Paladin Energy reported in early February its subsidiary company, Paladin (Africa) Ltd. (PAL), is suspending production at the Kayelekera uranium mine in northern Malawi. The mine will be placed on care and maintenance until the price of uranium recovers. Production during 2013 totaled 2.94 million lb of U3O8.

The Paladin announcement pointed out that the spot uranium price has dropped from $72.63/lb prior to the Fukushima earthquake and tsunami in Japan in March 2011 to a current price of $35.50/lb.

The government of Malawi, which has a 15% interest in PAL, has been notified of the decision to suspend operations at Kayelekera. About 194 Malawi national employees and 27 expatriate staff will be retained to maintain the site.

Paladin managing director and CEO John Borshoff said, “The Kayelekera mine has performed exceptionally well technically, with production levels recorded at or near nameplate capacity over the past 12 months and significant achievements made in PAL’s cost reduction program. Nevertheless, despite these considerable efforts, Kayelekera continues to operate at a loss due to the low prevailing uranium price. Paladin is unable to continue to provide the level of financial support that PAL has required in recent years, hence the decision at this time.

“By placing Kayelekera on care and maintenance now, we are preserving the remaining value of the orebody until it can be mined profitably to make a positive contribution to the Paladin Group,” Borshoff said.

Mining operations at Kayelekera have already been suspended. Ore processing is continuing during a transitional rundown phase until reagents and consumables on site have been depleted and the production circuit has been emptied and cleaned. The plant then will be placed on care and maintenance. This rundown/sterilization phase is slated for completion in April or May.

“Paladin remains committed to its vision of the long-term viability and strength of the nuclear sector and to its presence in Malawi,” the Paladin statement said. “Paladin intends to maintain its presence in Malawi and to continue exploration activities in the country, with the objective of identifying and delineating additional uranium resources in order to assure the long-term future of Kayelekera.”

Production at Paladin’s Langer Heinrich uranium mine in Namibia, which has a significantly lower cost profile than Kayelekera, will not be affected by the suspension of operations at Kayelekera.