The restructuring of a U$45 million loan agreement between Nedbank and Paladin Energy initially agreed in January this year will save its Namibian unit, Langer Heinrich, from paying interest on the loan.
The money was borrowed by Paladin to support operations at its Namibian unit and Langer Heinrich was supposed to pay the interest due on the loan to its mother company, Paladin.
Paladin said this week that if consent is granted by shareholders, the interest that was due to be paid to it will now capitalise the mine while it is on care and maintenance until such a time that the mine recommences operations.
Paladin Energy Managing Director Michael Introna told the Windhoek Observer in an interview that as a result of the deal, Langer Heinrich Mine will not have to pay Paladin Energy Ltd the interest due and payable on the US$45 million loan on a quarterly basis and the interest will be capitalised.
“You need to understand that being on care and maintenance, LHU has no revenue source and is loaned the care and maintenance funds by Paladin,” Introna said.
In May, Langer Heinrich announced that it will go into a care and maintenance process due to low uranium prices, which will see about 600 people losing their jobs.
Introna said about 120 workers will leave at the end of this month and the rest at the end of August
“The retrenchments are done in phases. At the end of this month 120 people will leave, with a few remaining during August. We have received all the required confirmations to place the mine on care and maintenance and this was announced to the public on the 25 May 2018,” he said.
At the end of the retrenchment process, there will be approximately 20 employees left to take care of the plant, Introna said.
Last month, Langer Heinrich and the Mineworkers Union of Namibia signed a retrenchment agreement, in which workers will receive retrenchment packages of two months’ notice pay and two weeks’ severance pay for every 12 months worked.
Langer Heinrich also waived the workers' financial study assistance or bursary debt owed to the company. According to the agreement, if the company gets back into production in the next four years, the workers will be given preference for rehiring.
The Windhoek Observer reported last month that local suppliers, who provide various goods and services worth about N$402 million per year to Langer Heinrich Uranium Mine, are set to lose out after the mine was put under a care and maintenance.
The move is will hit the Erongo region’s economy, which like the rest of the country, is already reeling under the effects of the current economic recession.
Langer Heinrich has said the care and maintenance plan will remain in place until the spot price reaches US$40 to US$45 per pound and Paladin is in a position to restart operations.
The plan to stop production will cost about N$45 million per annum, depending on the exchange rate.
The company had hoped to produce 2.8 million pounds this year, but this is unlikely to be met.