By David Winning

SYDNEY--Uranium has been a popular bet in commodity markets over the past year, but meeting lofty expectations can be hard.

Just ask Paladin Energy, whose stock dived 24% to its lowest level in more than a year on Tuesday after the miner junked previous output guidance for its flagship uranium mine in Namibia and said it needed to reassess spending plans.

Paladin is seven months into a restart of the Langer Heinrich mine in Namibia that it expects will take some 21 months to complete. For many investors, the company has been a way to gain exposure to the theme of a renaissance in nuclear power. Paladin has leant into that idea, notably when announcing a deal to buy Canada's Fission Uranium for more than $800 million in June.

Many countries are planning an expansion of nuclear energy to help to drive down emissions.

At the United Nations' annual climate meeting last year--known as COP28--more than 20 countries, including the U.S., pledged to triple nuclear-energy capacity by 2050, saying atomic power will be a critical part of achieving global net-zero emissions. The next gathering is happening this month in Baku, the capital of Azerbaijan.

Bets on a steady rise in uranium demand have led miners in Kazakhstan, Canada, Australia and elsewhere to expand production. Those efforts have included bringing back to life mines that had been mothballed when prices of U308--a lightly processed concentrate known as yellowcake--crashed following the Fukushima nuclear power plant disaster in Japan in 2011.

Prices of U3O8 hit a 16-year high earlier this year, partly due to production challenges worldwide, before pulling back a tad. Still, they remain well above levels achieved during the prolonged market downturn.

Paladin said it now expects to produce between 3.0 million and 3.6 million pounds of U3O8 from the Langer Heinrich operation in the 12 months through June. It had previously forecast output of 4.0 million-4.5 million lb.

"Paladin notes that the increased range of potential production outcomes will have a material impact on the company's unit operating costs and the realized price for uranium sales," it said in a regulatory filing.

Paladin said output of 186,667 lb of U3O8 in October was lower than planned, citing continued variability in stockpiled ore that was processed at Langer Heinrich. It also said disruptions to water supply meant it couldn't process as much ore as it had hoped.

Write to David Winning at david.winning@wsj.com

(END) Dow Jones Newswires

November 11, 2024 19:29 ET (00:29 GMT)

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