Australia-based Paladin Energy Limited plans to start arbitration proceedings against China National Nuclear Corporation subsidiary, CNNC Overseas Uranium Holdings Ltd (CNNC Overseas), amid indications it will seek to acquire Paladin's interest in the Langer Heinrich uranium mine in Namibia. CNNC Overseas bought a 25% joint venture equity stake in Langer Heinrich for $190m in January 2014.
Paladin earlier notified the Australian Stock Exchange that CNNC Overseas had requested it begin the process of determining "fair market value" of Paladin's 75% share of Langer Heinrich. This was seen as a first step in a process that could lead to CNNC Overseas exercising an option entitling it to acquire Paladin's share in the Namibian mine.
The fair value determination process depends on CNNC Overseas establishing that an "event of default" has occurred under the Langer Heinrich Mine shareholders agreement. Paladin denies that such an event has occurred and is therefore disputing the validity of CNNC Overseas' notice. The shareholders agreement is subject to the laws of Western Australia, under which such disputes must be referred to arbitration before the Singapore International Arbitration Centre, Paladin said. The company is seeking to extend existing standstill arrangements with creditors to allow it time to pursue the arbitration proceedings.
Paladin last year announced plans to sell 24% of Langer Heinrich to CNNC Overseas, but in December announced the sale was no longer likely to close before the end of the final quarter of 2016. With no progress on the sale, Paladin in January announced a balance sheet restructuring to enable it to meet a $212m debt obligation due in April 2017. Paladin said on 23 March that, if the potential CNNC Overseas option is found to be valid, it is unlikely it will be able to implement the restructure proposal.