Paladin Energy (ASX:PDN) has signed a 6 year off-take agreement with a major utility to deliver a total of 13.73 million pounds of uranium U3O8 in the period from 2019 to 2024 incorporating a prepayment of US$200 million as its key feature.
Underscoring the long term supply issues expected to beset the uranium sector, the deal would see the pre-payment to Paladin before January 31, 2013.
The name of the utility was not divulged.
Delivery will be from its current African mining operations or a project yet to be developed from the Company’s significant existing project pipeline or a combination of these options.
Uranium delivered under the LTC will be sold at market prices prevailing at the time of delivery bounded by escalating floor and ceiling prices.
To secure Paladin’s obligation to deliver product representing the prepayment amount, the utility will hold security over 60.1% of Paladin’s Michelin project in Canada.
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