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Paladin Energy (ASX:PDN) share price sinks 24% on FY25 update

The Paladin Energy Ltd (ASX:PDN) share price has sunk 24% after the ASX energy share gave a disappointing FY25 update.

The Paladin Energy Ltd (ASX: PDN) share price has sunk 24% after the ASX energy share gave a FY25 update.

Paladin Energy is a relatively large uranium miner that is listed on the ASX.

Paladin Energy’s FY25 update

The company said the production ramp-up at the Langer Heinrich Mine (LHM) continues.

In the year to date to the end of October 2024, it said it had processed 1.1 million tonnes, with plant recovery rate of 73.5%.

Paladin Energy said it produced 826,346 pounds of uranium (U308) and sold 823,064 pounds.

October production was lower than planned due to two factors.

First, continued variability in the stockpiled ore processed, resulting in a lower than planned average feed grade for the month.

Second, disruptions to the supply of water from NamWater, which restricted the throughput volume of ore tonnes processed through the plant.

The average realised price for its sales was US$73.1 per pound, compared to a cost of production of US$44.8 per pound.

The ASX uranium share also said its sustaining capital expenditure was US$6 million.

Downgrade of guidance

Paladin Energy said that as a result of the lower-than-expected production results for October, and the ongoing challenges and operational variability experienced to date in ramping up production at the Langer Heinrich Mine, the business decided to reduce its guidance.

FY25 production guidance is now between 3 million pounds to 3.6 million pounds, down from the previous 4 million pounds to 4.5 million pounds. It has also withdrawn all other guidance relating to FY25.

This could have a “material impact on the company’s unit operating costs and the realised price for uranium sales”, according to Paladin.

Forecast capital expenditure will be re-assessed due to the LHM operational performance to date.

The ASX energy share expects production to be higher in the second half of FY25 as the company continues to work through the current challenges encountered at the LHM to date, ramping-up operations.

A planned shutdown is scheduled for the second half of November 2024, which is expected to allow for various improvement and operational upgrades for the LHM.

Final thoughts on the Paladin Energy share price

The business is expecting the ramp-up to continue over the next year or so. Paladin said it remains confident of achieving a production run rate of 6 million pounds per year at the LHM by the end of the 2025 calendar year.

I’m not an expert on uranium or Paladin Energy shares. If the uranium ASX share can keep growing production, it could benefit from growing demand for uranium, so this sell-off could be a longer-term opportunity. But, it’s certainly a higher-risk idea and not one I’m looking to buy.

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