Shares of ASX-listed Paladin Energy (AU:PDN) tumbled nearly 30% after the company cut its production guidance for FY25. The company now expects to produce between 3.0 million and 3.6 million pounds of uranium as compared to the previous estimate of 4.0 million to 4.5 million pounds. Additionally, Paladin withdrew all other guidance for FY 2025.
Paladin Energy is a uranium producer based in Western Australia. The company operates the Langer Heinrich Mine (LHM) located in Namibia.
Paladin Faces Production Setbacks at Langer Heinrich Mine
The updated guidance by Paladin reflects major production setbacks at its Langer Heinrich Mine in Namibia. LHM produced lower-than-expected uranium in October while also facing challenges in increasing its production at the mine. Production was mainly hit by lower quality of uranium ore and reduced water supply from NamWater for the mining process.
Looking ahead, Paladin expects production to rise in the second half of FY2025, as the company works to overcome the challenges it has faced in increasing operations at the LHM. The company has scheduled a two-week shutdown at the LHM in the second half of November. It aims to implement various improvements and operational upgrades with this shutdown.
Nuclear Energy Boom Spurs Uranium Market Growth
Overall, uranium has strong prospects, driven by large tech companies’ push towards nuclear energy to meet the growing power demands of their data centers. Last month, PDN shares surged 10% in a single day following Amazon’s (AMZN) announcement of its investment in nuclear energy. Before that, Alphabet/Google (GOOGL) also signed agreements to use small modular nuclear reactors to meet its energy demands.
Nuclear power plants use a specific type of uranium, indicating that these agreements could lead to a significant increase in uranium demand in the future.
Is Paladin Energy a Good Buy?
According to TipRanks’ rating consensus, PDN stock has a Strong Buy rating based on seven Buy recommendations. The Paladin Energy share price target is AU$14.42, which shows growth of 108.3% at the current price level.
Year-to-date, PDN stock has lost over 30%.
