PDN -3.95%: announced today that production has been suspended at their Namibian operation due to heavy unseasonal rain – these weather events occur once in about every 5 years in Namibia – it’s typically a very dry climate. It’s not yet clear how long the operation will be suspended for, however given current production is processing stockpiles of existing ore tailings, the primary issue is lack of access to the site due to flooded roads rather than damage to the operations.
We’re optimistic the site should be back up to speed quickly once the flooding and rain fades and reassuringly in the interim, the balance sheet is firm with circa ~US$150m cash. We will wait to hear more from management who will likely update the market on the impact to production and guidance as the situation develops.
We’re keeping a close eye on this, though from the information we have it seems like an unavoidable weather event, a short-term issue and our thesis on the stock/thematic remains intact.
MM remains long and bullish PDN
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