, and which lenders we want to move forward into a phase two. That is the longest lead transaction for us on a financing. That is our focus at the current time. I would say that our existing lenders are very keen to continue to participate, not only at Langer, but also at PLS. I think that really goes to our credibility as an operator. I think we are in a good position with lots of options.
Could I just reconfirm that a project sell down is probably lower down your order of preference as you see it at the moment? It is more so a debt equity mix is the way you guys are thinking about the project.
Oh, Branko, I think that is still an option for us. I think we have got the capacity to fund this and operate this ourselves. Paul, maybe you want to jump in and comment on that.
Yeah. I think, as I said at the Investor Day, somebody would have to bring something to the table that we could not bring ourselves. Look, we are still open to the possibility. It could be someone who brings alternative and low-cost financing options. We are open to it. But as Anna said, we went into this project on the basis that we would fund and operate it ourselves, but we are open to that possibility.
All right. That's great. That's all from me. Appreciate it.
Thank you.
Your next question comes from Kaila Mayer with Barrenjoey. Please go ahead.
Hey, team. Just the first one on recoveries. I know it dipped down to 85% versus 90% last quarter. How much of that was the ore type versus the maintenance shutdowns and low circuit inventory? Should we expect it to return up to about that 90% level in the December quarter, or that won't come through until the second half?
Do you want to take that one, Scott?
Yeah. The shutdown didn't have anything to do with the recoveries. That would just be throughput, because the plant was shut down for that week while we did the maintenance. Recovery is completely around the ore characteristics. The finer size, we're seeing a difficulty in liberating some of the finer particles in the classification circuit. Our beneficiation recovery is what's causing that drop in recovery. Blending in some low grade to bulk up or get some harder rock into the circuit is helping. We're also doing a lot of work on the water sprays and making sure that the classification circuit is running really well. That is being seen. We saw it at the end of September and it's a bit early in October to talk about this quarter, but we are seeing the recovery start to bounce back.
Okay. Any updates on your discussions with the Métis Nation? Any progress here?
Yeah.
Yeah. The, the-
The team in
Sorry, carry on.
I was just going to say, the team in Canada continuing really positive conversations and back and forths and engagements with the Métis Nation. Dale and the team did a community day a few weeks ago which went really well. Yeah, it's still ongoing. There's nothing definitive to say other than it is really positive and moving forward.
Okay. Thank you.
Your next question comes from Alistair Rankin with RBC Capital Markets. Please go ahead.
Good morning, team. Just sticking on PLS for a second here. I know you signed the CNSC Administrative Protocol this quarter. I am just wondering if there has been any further discussions around this. Any color on how they are approaching that end of year and end of 2027 hearings targets at the moment? If there has just been any more discussions that you have had with them.
Alistair, what I would say is that both the Saskatchewan provincial government, and the Office of the Prime Minister and mining minister have been incredibly supportive. I am aware that the mining minister recently wrote a letter to the CNSC, reiterating their desire to make sure that projects progress in a timely manner, and that they look at ways of reducing the timeline on approval process. I have met with the President of CNSC, incredibly positive and supportive. The administrative protocol is really an important document for us. I know that some of our peers who have gone before us didn't have that sort of document in place. It does reiterate CNSC's intention to work towards approvals on our timeline, which is really encouraging. We are continuing to see evidence of the way they are working between Dale, his team, and CNSC. I am feeling quite encouraged about CNSC's performance.
That's really helpful color. Then maybe just coming back to Langer Heinrich quickly. Just wondering about the December quarter shutdown. Could you just give us a little bit more detail, maybe around the timing when that's going to happen during the quarter, the duration? It sounds like it's going to be about a week. I guess what sort of parts of the plant are involved. You mentioned that throughput was really the only thing impacted in this most recent shutdown, but are there any other sort of considerations we should be thinking about for our models for this upcoming shutdown in the December quarter?
Yeah, Alistair, the shutdown is scheduled for the back half of November. It's mainly around the kiln, which is used to dry the product before we can drum it. That's the big bit of maintenance that's being done. The rest of the plant will still be operational, so we'll be building inventory during that time. The kiln is in W.A., and it's going to get shipped either later this week or early next week. The plan is to get it on site, inspect it, make sure nothing has changed during the transport. Do all the testing that we need to do to make sure that it's ready to go, and then install it in November.
Awesome. Very helpful. Thank you.
Your next question comes from Hugo Nicolaci with Goldman Sachs. Please go ahead.
Morning, guys. Thanks for the update. Look, first one, just Langer and sort of the cost piece. If I look at your indicative cash outflows at Langer, just combining those reported unit costs and CapEx, it's actually softened a little bit quarter-on-quarter, about $80 million cash outflow versus $85 million last quarter on a nominal basis. Could you just walk us through what the cash waterfall is there in terms of the moving pieces? Is that purely just around the lower processing with the lower production? Then on a go-forward sort of basis, is there a pathway to get back to the $60 million-$70 million a quarter nominal spend that you had six to nine months ago, or is this $80 million plus sort of the going run rate on a forward basis here?
Yeah, Hugo, Scott and I will probably take that together. As far as the unit cost of production outcome, that is pretty much solely a function of the production outcome for the quarter. The total costs are pretty in line with the previous quarter. I guess if you look at our cash flow quarter-on-quarter, what you see is pretty high shifts around the customer receipts. That is the principal movement in the quarter-on-quarter. We had a relatively, I guess, low cash receipt outcome from customers vis-a-vis June, where we had circa $160 million. I think if you look back this time last year, we were also processing the medium grade stockpile, so we were in a lower cost environment. We are now mining, so it is going to be a higher cost environment than it was 12 months ago.
Got it. That is clear. Then if I can ask one on PLS. With your license hearings not completing until the end of calendar 2027, that implies that probably getting fully permitted and then making an FID decision in calendar 2027 maybe looks increasingly unlikely. I guess, what sort of timelines are you now looking to in terms of being able to make an FID decision here just on sort of that permitting piece? In your view, does that potentially extended timeline maybe provide a little bit of a positive and then more time to potentially get more favorable offtake and funding agreements in place?
I think what I will say is the project economics remain incredibly strong, and they do so under a range of scenarios. With respect to the hearings, my expectation is at the back end of calendar year 2027, those hearings should be complete. Typically what we are seeing is a decision within a month. So I think, taking FID late 2027, early 2028 is probably likely, but more importantly, maintaining a 2031 first production, I think is absolutely possible at this point in time. Alex, do you want to comment on offtakes?
Yeah, sure. Look, we are actually already receiving a lot of interest in PLS offtake. Our customers are seeing what we are doing on PLS, and really that supply-demand deficit does not go unnoticed on the customer side. So they are approaching credible producers like ourselves to secure production. I guess we are not in a hurry to enter into offtakes too early. It will be largely driven by our financing structure that we have put in place and our FID timing. But it is encouraging to see that the market is there. Hugo, as you say, it does give us plenty of time to put those offtakes in place, and we will continue to leverage our relationships with the customers that we have built, and put the offtakes at the right time.
Thanks. If I could just squeeze one more in just on the PLS CapEx. You noted you are updating those estimates by March 2027, I guess, to feed into this updated study at the end of 2027. You do not need to revise them again then if the FID slips into early 2028, that is still all fine?
Yeah, I am not seeing any issues.
Yep, fantastic. Thanks guys. Thanks a lot.
Thanks, Hugo.
Your next question comes from Daniel Roden with Jefferies. Please go ahead.
Yeah. Good day, guys. Thanks for taking my question. Just one from me. Just on, I guess, realized pricing and around the contract structure. Are you able to tell us how much of your sales book was, I guess, the spot linked versus the fixed price contract sales in the quarter? Probably just noting that FY 2025, your first half was more spot-linked contract sales versus second half, which was more, I guess, contract sales. Are you expecting a similar outcome for FY 2027 as well?
Sorry, Daniel, you were cutting out there, but I gather you were asking about the contract mix. Yes, we did have a higher market-related contract mix in the quarter, and also high uranium prices, which allowed us to realize a strong price in the quarter. I think going forward, we're running largely in line with our realized price sensitivity matrix that we published in July. I think people should be looking at it on an annual basis rather than on a quarterly basis. There was always going to be movements quarter to quarter as we deliver material and realize sales, which are quite lumpy on our side. But we're very happy with the way the book has performed this quarter. It shows the leverage to the uranium price. It shows that we're delivering our material to our customers, meeting our obligations on time and on schedule.
Yeah, thanks for that. Sorry about that call on. Hopefully, that's better. Yeah, I was just, I wonder if you could clarify out of that 1.16 Mlb , how much of that was sold into the, I guess, the fixed price escalated contracts. Was that a material composition? I guess, I was kind of mentioning like in FY 2026, half one was more weighted towards the spot-linked CNC contracts versus half two. Are you expecting a similar outcome for FY 2027?
Yeah, Daniel. We do not really sort of provide that detailed breakdown on a quarter by quarter basis. We publish our contract metrics, and I think we are running, tracking largely in line with that. As I said, the two metrics that you have got there is the realized price sensitivity tables and our guidance, which we are very satisfied with the way we are tracking.
Okay, cool. Thanks, guys. I will hand it over. Thanks.
Once again, if you wish to ask a question, please press star one on your telephone. Your next question comes from Chris Creech with Morgans Financial. Please go ahead.
Good morning, guys. Thank you all for your time this morning. This one might be best for you, Scott. Just a quick one on cash costs. You had some headwinds this quarter with your expected lower production. But how sensitive are your costs to the diesel price? I mean, we can see the global diesel price at the moment is somewhat volatile and pretty high. I am just trying to understand what the sensitivity for your cost is to diesel.
Well, the mining cost is about half of the overall spend, and diesel is about 10% of the mining cost. It is not overly sensitive on the total. In Namibia, the diesel price is actually set by the government. So we are not as affected by the overall market in Namibia, and we have not seen major swings in the diesel price locally, both the pumps and what is supplied to the mine.
That is worthy. Thank you so much.
Your next question comes from Hugo Nicolaci with Goldman Sachs. Please go ahead.
Oh, hey, guys. Thanks for the follow-up. Just one on your uranium loans. Noted you rolled the 200,000 pounds due this quarter. Should we expect a similar sort of outcome for the volumes due in the March and September 2027 quarters now, or will that be a little bit governed by sort of where your production ramp-up is sitting, whether you repay those when due or roll them?
Yeah, Hugo. That is exactly right. We retain flexibility to either repay or roll that loan. We have not made that decision. We will see how we go. We use loans and swaps to meet our delivery obligations to make the most efficient use of our material and locations where we are delivering. It is always going to be an ongoing part of our toolbox kits that we utilize. We will make that decision close to the time.
Got it. Thanks. If I can just extrapolate that comment then, I think your original sales guidance factored in the intention to repay part of those loans. How would your sales guidance shift then if those loans are not getting repaid? Should we see that more in line with production then for the year?
Yeah. That is exactly right. We have assumed partial repayment of those loans. As I said, we have not made that decision. We will look at that close to the time.
Great. Thanks.
There are no further questions at this time. I will now hand back to Paul Hemburrow for closing remarks.
Thank you very much. Thank you everyone for your questions and of course, your continued interest in Paladin. We will continue to make steady progress at both Langer and Patterson Lake South. At Langer, our focus is clearly on safely executing the operating plan, improving recovery, and delivering the strongest second half production profile. Guidance metrics for FY 2027 remain unchanged. At PLS, we will maintain the same disciplined approach as we advance the engineering program, the regulatory pathway, the remaining indigenous partnership, and our exploration program. We believe Paladin is well-positioned to deliver long-term value for shareholders as a producer in today's rising uranium market and as a developer of one of the world's best uranium projects. Thanks once again for joining us.
That does conclude our conference for today. Thank you for participating. You may now disconnect.