Paladin to proceed with potential Langer Heinrich mine sale

VANCOUVER (miningweekly.com) – ASX- and TSX-listed uranium miner Paladin Energy has agreed to allow an independent valuation process to move forward regarding the sale of its 75%-stake in the Langer Heinrich mine (LHM), in Namibia’s Erongo region, to joint venture (JV) partner China National Nuclear Corporation’s (CNNC’s) Overseas Uranium Holdings subsidiary.

The company announced the concession Friday, stating it does not admit the validity of CNNC's claims and without prejudice to its rights under the LHM shareholders' agreement.

As part of Paladin's restructure proposal, there is a potential option for CNNC which, if validly exercised, could entitle the nuclear-technology company to the right to acquire Paladin’s share in LHM. However Paladin last month launched arbitration proceedings against CNNC, seeking orders and declarations regarding the sale.

In March, CNNC asked Paladin to determine the fair market value of its share capital in Langer Heinrich Mauritius Holdings – the holding company of the owner of LHM.

The fair value determination process would be the first step in a process that may lead to CNNC exercising its potential option to acquire Paladin’s share in LHM, if the option validly exists and is dependent on CNNC establishing that an event of default has occurred under the LHM shareholders agreement.

Paladin is disputing that an event of default has occurred, as well as the validity of the notice received from CNNC.

Paladin on Friday said CNNC sought to advance the potential option through discussions with the company and also directly with its bondholders and their advisers. During these discussions, various concessions were discussed that could benefit Paladin. Further, during this time, Paladin developed ideas for an alternative solvent restructuring proposal with its creditors.

The valuation is to be performed by an independent international investment bank with uranium experience and is expected to take five to six weeks. Under the LHM shareholders' agreement, once the valuation is complete CNNC has 30 days to exercise the option. An acquisition of Paladin's interest in LHM pursuant to the option would include the right to buy one or both of the company's shareholder loans of about $251-million at its full face value; and its equity in LHM. A 5% discount to fair market value would apply to the equity portion.

Paladin affirmed the support of its stakeholders and is seeking to finalise an alternative restructuring proposal that can be put forward as a valid, solvent restructuring to be implemented in the event CNNC acquires its stake in LHM.