Paladin Energy to cut costs by $80 million

Uranium miner, Paladin Energy (TSX:PDN)(ASX:PDN), is targeting $80 million in cost reductions over the next two years and putting a freeze on development as the price for uranium spot has weakened.

In its quarterly report for the three months to September, the company said it had undertaken a cost and production optimization review as part of its plans to transition from development to production.

Chief executive John Borshoff said he would make an announcement about jobs later and anticipated the uranium price would plateau in the short term to pick up in the mid-term.

"Today the price is not justifying any development and everybody realises that, even with development, there's a supply crisis moving forward," he said.

"It's not playing into the consumers' hands at all."

Paladin also said the cost review found that the Langer Heinrich operations, in Namibia, could deliver a cost saving of $10 million during 2013. The Kayelekera mine, in Malawi, would —in turn— contribute another $10 million saving through discretionary spending and improvements in mining cost.

Next year the company will also slash its exploration expenditures by nearly 20%, $4 million, while inventory management would save another $15 million in 2013. Additionally, the miner is targeting a 10% reduction in corporate overheads.

In 2014, the miner would save another $10 million at Langer Heinrich by further reducing unit costs as the operation was fully optimised, while the Kayelekera mine would deliver a $2 -million cost saving by reducing unit costs a further 15% by gaining access to grid power supply and the completion of key production optimisation programmes.

Paladin shares closed in Sydney at $1.05, which is 1.4% lower than Tuesday, having tumbled nearly 80% since the Fukushima nuclear disaster in Japan led to weakened demand for uranium.

Paladin's annual general meeting will be held in Perth on November 22.