Paladin Energy (ASX:PDN) Higher Grades Drive a Strong Quarter

Why the Market Re-Rated This Uranium Update

Despite broader market volatility, Paladin delivered a strong operational result, with the share price rising around 10% following the quarterly update. In our view, the move reflects improving execution and growing confidence in the company’s production profile.

During the quarter, Paladin produced 1.23 million pounds of uranium and sold a total of 1.43 million pounds. Production increased 16% quarter on quarter, driven by higher ore feed grades. This improvement was largely due to a greater proportion of mined ore being processed through the plant, which supported higher overall throughput.

On pricing, the company achieved an average realised uranium price of US$71.20 per pound. Average operating costs came in at US$39.10 per pound. Realised pricing increased, and costs declined quarter on quarter, which is a positive outcome given the resulting margin profile. Importantly, this delivered an operating spread of approximately US$32 per pound.

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Investing Today to Secure Tomorrow’s Production

One of the more encouraging takeaways from the quarter was that most key operating and financial metrics showed improvement. While this is only a single quarter and investors should remain mindful of short-term variability, the overall performance was strong across the board and points to improving operational momentum.

Capital expenditure increased to A$1.9 billion for the period, up from A$0.9 billion previously. This reflects deliberate investment into infrastructure and processing capability towards its 2026 production goals, alongside approximately A$0.5 million allocated to exploration activities. In our view, this level of reinvestment supports longer-term production reliability rather than short-term optimisation alone.

FY26 Guidance

Looking ahead, Paladin has guided to FY26 production of between 4.0 and 4.4 million pounds, with expectations tracking toward the upper end of that range. The ramp-up phase is targeted for completion by the end of FY26, with full mining and processing operations planned for FY27. This provides investors with a clearer line of sight to a more stable and fully operational production profile.

The company ended the period with a strong cash position of A$274 million, which provides flexibility to fund remaining ramp-up activity while maintaining balance sheet resilience. From a capital position standpoint, Paladin appears well-funded for the next phase of its operational lifecycle.

The Investors Takeaway for PDN

In our previous note, we rated Paladin a Buy around A$8 to A$9 per share. While we continue to believe strongly in the company’s long-term growth trajectory, investors should expect volatility along the way. Policy uncertainty and broader macro headwinds around nuclear energy can drive sharp price movements, particularly after strong runs in the share price.

Given the recent rally, our view is that Paladin is better positioned as a Hold in the near term. We would look for a more attractive entry point before becoming more constructive again, while remaining confident in the longer-term fundamentals of the business.