Paladin shares have jumped six per cent after the uranium miner announced it will sell a 25 per cent stake in its Langer Heinrich mine in Namibia to China Uranium Corporation for $US190 million ($A217.18 million).
The sale will be largely used to pay down debt as the uranium price hovers around record lows.
At 1110 AEDT Paladin shares were three cents, or 6.2 per cent, higher at 60 cents.
The Perth-based uranium producer had been looking for a buyer for a minority stake in its flagship Langer Heinrich uranium mine to improve its balance sheet, following a $40 million loss in the September quarter.
Paladin said the deal with China Uranium Corporation Limited, a wholly owned subsidiary of China National Nuclear Corporation (CNNC), would allow CNNC to purchase its pro-rata share of product at the prevailing market spot price.
CNNC has agreed to pay a $US20 million non-refundable deposit.
Completion of the transaction is subject to Chinese regulatory approvals, including approval by the National Development and Reform Commission, which is expected to be obtained by mid-2014.
Paladin managing director John Borshoff said the company had conducted an exhaustive and wide-ranging sale process.
“The significant cash injection from this minority interest sale will largely be applied to debt reduction, which the board considers an essential step during a time of unprecedented low uranium prices,” Mr Borshoff said.
“This will help stabilise the company, establishing an incredibly strong platform that will enable us to maximise the value of our assets and ensure increased production of much needed uranium once the price is sufficient to support the planned future growth of nuclear energy in China and elsewhere.”
Director-in-General of CNNC Du Yunbin said CNNC was looking forward to having “further prosperous co-operation” with Paladin.
It comes after Paladin’s shares rose eight per cent on Friday after announcing it will save more than $67 million after refinancing its debt facility.
Paladin’s finance facilities for the Langer Heinrich uranium mine in Namibia and its Kayelekera mine in Malawi have both been refinanced, leading to a $US59 million reduction in debt repayments over the 2014/15 calendar years.
Langer Heinrich has a current design capacity of 5.2 million pounds of uranium concentrate per annum.
Paladin is targeting 5.7 million pounds of production in fiscal 2014, with a 20-year mine life.
The company says the mine is capable of being expanded further to produce about 8.5 million pounds per annum.
