Paladin Energy : Langer Heinrich Mine Restart Plan

PALADIN ENERGY LTD

ACN 061 681 098

30 June 2020

ASX Market Announcements Australian Securities Exchange 20 Bridge Street

By Electronic Lodgement

SYDNEY NSW 2000

Langer Heinrich Mine Restart Plan Confirms US$81M of Restart

Expenditure and Life of Mine C1 Cost of US$27/lb U3O8

Paladin Energy Limited (ASX:PDN) ("Paladin" or "the Company") is pleased to announce the results of the Langer Heinrich Mine Restart Plan ("The Restart Plan"). The Restart Plan marks the completion of an extensive work package aimed at delivering a reliable mine restart to bring the globally significant Langer Heinrich Mine back into production under the right Uranium pricing environment.

HIGHLIGHTS

•  The Restart Plan is now complete confirming restart capital, costs and operational performance;

•  Langer Heinrich can be brought back into production for US$81M of pre-production cash expenditure, allocated as follows:

  • o operational readiness (US$34M) required to mobilise the work force, undertake maintenance and provide the working capital requirements to commence production; and

  • o discretionary capital (US$47M) specifically aimed at improving process plant availability and reliability to lift production capacity by more than 10%.

•  Low restart capital intensity (US$14/lb) and competitive C1 Cost of Production (US$27/lb) confirms Langer Heinrich is well positioned alongside other Tier 1 operations to deliver product into a recovering Uranium market;

•  The Restart Plan has confirmed a 17-year mine life for Langer Heinrich with peak production of 5.9Mlb U3O8 per annum for 7 years;

•  The Life of Mine Plan outlines three distinct operational phases being Ramp-up (year 1), Mining (year 2-8) and Stockpile (year 9-17). The utilisation of stockpile material in the Ramp-up phase greatly reduces operational start up risk and provides a strong platform for the operation to move toward nameplate capacity within a 12-month period;

•  Langer Heinrich remains fully permitted to resume mining and Uranium exports; and

•  Paladin's cash position of US$35M provides financial flexibility and the Company will only consider a restart when it secures an appropriate term-price contract with sufficient tenor and value to deliver an appropriate return to all stakeholders.

Paladin CEO, Ian Purdy said "The completion of the Langer Heinrich Mine Restart Plan is a significant step forward for the Company and completes the vast amount of study work undertaken over the past 18 months. The operational and economic parameters identified in the chosen restart plan show the strategic significance of the Langer Heinrich asset and highlight the potential economic returns that can be delivered under the right Uranium price environment. Paladin will continue to refine and progress work packages under The Restart Plan and I look forward to updating the market on our ongoing activities".

Level 4, 502 Hay Street, Subiaco, Western Australia 6008 Postal: PO Box 201, Subiaco, Western Australia 6904

Tel: [phone] Fax: [phone] Email:[e-mail]: www.paladinenergy.com.au

EXECUTIVE SUMMARY

The release of the Langer Heinrich Restart Plan marks the conclusion of the Company's 18 month prefeasibility and optimisation study work programmes. The selected restart option provides a low risk, reliable restart plan balancing the ability to rapidly respond to strengthening Uranium prices and maximising asset value. Key Capital, Operational and Cost highlights of The Restart Plan are detailed below:

Please note that all operational performance, costs and capital metrics are on a 100% basis for the Langer Heinrich operation. Paladin owns 75% of Langer Heinrich.

Restart Costs (US$81M)

Operational Readiness	US$34M	Improving Plant Availability and Process Stability	US$47M
Maintenance	$13	Product Drying and Packaging	$14
Working Capital Replenishment	$14	Leach Surge Capacity and Water Storage	$7
Workforce and Mobilisation	$7	Process Control and Stability	$6
Infrastructure Asset Integrity	$16
Tailings Dam	$4

Key Operational Metrics

Ramp-up Phase (Year 1)	Mining Phase (Year 2-8)	Stockpile Phase (Year 9-17)
Mining Rate (TMM Mt pa)	0	28.8	0
Mill Throughput (Mt pa)	3.3 (from stockpile)	5.1	5.3 (from stockpile)
Mill Availability (%)	71	95	95
Mill Feed Grade (ppm)	520	593	336
Process Recovery (%)	88.5	88.4	88.5
Production (Mlb pa U308)	3.3	5.9	3.5
Mining & Stockpile Rehandling Cost ($M pa)1, 3	11	72	16
Processing & Maintenance Cost ($M pa)	57	81	67
G&A and Other ($M pa)	9	9	9
Capex ($M pa)2	1.5	14.5	13.1

1. Excludes stockpile inventory adjustments. 2. Sustaining, minor improvements, progressive rehab and tailings mgt capex. 3. No in-situ mining occurs in Ramp-up and Stockpile phases. Stockpile re-handling only. 4. Figures quoted in table reflect yearly average over the operational phases.

Cost Profile

US$/lb U3O8	Ramp-up Phase (Year 1)	Mining Phase (Year 2-8)	Stockpile Phase (Year 9-17)	Life of Mine (All 3 phases)
Mining & Stockpile Rehandling 1	3.3	12.2	4.6	8.7
Processing & Maintenance	16.9	13.7	19.3	16.2
G&A and Other	2.8	1.5	2.6	2.0
Production Cash Cost	23.0	27.4	26.5	26.9
Non-Cash Inventory Adjustments4	-	(7.9)	10.5	-
C1 Cost of Production	23.0	19.5	37.0	26.9
Freight & Logistics	0.95	0.95	0.95	0.95
Capex3	0.45	2.4	3.7	2.9
Government Royalties2	3%	3%	3%	3%

1. Excludes stockpile inventory adjustments. 2. Namibian Royalties of 3% US$ sales. Excludes 3rd party royalty of A$0.12/kg. 3. Sustaining, minor improvement, progressive rehab and tailings mgt capital. 4. Opening stockpiles have no book value (written off in 2017/2018).

Production Profile

Paladin is Well Positioned in an Improving Uranium Market

The Company remains poised to take advantage of the growing structural Uranium supply deficit in global markets. Spot prices have increased by 36 percent since the start of January 2020 to approximately US$34/lb U3O8. The Company notes continued primary production cuts and US utility contract coverage reaching critical lows. Securing term contracts remains key to the restart of Langer Heinrich.

The Langer Heinrich Mine remains competitively positioned versus other suspended mines, highlighted through modest restart capital and competitive operating costs, further underpinned by a proven product quality and a globally significant operation with lower incentive prices than greenfield projects.

Paladin remains in a healthy financial position. The Company has:

•  Significant runway to execute its strategy with US$35M in cash at 31 May 2020;

•  Greatly reduced cash burn with FY2021 cash spend forecast of less than US$10M;

•  A disciplined and patient approach;

•  Flexibility to respond to market conditions; and

•  US$145M (as at 31 May 2020) of Senior Debt repayable January 2023.

Next Steps

Paladin will continue to build the foundations for a successful restart of the Langer Heinrich Mine. The Company will:

•  Continue to engage with potential customers to secure term-price offtake agreements;

•  Advance the critical-path elements of The Restart Plan, including;

  • o Continue detailed mine planning to support the preparation of contract mining commercial documentation;

  • o A detailed "as-is" condition survey of the processing plant, process flow modelling and preliminary engineering of the proposed modifications to support the preparation of Engineering, Procurement, Construction and Management (EPCM) commercial documentation;

  • o Other ongoing detailed technical and commercial work aimed at further de-risking restart activities; and

  • o Utilising the forward work program to publish a revised Ore Reserve.

•  Continue to preserve the Langer Heinrich Mine through cost effective ongoing care & maintenance (C&M) activities; and

•  Continue to minimise cash burn, with all work programmes to be funded within Paladin's guidance of total expenditure for FY2021 of less than US$10M.

THE RESTART PLAN DETAILS

Background

Paladin owns 75% of the Langer Heinrich Mine, located in Namibia. The remaining 25% is owned by CNNC Overseas Uranium Holdings Limited, a subsidiary of China National Nuclear Corporation (CNNC), a leading Chinese nuclear agency. The Langer Heinrich Mine commenced operations in 2007 and has produced and sold over 43Mlb of U3O8 to date. The mine was transitioned into care and maintenance in August 2018 due to the sustained low Uranium price.

Langer Heinrich Mine Restart Plan

The Restart Plan provides a low risk, reliable restart plan balancing the ability to rapidly respond to strengthening Uranium prices and maximising asset value, ensuring the delivery of objectives around:

•  Definition of capital improvements required to increase plant runtime to 95%;

•  Identification of growth options and work packages to de-bottleneck the plant by 25%;

•  Improvement in management systems and process control to increase process stability;

•  Verification of license, permits and certificates required for restart;

•  Detailing and de-risking The Restart Plan and schedule to ensure benefits will be realised; and

•  Modelling key operational Life of Mine metrics.

The Restart Plan has confirmed the economic significance of the Langer Heinrich Mine with key highlights:

1. Capital restart costs divided by annual production volume.

Figure 1 - Key Economic Parameters for Langer Heinrich Mine Restart Plan

Restart Costs

The Restart Plan confirms that Langer Heinrich can be brought back into production and deliver reliable operations with a pre-production cash expenditure of US$81M (100% basis). The expenditure is separated into two components:

Operational Readiness (US$34M)

Operational readiness expenditure relates specifically to working capital and other cash expenditure required to restart baseline operations at Langer Heinrich. The operational readiness expenditure will focus on:

•  Performing maintenance on plant and infrastructure (US$13M);

•  Replenishing reagents, purchasing spare parts and other working capital (US$14M); and

•  Workforce recruitment, mobilisation and training. Mobilise key contractors, including mining contractor (US$7M).

Discretionary Capital Investment to Improve Plant Runtime (US$47M)

Discretionary capital investment is focused on improving plant reliability and runtime to 95% (historic levels c.85%) by targeted expenditure on key areas of the process plant including:

•  Product drying and packaging facility upgrade reducing product volumes and transport weight (US$14M);

•  Leach feed surge tank to decouple crushing from leach and increasing water storage mitigating production interruption when primary water supply is disrupted (US$7M);

•  Process control upgrade and process equipment changes to increase stability and control (US$6M);

•  Address known asset integrity issues - piping, structural and electrical (US$16M); and

•  Tailings dam capacity increased to meet future production (US$4M).

Figure 2 - Aerial Photo of Discretionary Capital Investment Projects