The Langer Heinrich Royalty was created pursuant to a letter agreement dated May 31, 2002, between Paladin Resources Ltd. (now Paladin Energy Ltd.), through its subsidiary, Paladin Energy Metals Ltd. (now Paladin Energy Minerals NL) and Aztec Resources Limited. Such royalty interest was subsequently acquired by Mega Redport Pty Ltd., a wholly owned subsidiary of Mega Uranium Ltd. The Langer Royalty is a PR royalty of A$0.12 per kilogram of U3O8 produced from the Langer Heinrich Mine and sold by Paladin and Paladin Energy Metals Ltd.
According to publicly available information, the Langer Heinrich Mine is located in Namibia, 80 kilometers east of the major seaport of Walvis Bay and about 40 kilometers south-east of the large-scale, hard-rock Rossing uranium project operated by a subsidiary of Rio Tinto plc. The mine is a surficial calcrete type uranium deposit. The project is operated by Langer Heinrich Uranium (Pty) Ltd., a company that is 75% owned by Paladin Energy Ltd. ("Paladin") and 25% owned by CNNC Overseas Uranium Holding Limited, a wholly owned subsidiary of the China National Nuclear Corporation.
Construction of the Langer Heinrich Uranium Project commenced in 2005, and staged commissioning of the plant began in August 2006. The mine was officially opened in March 2007. On May 25, 2018, Paladin announced that the Langer Heinrich Mine was to be placed on care and maintenance and stopped presenting ore to the plant because of persistently low uranium prices.
The information below regarding project milestones and recent developments for the Langer Heinrich Mine has been summarized from Paladin's public disclosure and from other publicly available materials.
The Langer Heinrich Mine deposit was discovered by General Mining Union Corporation Limited ("Gencor") in 1973. Between the late 1970s and 1980, Gencor completed substantial technical work, including a full project-evaluation study, metallurgical studies, multiple exploratory shafts and construction of a 300,000 tonne per year dry screen plant and pilot plant at the Langer Heinrich Mine. In 1998, the Langer Heinrich Mine was acquired by Acclaim Uranium, which completed additional drilling and a pre-feasibility study between 1999 and 2002. In August 2002, Paladin acquired Langer Heinrich Uranium (Pty) Ltd. from Aztec Resources Ltd (formerly Acclaim Uranium NL).
Paladin filed a resource estimation in April of 2005, and in July of 2005, announced that the Ministry of Mines and Energy in Namibia approved the grant of a mining licence covering the Langer Heinrich deposit for a 25-year term. Initial construction at the Langer Heinrich project started in September 2005, leading to the mine's official opening in March of 2007.
The Langer Heinrich Mine had its first full year of production in Paladin's fiscal year ended June 30, 2009. Since then, Paladin has completed two expansion projects, the first being the Stage 2 expansion in fiscal 2010 and the second being the Stage 3 expansion that took place in fiscal 2012.
In July of 2014, Paladin announced the completion of the sale of a 25% stake in the Langer Heinrich mining operations to CNNC Overseas Uranium Holding Limited. In May of 2018, Paladin announced that it has received the consent of relevant stakeholders to place the Langer Heinrich Mine on care and maintenance and that it had stopped presenting ore to the plant.
In its annual report for the year ended June 30, 2019, Paladin announced that in February 2019 it had completed a concept study that identified multiple options to reduce operating costs, improve process plant performance and potentially recover a saleable vanadium product. Such annual report also disclosed that in March 2019 it commenced a two-stage pre-feasibility study respecting a potential re-start of mining operations at the Langer Heinrich Mine upon a sustained recovery in uranium prices, with the first stage expected to be completed in September 2019 and examining a rapid, low-risk restart of the mine and the second stage expected to be completed in March 2020 and involving a more detailed study, including process optimization aimed at lowering costs, recovering vanadium and potentially increasing production in the later stages of the mine life. In the report, Paladin also disclosed that a re-start would be considered only if forecast cash flows from uranium sales provide an appropriate return on investment.
On October 14, 2019, Paladin announced the completion of the first stage of its pre-feasibility study, which included a JORC(1) compliant mineral resource estimate for the Langer Heinrich Mine with measured resources of 71.87 mmlb of U3O8 (66.2 million tonnes at an average grade of 0.049% U3O8) and indicated resources of 17.96 mmlb of U3O8 (18.8 million tonnes at an average grade of 0.044% U3O8). Such resource estimate was reported on a depleted basis to June 30, 2018 and did not include stockpiles. Paladin's disclosure regarding the prefeasibility study included: (a) an estimate of US$80 million required for the rapid restart of the mine, including US$38 million for plant repair and improvement and US$42 million for working capital; (b) an initial production capacity of 5.2 mmlb, while processing high and medium grade ores for approximately an 8-year period (after a 12-month ramp-up), followed by production capacity of 2.7 mmlb while processing low grade ores for approximately 12 years; and (c) a resulting average life of mine all-in sustaining cost of approximately US$33 per pound, consisting of life-of-asset mining costs of US$8.40 per pound, processing costs of US$18.20 per pound, other operating costs of US$2.60 per pound and capital costs of US$3.80 per pound. Paladin further disclosed that it had identified opportunities, requiring estimated discretionary capital expenditures of US$30 million, to significantly debottleneck existing mining and mineral processing operations to 6.5 mmlb per year and reduce all-in sustaining costs by approximately US$4.50 per pound.
On June 30, 2020 Paladin announced the result of the Langer Heinrich Restart Plan, which refined the results of the previous Prefeasibility Report. The Restart Plan is based on a re-sequencing of mining and processing activities outlined in the 2019 PFS and takes elements from both the PFS 5.2Mlb Option and the PFS 6.5Mlb Option. The release states that the mine could be brought back into production for US$81M of pre-production cash expenditure. The release also states a C1 Cost of Production of US$27/lb and a 17-year mine life with peak production of 5.9 mmlb of U3O8 for seven years. The Life of Mine Plan outlines three distinct operational phases; Ramp-Up (Year 1), Mining (Years 2 – 8) and Stockpile (Years 9 – 17). The Restart Plan also re-stated the Mineral Resources associated with the project, explicitly including the ROM stockpiles in the Resources. The underlying in-situ Mineral Resource as announced on October 14, 2019 remains unchanged, as are the tonnes and grade stated for ROM stockpiles in the same announcement. Further details available in the ASX announcement.
The table below sets forth historic performance parameters for the Langer Heinrich Mine between 2013 and 2018, as reported by Paladin in its Langer Heinrich Mine Restart Plan Presentation released on June 30, 2020.
On November 4, 2021, Paladin announced an update to the Langer Heinrich Mine Restart Plan along with an update to the mineral resource and ore reserve estimates for the Langer Heinrich mine. The Restart Plan Update confirms the restart cost estimate of US$81M and a 17 year mine life supported by Ore Reserves of 84.8Mt with an average U3O8 grade of 448ppm. The life of mine production target increased to 77.4Mlb of U3O8 (previously 76.1Mlb). The estimated Life of Mine C1 Costs have been updated to US$27.40/lb (previously US$26.90/lb), primarily due to increased estimated contract mining rates. Paladin has also confirmed an estimated project execution timeframe of 18 months from project commencement to first production, with full production achieved after a further 15 months. Further details available in the ASX announcement.
The Restart Plan Update included a JORC(1) compliant Mineral Resource estimate for the Langer Heinrich Mine with Measured Resources of 78.6 Mlbs of U3O8 (79.1 million tonnes at an average grade of 0.045% U3O8) and Indicated Resources of 19.5 Mlbs of U3O8 (23.5 million tonnes at an average grade of 0.0375% U3O8). It further reports additional Measured Resources in medium-grade stockpiles totalling 7.1 Mlbs of U3O8 (6.3 million tonnes at an average grade of 0.051% U3O8) and low-grade stockpiles totaling 14.5 Mlbs of U3O8 (20.2 million tonnes at an average grade of 0.0325% U3O8). A 200ppm U3O8 cut-off was applied to in-situ Mineral Resources – 250ppm U3O8 cut-off was applied to stockpiles at the time of mining. Mineral Resources reported on a 100% ownership basis, of which Paladin has a 75% interest. The Measured and Indicated U3O8 Mineral Resources are inclusive of those Mineral Resources modified to produce the Ore Reserves (as reported below). Such resource estimate was reported on a depleted basis to June 30, 2018. The Restart Plan Update also stated updated Ore Reserves, with Proved Reserves of 52.0 Mlbs of U3O8 (48.3 million tonnes at an average grade of 0.0488% U3O8) and Probable reserves of 10.2 Mlbs of U3O8 (10.0 million tonnes at an average grade of 0.0464% U3O8). Paladin further reports additional Proved reserves in stockpiles totalling 21.6 Mlbs of U3O8 (26.5 million tonnes at an average grade of 0.0369% U3O8). Ore Reserves are reported on a dry basis. Proved Ore Reserves are inclusive of ore stockpiles. 250ppm cut-off applied. The updated Ore Reserve is estimated using a metal price assumption of US$50/lb U3O8. Tonnage figures have been rounded and may not add up to the totals quoted. Ore Reserves reported on a 100% ownership basis, of which Paladin has a 75% interest.
(1) Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves, The JORC Code 2012 Edition, Effective 20 December 2012, mandatory from 1 December 2013. Prepared by the Joint Ore Reserves Committee of the Australasian Institute of Mining and Metallurgy, Australian Institute of Geoscientists and Minerals Council of Australia (JORC).