Sunday, July 09, 2006

July 9 Uranium Stocks Update: Paladin Resources (TSE:PDN)

A report from The West Australian claims that the trading halt of Paladin on the ASX is probably due to its attempted takeover of Resolute Mining-controlled Valhalla Resources and their uranium deposits in the Queensland region, where uranium mining arguably may be permitted sooner than any other Australian territory, although protection of the coal industry remains a considerable roadblock.

It is understood Resolute is negotiating to sell its 83 per cent stake in Valhalla to Paladin. Valhalla shares last traded at $1.22, valuing Resolute’s stake at just over $120 million.

Paladin’s chief focus remains on Langer Heinrich and the Kayalekera project in Malawi, but it has made no secret of its desire to start mining in Australia within five to 10 years.

This is a reasonable estimate of how long it will take for uranium to ever be mined out of new Australian mines. Paladin is trying to diversify its core holdings and $120 million, while significant for a $2 billion dollar uranium junior, is a fair price for future growth.

Yet the prospects of a trouble-free deal with Paladin appear unlikely, given Summit’s own desire to consolidate the Valhalla and Skal projects.

Summit Resources ASX:SMM owns a portion of the properties of interest and PDN.TO will likely have to negotiate with them to seal the deal.

I'd like to emphasize at this point that no official announcement has been made by Paladin as of this time. However, it seems that uranium merger mania might have struck again..
 

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