PDN has provided an operational and guidance update for the Langer Heinrich mine (75% PDN). As previously flagged, ongoing operational and ore variability issues continue to impede production ramp up. PDN has adjusted mine guidance (100% basis) downward from 4-4.5 Mlbs to 3-3.6 Mlbs U3O8. This revision is consistent with Argonaut’s previously revised forecast of 3.3Mlbs. PDN remains confident of achieving a production run rate of 6Mlb p.a. at the LHM by the end of CY2025. A reduction in output is expected to increase unit cost of production (YTD is US$44.8/lb vs original guidance of US$28-31/lb – note cost guidance has been withdrawn). PDN will complete a planned shutdown in November to allow for improvements and operational upgrades. If revised guidance is met, we expect PDN to be cashflow positive in FY25. Closure of the Fission Energy deal is expected to provide PDN with a quality secondary asset for development in the long term. The Fission deal is also expected to provide access to C$146M in cash and short-term investments. Resolution or improvement to stockpile grade variability, recovery and equipment issues will be vital in the December quarter. A sharp sell off following guidance downgrade provides a buying opportunity with downside now priced in.
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