The Paladin Energy Ltd (ASX: PDN) share price is catching the eye on Tuesday with a particularly strong start to the shortened week.
In morning trade, the uranium producer's shares are up a sizeable 6% to $1.45.
This compares favourably to a relatively flat start from the benchmark ASX 200 index today.
Why is the Paladin Energy share price storming higher?
Investors have been buying the company's shares on Tuesday after the company announced that it has commenced production at the Langer Heinrich Mine (LHM) in central western Namibia.
According to the release, both uranium concentrate production and drumming were achieved at LHM on 30 March 2024. This means that LHM will soon be able to capitalise on the sky high prices that uranium is commanding.
Management's focus will now shift to production ramp-up and building a finished product inventory, ahead of shipments to customers.
As part of the transition to production, Paladin's Chief Operating Officer, Paul Hemburrow will assume responsibility for all LHM activities.
'An important milestone'
Paladin Energy's CEO, Ian Purdy, described the news as an important milestone for the company. He commented:
Achieving first production at the Langer Heinrich Mine is an important milestone for Paladin. I would like to thank all our staff and contractors for their hard work and dedication in returning this globally significant uranium mine to production. I would also like to thank the Namibian Government and our local communities in the Erongo region for their continued support.
Purdy appears confident on the company's outlook given its strong balance sheet and the growing demand for uranium. He adds:
With a return to production, a strong balance sheet and supportive uranium fundamentals, Paladin is exceptionally well positioned to generate sustainable returns for all our stakeholders.
What's next?
LHM has already produced over 43 million pounds of U3O8 over a successful 10-year operational period.
Looking to the future, management is targeting even greater production. It previously advised that it is ultimately targeting peak production of 6 million pounds of U3O8 per annum.
But it will take time to ramp up to those levels. Nevertheless, over the long term, LHM is expected to be 4% of annual global uranium production. And over its estimated 17-year mine life, it is forecast to produce a total of 77Mlb of U3O8. Though, further upside is available through operational optimisation.
In the meantime, Paladin plans to provide guidance for key FY 2025 LHM operational parameters in the second half of the year.
Following today's gain, the Paladin Energy share price is now up 120% over the last 12 months.
