PDN 0.00% 11.5¢ paladin energy ltd

extract for pdn in report about mining sector

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    source: citigroup, pls DYOR, thx. i only pasted this one.

    Metals & Mining Sector
    20 November 2008
    25 Citigroup Global Markets
    Paladin Energy Ltd (PDN.AX)
    Cash Rich
     Buy Retained — Paladin is Buy rated with an unchanged target price of
    A$3.00/share. Key changes to the model have been a 30% reduction in
    2009 earnings on slower Kayelekera ramp-up and higher interest and
    exploration costs. This has been offset by the impact of the lower A$ and the
    translation through our US$ NPV to an A$ target price.
     Examining debt and cashflow — PDN is in a relatively comfortable debt
    position having launched convertible bonds in early 2008. The falling A$ is
    not an issue for debt valuation as functional and reporting currency is in
    US$. Long-dated convertible bonds with first maturity in Dec 2011 are 90%
    of the borrowings. Facilities totaling US$641m are fully drawn and there is
    substantial cash on hand.
     Net debt — Reported net debt to end-June 2008 was US$245m, growing to
    US$307m by end of Sep 2008 after cash burn of US$58m. Net debt
    increases to US$304m at June 2008 and US$362m at Sep 2008, if the full
    value of out-of-the-money convertible bonds are taken as debt.
     Sufficient Debt — On our estimates the company has sufficient debt to
    complete Kayelekera, Langer Heinrich stage 2 and 3, and early capex at
    Bigrlyi and Isa Uranium (both at 50% probabilities) without drawing down
    project financing for Kayelkera (US$167m planned).
     More Project Finance? — Potential for additional debt as US$167m seven
    year project finance offer accepted for Kayelekera, but awaiting legal
    documentation and fulfillment of precedent conditions. This would further
    increase balance sheet flexibility, but no guarantees in the current market.
     Spot Uranium — On spot uranium price of US$48/lb (Citi US$60/lb in
    2009e) operating cashflow would be lower (realised price 50/50 mix between
    term and spot), but net debt would remain comfortably within limits.
     Paladin Nuclear — Funding for more uranium purchases for Paladin Nuclear
    trading arm would push up net debt, but current signs are that PDN is
    reining in spending, despite tempting spot price, unless cashflow is secured
    through additional debt.
    Company Focus
    Buy/High Risk 1H
    Price (20 Nov 08) A$1.85
    Target price A$3.00
    Expected share price return 62.2%
    Expected dividend yield 0.0%
    Expected total return 62.2%
    Market Cap A$1,136M
    Price Performance (RIC: PDN.AX, BB: PDN AU)
    PDN.AU (Y/E Jun) 2008A 2009E 2010E 2011E
    Reported Profit (US$m) -36.0 28.1 104.3 169.3
    Core Net Profit (US$m) -36.0 28.1 104.3 169.3
    Core EPS (US¢) -5.9 4.6 17.0 27.6
    Core EPS Growth (%) 7.9 178.2 270.5 62.4
    PE Ratio (x) -20.1 25.7 6.9 4.3
    DPS (US¢) 0.0 1.0 5.1 8.3
    Dividend Yield (%) 0.0 0.8 4.3 7.0
    Franking Rate (%) 0.0 100.0 100.0 100.0
    P/Operating Cashflow (x) -36.9 12.4 4.9 3.7
    ROE (%) -2.6 2.0 7.7 11.9
    Source: Powered by dataCentra
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