Paladin Energy Limited says it has recorded a net loss of approximately K39 billion (US$137.7 million) at the Kayelekera uranium mine for the nine months ended March 31, 2012 due to the fluctuating prices of uranium on the international market.
The company's General Manager for International Affairs Greg Walker said this resulted from the Japanese earthquake in March last year which saw suspension of Japanese nuclear power production.
He said the spot price of uranium oxide dropped from US$75/lb (approximately K21,000) when the Kayelekera Project commenced to a low of US$47.50/lb (approximately K13,000) in the aftermath of Fukushima.
Currently, the spot price is at US$49.50/lb (approximately K14,000) which is below the direct cost of production at Kayelekera.
"In order to support Kayelekera Mine and to keep Malawians employed, Paladin has injected US$145 million [approximately K41 billion] into the local operation.
"Contrary to popular misconception, money is not flowing out of Malawi–it is still flowing in. Largely as a result of this situation in
Malawi, the Paladin Group recorded a net loss of US$137.7 million [approximately K39 billion] for the nine months ended 31 March 2012," Walker said.
Paladin provided a 15 percent stake in Paladin (Africa) Limited to the government of Malawi under the terms of the Development Agreement signed between the government and Paladin Group of Companies in February 2007.
Under the Agreement, in exchange for its carried 15 percent stake in Paladin (Africa) Limited, the government of Malawi reduced the corporate tax rate applying to the company from 30 percent to 27.5 percent.
A 10 percent resource rent tax which would apply to a high rate of profits was reduced to zero.