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Why the Paladin share price is up 13% on its trading update

The Paladin Energy Ltd (ASX: PDN) share price is on watch this morning after releasing its March 2019 quarterly in an after-market ASX update last Thursday.

What happened for Paladin in the March 2019 quarter?

Paladin Energy’s Quarterly Activities Report provided an update on some of the company’s key operations, including the following:

1. Langer Heinrich Mine (LHM)

  • Concept study to optimise LHM in preparation for a long-awaited restart decision returned positive results, identifying multiple options to lower costs.
  • The company’s two-stage Prefeasibility Study to further develop LHM restart plans commenced in March 2019. The first stage to refine rapid restart plan is expected to be completed in September 2019, with the second stage (process optimisation) expected to complete in March 2020.
  • The company is targeting aspirational average LHM life of mine all-in costs of US$30 per pound (after vanadium credits) with production ready from early to mid-2021

2. Kayelekera Mine (KM)

  • No water treatment was undertaken at the site during the quarter due to below average rainfall between January and March
  • Positively, the company said that target levels were achieved for all water storage ponds during the quarter.

In addition to the above, the company also noted that cash and cash equivalents at the end of the quarter totalled US$29.9 million (A$41.9 million) excluding restricted cash of US$11.2 million (A$15.7 million).

Where has the Paladin share price gone in 2019?

The Paladin share price is down nearly 30% so far this year and has slid to just $0.12 per share following weaker than expected earnings and as the company fell out of S&P/ASX200 Index (ASX: XJO).

I’m not sure Paladin is the best option in the Energy sector, with the likes of Beach Energy Ltd (ASX: APT) and Santos Limited (ASX: STO) seeing their share prices shoot 65.9% and 36.7% higher this year, respectively.

In my view, the oil and gas sector could provide a good hedge via the non-cyclical dividend income that these stocks could provide your portfolio should we see an economic downturn.

For those who want to look elsewhere for growth, this top-rated stock could boost portfolio gains as it continues to soar in a $22 billion industry.

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Motley Fool contributor Lachlan Hall has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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