PDN 7.32% 44.0¢ paladin energy ltd

good news

  1. 422 Posts.

    Kevin Andrusiak | July 18, 2007
    ANALYSTS have upgraded their forecast for Paladin Resources' 2006-07 financial year to a loss of $31.5 million, as teething problems and shipping delays at the company's African operations are largely resolved.

    Southern Cross Equities has elevated the stock to a "buy" recommendation on the back of continued strength in the uranium market and the successful $1 billion acquisition of Summit Resources.

    The broker added that the Valhalla project, which it now controls virtually outright after initially having a 50 per cent stake prior to the Summit bid, would become a "cornerstone" growth project for Paladin.

    "With the share price retreating in recent months, value is now emerging in Paladin," Southern Cross analysts said in a note to clients.

    "While on a price to EBITDA ratio, Paladin compares well with its global peers.

    "Our target price of $10 a share is a premium of 1.5 times the 12 month net present value of $6.57. We use a premium as Paladin is one of the few largely unhedged producers in the robust uranium market, which should give it the opportunity to grow rapidly, either organically or through acquisition."

    Southern Cross has also upgraded its short-term spot uranium price from $US95 a pound to $US125/pound against a current spot price of $US129/pound.

    Paladin's share price high of $10.70 was reached on April 10 from where it retreated to a low of $7.78 as it struggled with teething problems at its Langer Heinrich mine in Namibia.

    Meanwhile, Paladin has dismissed rumours it has recently become a takeover target for uranium heavyweight Cameco.

    "The company can emphatically state that Cameco has not approached Paladin in this regard," company managing director John Borshoff said in a statement to the Australian Securities Exchange.

    Paladin's share register is very open with no one entity controlling more than 4.4 per cent of the available stock.

    According to Bloomberg, Mr Borshoff has a 3 per cent stake in the company while chairman Rick Crabb owns about 8.97 million shares, or 1.5 per cent.

    Paladin shares gained 24c to $8.52.
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