Paladin Energy Ltd

Thank you, everyone, for joining our fourth quarter conference call. With me today in Sydney are Paul Hemburrow, our Chief Operating Officer; and Anna Sudlow, our Chief Financial Officer.

Paul and the whole team have delivered an outstanding quarter with strong production at the Langer Heinrich Mine and another key milestone progressed at our PLS project in Canada. The Langer Heinrich Mine finished financial year '25 strongly with the commencement of mining executed successfully and safely during the quarter.

The expected benefits from the introduction of fresh ore into our processing plant were realized and the performance this quarter is evidence of a significant step taken forward in our ramp-up of the Langer Heinrich Mine. Noting the progress made in the ramp-up during the quarter, the company is also pleased to provide financial year '26 guidance for the Langer Heinrich Mine.

The guidance sets the road map for Langer Heinrich as he transitions from its continued ramp-up during financial year '26 to expected full operations in financial year '27. At our Patterson Lake project in Canada, the financial environmental impact statement was formally accepted by the Saskatchewan Ministry of Environment and is currently undergoing a public review process.

The acceptance of our final EIS is the culmination of many year's work by the Canadian team and is a credit to their consultation processes and the quality of the work which has been completed. Finally, I'm also incredibly pleased to report that the Board of Paladin has appointed Paul Hemburrow as the next CEO and Managing Director of Paladin Energy effective from the first of September.

Having worked closely with Paul for the past 2.5 years, I can confirm he's an incredible leader who has the skills and experience to drive our company forward. The entire global senior management team share my excitement with Paul's point.

Thanks again for attending. I'll now hand over to Paul to run you through the operational highlights for the quarter and also step through the Langer Heinrich Mine guidance for financial year '26.

Thanks, Ian, and good morning, everyone. Well, I'll talk through the quarter results at Langer Heinrich.

I will move into the Langer Heinrich Mine guidance, and we'll conclude with the remaining highlights from other parts from the company. I'm pleased to report that Paladin achieved a number of significant milestones in the quarter.

Our Langer Heinrich Mine recorded a 33% increase in quarter-on-quarter production, producing just over 993,000 pounds of U308. This is the highest quarterly output since the mine's restart and brings our total production for the financial year to GBP 3 million.

Additionally, we achieved the highest quarterly crusher circuit throughput in the history of Langer Heinrich Mine operations with 1.17 million tonnes processed, beating the previous record of 982,000 tonnes in the March quarter of FY '14. This result was achieved on the back of mobilizing the mining fleet, which brings us to nearly 50% of the planned mining operation.

More importantly, however, we delivered prime ore from the pit to the crusher, complementing the medium-grade stockpile fee with core high-grade material. We've also seen continued stabilization of our overall recovery at 87% as well as an increase in the grade of crusher feed to an average of 477 PPM for the quarter.

This exceptional performance is a testament to the hard work, problem-solving capability and dedication of our team and the these results have proven 3 key things. And they are, the project delivered what we thought it would, an increase in the process stability and debottleneck throughput.

Secondly, that our hypothesis of our adding more ore to the mines and optimizing blend strategy to improve handability and grade will deliver an uplift in production of U3O8. And thirdly, that we have the capability to mine efficiently and effectively to deliver the results that we need.

I could not be more pleased with this quarter's performance, and I look forward to building on this capability in the year ahead. Our financial performance remained strong with the cost of production at $37.5 per pound, which largely reflects the increase in volume and continuation of low-cost stockpile drawdown as well as access to mining in previously blasted and uncovered round in the GP -- we achieved an average realized price of $55.60 per pound for the quarter, which is a function of the timing and composition of the contract that we delivered against in the quarter.

For the full financial year, we received an average realized price of $650 per pound, reflecting the company's balanced portfolio of contracts with a mix of base escalated fixed and market-related pricing. Our cash and cash equivalents stands at $89 million with an undrawn $50 million revolving debt facility.

This does not include cash receipt of $29 million received in July for revenue recognized in the June quarter. I'll now move into the FY '26 guidance below the Heinrich Mine.

Let me start by reiterating where we are at today. Langer Heinrich Mine has approximately 49% of the mining fleet in operation today.

The processing plant is delivering at record production rates, and we have a medium-grade stockpile of approximately 2.2 million tonnes remaining. The Langer Heinrich Mine will continue its operational ramp-up during FY '26.

Over the course of the year, we'll transition from processing stockpile medium-grade ore to processing primary mined ore. We expect the operational ramp-up to be completed by the end of FY '26 with full mining and processing operations planned for FY '27.

We intend to provide annual guidance for FY '27 in July 2026. Key aspects of our FY '26 guidance U308, produced 4 million to 4.4 million pounds, sales of between GBP 3.8 million and GBP 4.2 million, a unit cost of production between $44 and $48 per pound, with capital and exploration expenditure between $26 million to $32 million.

I'll talk to these numbers directly, and I'll start with U3O8 produced. Production is primarily a function of 3 things, crusher throughput, grade and overall recovery.

In crusher throughput, we've seen a significant uplift in plant performance, which has been driven by a number of factors. The most significant being the ability of the mining operations to deliver tonnes.

In the year ahead, we will observe 3 key performance aspects. Firstly, mobilization of the remaining fleet in the first half of the financial year and subsequent commissioning of that fleet during the second half of the financial year to give us full mining operations.

Secondly, concentration of the mining fleet in the G2A area with a significant proportion of time spent on overburn removal and low-grade stockpiling in the first half. This means the first half of the year will largely processing of medium-grade stockpile and lower levels of primary mine ore feed for the crusher.

And thirdly, opening up productive lower benches of the G2A for the second half of the financial year. Looking at these 3 performance assets, while we expect a strong first half of FY '26, aligned with the performance that we saw last quarter, we expect a strong second half to deliver in the guidance range.

On grade, I'll provide transparency at the end of every quarter going forward and provide verified grade numbers. What we know, though, is that as we feed stockholder into the crusher and optimize the blend as we go, we see 2 primary impacts, improved grade and improved throughput.

The grade is reconciled after crushing and following a mass balance from the plant. The actual grade input into the plant will vary as we change blends and access different parts of the stockpile and the mine.

I'll do the work, optimize the performance and report grade after that work is complete. As I mentioned before, quarterly production volumes are expected to vary during FY '26, mainly due to reduced primary mine ore feed into the processing plant in the first half of FY '26.

Production is expected to be higher in the second half of FY '26 with a high level of primary ore feed available to blend with a medium-priced stockpile material. This brings me to the third component, overall recovery.

The improvements in processing plant performance achieved during FY '25 are expected to be sustained in FY '26. Our guidance is based on considered plant availability and utilization reductions and includes allowances for expected water supply disruptions, estimated planned and unplanned maintenance activities and general plant disruptions based on historic performance.

During FY '26, Paladin expects to continue delivering new range with global customers in the U.S., Europe and Asia. We continue to look for opportunities to layer new contracts with high quality counterparts.

Sales volume, cash receipts and realized pricing are expected to vary quarter-on-quarter due to the timing of shipments, individual contract terms and prevailing spot prices. We do not expect to buy or sell material on the spot market during FY '26.

Both on our contract books as of July 2025, the forecast realized earnings price sensitivity for FY '26 under a range of spot assumptions are in the table within the announcement. To wrap up commentary and guidance on LHM, I'd like to reiterate that the last quarter has given us confidence that we can deliver full processing and mining operations by the end of FY '26.

This is the final ramp-up year and while the first half will be strong, the second half will be stronger. We're confident in our plans for FY '26 and look forward to achieving our operations and financial targets.

Let me quickly cover the other aspects of quarterly performance report before we move to questions. As the Patterson Lake South project, final environment impact statement was formally accepted by the Saskatchewan Ministry of Environment, as mentioned earlier, our winter drilling program delivered the most significant radio activity results ever recorded on our tenements outside of the RRR deposit.

These results enhance our understanding of the baloon trend and reinforce the long-term strategic value of the project. Safety and sustainability remain our top priority.

We recorded an average total recordable injury frequency rate of 2.7 million hours, exceeding our FY '25 safety target. We also continue our investment in local communities, supporting the establishment of breast cancer clinic in Swakopmund State Hospital and partnering with Cricket Namibia to develop the Mondesa Cricket Hub.

In covered up on our leadership changes, I'm extremely pleased to be taking on the role of Managing Director and CEO in September. I'd like to quickly take this opportunity to acknowledge Ian's outstanding contribution to Paladin over the last 6 years.

We'll now open the floor to questions. There are a lot of questions registered already and I ask that you limit your questions to 2 per person.

And if you have further questions after the close, please follow up Paul or [indiscernible]. I'll now open to questions.

Well done another consecutive quarter of solid production growth and also congratulations to Paul on your appointment and also to you Anna on building the company to where it is now in good luck with your future endeavors. Just -- so my first question, you mentioned for the FY '26 guidance, you've factored in allowances for expected water supply disruptions based on the historical performance.

I mean, performance over the last couple of quarters seems to have been -- or last quarter has been okay. But are there any further work streams to improve the consistency for water supply from Namwater planned over the near term?

We have seen an improvement in the performance of Namwater and the Arano destock plant. We've also improved our unit water consumption on site.

And we have both of our plates up and running successfully. During the course of the year, we also commissioned a second Swakop River extraction bore.

And we have our new set [indiscernible] operations. This means that we've improved the capability of the water balance on site, and we're in reasonably good shape moving into the year ahead.

For the last outage that Orano had, we had very, very minimal disruption to the processing facility due to the installation of the infrastructure challenges.

Perfect. And just my second question, could you just give an update on how you're going with the dewatering of that G pit?

I know you've stated that you're targeting by the end of CY 2025, which seems to line up with when you're expecting the final few -- with the final mobilization of your mining equipment, but just looking for an update on where it is right now?

Yes. Ian and I were in there maybe a couple of weeks ago and had a look around the G pit in detail.

There's actually 1 very small part of the G pit that still has some water in it. There's a little bit of seepage, but it's not a huge volume.

So what we're able to do is, over the next couple of months, we'll do the top soil clearing well pre-strip the pit, drill and blast, and I don't anticipate any significant challenges from that small pit with some water in it still.

My first one, I just wanted to ask FY '26 sales guidance is $300,000 lower than production. I just wondered if you could provide a bit of color or commentary around what that discrepancy is pointing towards, please?

Dan, thanks for your question. Nothing in particular other than our current schedule of expected shipments.

As you know, Dan, we get periodic fairly large value shipments out of the orders paid to our global customers. We take a view with our customers on a high-level shipping schedule over the forthcoming about 18 months.

So we based our guidance on that, but it is subject to variability depending on when the actual ship arrives or if the customer can move a shipment a month forward or back. So I think it's a realistic estimate that sales may be a little bit lower but close to production.

But having said that, it could quite initially swing the other way with the timing of 1 particular shipper. So it's our best estimate.

We think it's appropriate for the market to assume sales are a little bit lower than production at this stage.

Okay. And I've noted that the unit costs provided in June and the FY '26 guidance exclude low-grade stockpile costs over -- should we expect that to be consistent over the life of mine?

And I guess, when was the decision made to start excluding those? And I guess the costs associated with stockpiling low grade has that been provided in historical CapEx forward guidance estimates as well, please?

Daniel, it's Anna. So what we provided in there during quarterly is the actual cost for the low-grade stockpile processing.

So we haven't provided guidance on it because it is quite variable quarter quarter-to-quarter but we are committed to providing that actual number to you in our quarterly results. I think historically, we have provided that information.

If you look back at our PFS release the rest stockpile will be more in there. I believe the NI 43-101 is the overage stockpile build cost in as well.

So I don't think there's necessarily a change in treatment. It's more about how we're disclosing that to you.

And then maybe the only other thing to mention is this is only -- this is a new item, right, because we've commenced mining. So we haven't had these costs up until this quarter.

Congrats on that quarter. So you produced close enough to 1 million pounds of uranium for Q4.

But the bottom end of your guidance for FY '26 is GBP 4 million. Is there some maintenance or other things that we should be factoring into our numbers?

Because I was just a bit surprised that for the bottom end of your guidance, you're not anticipating any improvement going forward?

Yes. Thanks, James.

What we're anticipating in the first half is a performance that is aligned with what we saw in the last quarter, which I think will be reasonably strong and then stronger in the second half. We factored in a number of days for planned preventative planned corrective maintenance as well as water outages.

But we think this is a number that's been developed quite rigorously. It's a bottom-up build.

And I think it's a number that we can confidently achieve.

Got it. Understood.

I was hoping someone else would ask about the average realized price, but I guess I'll have to Pretty low clearly driven by 1 of your contracts or maybe more. Do you expect this lumpiness of realized price to occur in FY '26?

Or do you think it will be closer to your sort of average matrix performance dependent on the spot price?

So yes, it was 55% for the quarter, but as I think Paul noted 65, 70 for the year. And we do expect that our price outcome will be aligned with that realized price table guidance we provide.

And yes, I agree, it will be very lumpy and variable because as you'd appreciated it's a function of Deliveries in the quarter. I think what you can assume is for this quarter, we're delivering into 1 or more of the earlier contracts.

Looking forward, what we've done in our marketing strategy is delay contracts over time. So what we really expect is that pricing will potentially go from the future as we strike contracts into the future.

But we've taken that balanced approach to the portfolio around pricing. So what you're going to see is a mix of mechanisms every quarter and what we've tried to achieve here is really good downside protection with considerable upside exposure.

But I think the guidance table on realized price is our expectation for FY '20.

Does that low-price contract in soon?

James, all of our contracts are a duration between 3 to 5 years. So that contract would have started just this year would have been potentially, let me just -- yes, 3 to 5 years.

Just interested at the current rate that you're going, when do you expect to deplete the medium-grade stockpile. I guess if I can ask it another way, what do you expect the split to be between fresh ore and stockpiled ore in FY '26.

And maybe just the second 1 is the ore -- fresh ore performance as it relates to grade in line with your expectations? Or just -- I appreciate you can't give a specific number, but just interested if that's performing in line with your expectations?

The second question first. Yes, it's performing in line with our expectations.

We've been really pleased with the contribution to an uplift in grade. Your first question when will we deplete the stockpile ore.

What we've been doing is creating a blend as we uncover stockpile ore based on how we judge the handability characteristics of that ore. And some blend ratio has been changing quite a bit.

Over the next half year, as we strip G pit, we'll have a bit less prime or available. And so we're just going to need to be a bit careful about how we blend the ore to get the best economic outcomes from the stockpile.

What that means is the stockpile could be depleted sooner or later, potentially as late as the end of this calendar year.

Congratulations, Ian, Paul and Anna, on a good finish to the year. Just following on from James' question sort of earlier with regards to performance over the first half.

I mean, if we were to assume sort of a continuation of the 4Q in terms of processing tonnes and potentially a little bit better, does that mean you sort of expect a decline in grade over the first half? And I guess, what visibility do you have on that?

Thanks, Regan. What we will process in the first half is more stockholder ore than fresh feed ore and the stockpile has continued to surprise us on grade.

So we'll -- I guess we'll see what happens as we progress through that stockpile. We'll have some prime ore coming out of G6 in this next half.

But I guess we'll have -- I'm pretty confident we'll have a stronger second half than the first half, but the current half, I think will be in line with the previous quarter.

Great. And then just on the sensitivity to uranium prices.

I guess if you compare that table to what was initially provided at the beginning of FY '25, particularly at that top end as uranium price starts to go up. You have sort of a decreased sensitivity to that increased uranium price.

Is that just layering in of lower fixed price contracts or there are sort of additional volumes that have been signed since then?

It's Ian, it's primarily due to the mix of contract deliveries to various contracts. So in the first year, we obviously let some flexibility in our contract book and have a more flexible arrangement with 1 of our customers that provides market pricing.

So it's a very similar contract book between the 2 years. But in the second year, there's just more deliveries to different pricing mechanisms.

Congratulations on finishing the [wet] sale. Just following up on that previous question, though, on realized price.

So if I wads to just do a straight read of the price sensitivity table for -- that you just provided. Spot price of $100 gets you a realized price of $79.

So I compare that to what you provided a year ago, and that would have been $85. Like for me, it's very hard to -- compared the 2 and not think that you have a lower realized price going forward versus wherever spot is?

Is that -- am I incorrect there? Or can you help me help us unpack that a little bit more?

I think it's fairly straightforward. The realized price that we've voted for financial year '26 is a result of our balanced book of our full contract portfolio, which includes market price contracts -- floors and ceilings as well as base-escalated pricing.

And that's the price we expect to deliver at those various spot prices as to the sensitivity, the sensitivity provided for financial year '25, which has just gone by was calculated the same way based on the mix of deliveries. And as I mentioned, for financial year '25, our contract with our customer who provides market pricing also provided us with delivery flexibility, which we took -- we took advantage of during our first year of ramp up.

So the -- what I can say is the overall pricing in our contract book has improved year-on-year with the rising uranium market than we've seen over the last few years. So overall, our book has improved from last year.

And the pricing just reflects the mix of delivery to those various contracts for that particular year.

Yes. Okay.

And I guess just on the idea or the intention to provide guidance for FY '27 as a result. Can you walk us through the rationale behind that?

it just feels like there's still a lot of variability in the ramp-up. So you could expand on that, please?

What we're going to do is provide guidance in the same way as our peers do. So we've got a lot of work to do this year.

And I think what we provided is reasonable guidance. What we will also do is add our actuals in our quarterly with a bit more detail.

And by the time we get to the end of this financial year, I think we'll be in really good shape to be able to provide more fulsome and accurate guidance for FY '27.

Can I also just note that we're providing now under the TSE quarterly financials and MD&A. So we'll be getting a lot more detail on actuals on a more frequent basis, quite detailed actually.

Paul, just firstly, I think you mentioned you would give quarter-by-quarter guidance for grade, I thought you said. I might have missed whether you actually provided it.

But just curious, you did bottom up. So can you provide us with just the throughput and grade expectation average for '26 that drives your guidance?

What we're going to do is provide our actual grade at the end of each quarter. So what we're doing in the mine is we're producing a blend strategy to deliver optimum throughput and economic outcomes in the plant.

We're going to use the existing stockpile, which as you know, Glyn has quite a bit of grade variability, but our mine is meeting our expectations in terms of grade so far. So what I'd rather do is understand what the reconcile grade is in quarter and provide a set of actuals based on what we actually did with respect to the blend strategy and the different pits that we opened up during the quarter rather than provide an estimate of what we're going to do in the quarter ahead.

Fair enough. Okay.

But I mean, you guess you had a bottom-up viewpoints. So there is a throughput in grade that you're thinking.

You're just not going to share that today. The second question was just on the cost.

The cost guidance of $44 million to $48 million. is that directly comparable to the $40 a pound that we just saw?

And how do I think about that? Does that mean we're looking at a $200 million cost base and that would move up a little bit more as you pull the full fleet through in the next 6 months.

I'm just trying to think dollars millions wise, because it is confusing a little bit with the costs and what you capitalize. I'm just trying to think about dollar spend to keep for the mining side?

Yes. So for last quarter, we had a lower production cost, and that's principally because we had a high volume of material produced but also we were using previously blasted material that 44% to 48% guidance reflects any of the additional costs associated with the ongoing ramp up.

So that's our expect for FY '26 on average. Like a lot of our metrics, we will see a reasonable amount of variability quarter-to-quarter depending on utilization of the medium-grade stockpile, how much ore is processed and mined.

So I think the quarterly view will be variable. We're pretty comfortable with our guidance.

It's the outcome of a rigorous budget and review process.

And I guess maybe just if I could just push you a little bit further then. If you look at the quarterly cash flow statement, production cash out of the door was close to $50 million for the quarter, so annualizing $200 million.

Is that -- should that pick up, do you think as we head through this half and you put a full fleet on it? Or will there be some other offsets to hold you around that $50 million cash outflow for production per quarter?

I think then you're better off looking at the production cost guidance than necessarily the quarterly cash flow because that was the mining ramp up. And also during the quarter, we had the impact of water.

It's probably been to use the guidance for FY '26 in thinking about that.

Yes. But I guess guidance is for $200 million.

If I take the midpoint of your cost and the midpoint of your production, I get $200 million for the year. So I guess that's what I'm sort of trying to rationalize and understand.

I think that's right.

Maybe 1 for Paul. You've mentioned 4 mine operations are expected from FY '27.

So I'd be interested in whether this implies you're comfortable with the original production target from the 2021 feasibility study? Or should we be interpreting this as these willl be under review as you move into the CEO role over the next couple of months?

Thanks for the question. Look, there's a lot of work to do between now and 12 month's time.

What we will do is we'll go through a period where we bring in some additional fleet at the back end of this year. And to small capacity fleet that we've got currently on the stockpile and optimize that fleet.

At that point, I really have a good understanding of the overall fleet capabilities. We'll have 12 months of processing plant performance.

So we've got a bit more time to further optimize the plant. And by the end of this financial year, I would have done the work to really understand the capability of the full mining operation which is why I'll be giving guidance at the end of this financial year on FY '27.

Okay. That makes sense.

And just a quick 1 on costs and just how we should be thinking about long-term costs in the context of what was a pretty decent fourth quarter number. but then also some weaker guidance to FY '26, if I compare your guidance versus where consensus is at.

Yes, sure. So, obviously we provided you with the [indiscernible] forthe FY '26.

As Paul said, we'll provide an update for FY '27 guidance next year. We run an annual rigorous process as we do so we source the data from the current year.

So that will be our process going forward. Actual costs are going to vary quarter to quarter.

And just, I guess, bear in mind that this is a transition and ramp-up year. So we are impacted by the production volumes of the year.

So what you see this quarter is the benefit of that higher volume being reflected in your production cost.

I just had a follow-up question on the loan material. So I just wanted to understand how much, I guess, the loan material cost was you're incurring over '25 and then to '26 and if that was impacting, I guess, your held final product inventory for reconciliation purposes.

Sorry, Dan, it's quite hard to hear you. So when we're using loans on an ongoing basis.

I think we've disclosed that we're basically using to manage working capital. We expect that loan volume to remain between GBP 400,000 on GBP 500,000 on an annual basis.

I'm not sure -- I missed part of your question. So I'm not sure if I've covered what you asked or whether there was anything else.

Sorry. I was just asking if the -- I guess, the cost of that loan material and if that was impacting the finished product inventory reconciliation.

No, it's not material and it's not impacting the inventory reconciliation. But for us, it's really just a standard tool we're using to manage the working capital cycle.

Sorry, yes. You mentioned that the key driver of stronger throughput is going to be delivery of the remaining mining equipment and increased material movement particularly for the G pit.

Is that the only bottleneck to reaching your peak annual throughput rate of 5.5 million tonnes per annum right now? Or is there some front-end plant optimization that you can do as well?

There's always continuous improvement opportunities in the processing facility. And so I think we've got some work we can do over the coming months in the processing plant.

But primarily in mining, it really is delivery of the remaining mining fleet. That's going to arrive at the back end of this year we'll start assembly of that kit.

And as we commission that equipment into the mine, we'll decommission some of the smaller fleet of the stockpile. But that ultimately, at the end of FY 2026 gets us to our full operational capabilities.

You mentioned in the quarterly no disruption to shipments over the past quarter. Are we to assume that you successfully met your contract requirements?

Or are you sort of successful in flexing those volumes down? And I guess if you were successful in flexing those volumes down, are they pushed out to a later date?

Or are they effectively canceled?

No. We met all those requirements, the customer deliveries in the quarter.

Thank you. So to sum up, Paladin has made significant progress this quarter, and we're well positioned for FY '26 and '27.

This is the final ramp-up here, and I'm looking forward to presenting detailed results on a quarterly basis in the year ahead, and I thank you all for your continued support. Thank you very much.