The below is a short worked example, curated from a twitter account known as yellow lab. It’s a great run through of insightful commodity centric analysis.


Uranium is back in vogue, or as close to back in vogue as it ever gets. Market participants are talking again about how “nuclear is the best option” going forwards. (we don’t share those views, but it’s not the point of the note, so we’ll park that for now.)

And thus, as you might reasonably expect, companies in the space are looking to restart/reaccelerate production plans.

The story

Paladin (PDN) have provided the below, to market, an equity raise to “restart” a project.

However the equity raise, quite clearly, goes toward paying off the senior notes. The use of funds section does not say “to get the plant going” for instance.

The next slide has the plan for mine operations and output. It seems to suggest there is $81m of pre-production capex.

Add up the life of mine production, using the years (marked as “Y” above), for example Y2:Y8 seem to be at about ~6m and Y9: Y17 at ~3m.

As Yellow lab walks us through the maths, 6*7 + 3*9 = ~69mlbs over the mine life. The little bits at the front and back end mean we can maybe say 74 to 75mlbs for a production number.

We now need to do revenues minus costs, which will be Production x Price – Production x Cost.

We’ve got the price of uranium, which at time of writing is ~$31/lb, and we’ve got the cost estimates from the slide deck of $27/lb, plus some freight and logistics costs and sustaining capex.

That’ll be about $31/lb, against our $31/lb price, minus a royalty.

We could stop there and note that the current spot price minus a royalty seems to be below the all in sustaining cost.

That doesn’t seem like a great deal.

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