Paladin Energy is suspending production at its Kayelekera uranium mine in Malawi, calling the operation a substantial drain on its cash resources during the last three years.
The company told investors that the suspension will involve placing the operation on care and maintenance until the price of uranium recovers.
The move is expected to preserve the remaining ore body until Paladin decides to resume production profitably.
The price of uranium oxide has been depressed ever since March 2011, when the Fukushima earthquake and tsunami hit in Japan. Since then, the spot uranium price has more than halved from US 72.63 dollars per pound prior to Fukushima, to a current price of US 35.50 dollars per pound.
The government of Malawi holds a 15% interest in Paladin's African subsidiary Paladin (Africa) Limited (PAL), which holds the uranium mine in Malawi. The company said it will work with government authorities to implement the suspension, also a result of the "unsustainable" cash burden to maintain the loss-making operation.
"The Kayelekera mine has performed exceptionally well technically, with production levels recorded at or near nameplate capacity during the past 12 months and significant achievements made in PAL's cost reduction programme," said CEO John Borshoff.
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