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Paladin Energy Shares Rise Amid Speculation on Potential Bids

By Angela Macdonald-Smith

May 19 (Bloomberg) -- Paladin Energy Ltd., the Australian producer of uranium in Namibia, rose the most in three months in Sydney trading amid speculation a recent decline in its share price makes it more likely to attract a takeover offer.

Paladin, based in Perth, gained as much as 54 cents, or 10 percent, to A$5.94 on the Australian Stock Exchange, beating an advance of as much as 4.1 percent in the exchange's benchmark energy index. The stock was at A$5.94 at 11:56 a.m. local time.

The company, whose shares were trading at about half the level of a year ago, has been rumored to be of interest to Canada's Cameco Corp., the world's largest producer of the radioactive metal, the Australian Financial Review said today in its Street Talk column. Cameco Chief Executive Officer Gerald Grandey said last week the declining uranium spot price made acquisitions ``more reasonable,'' the newspaper said.

``We expect ongoing consolidation in the uranium sector and Paladin could potentially be a candidate for downstream technology suppliers, countries, and/or reactors looking to secure raw material supply,'' Citigroup Inc. said in a May 15 report.

Paladin may also be interested in acquiring the Honeymoon uranium project in South Australia, which may be sold by the owner, Canada's Uranium One Inc., the Review said, without citing anyone. Deep Yellow Ltd. and WildHorse Energy Ltd., two rival Australian uranium explorers, may also be interested, it said.

Perth-based WildHorse gained as much as 11 percent, while Deep Yellow, also based in Perth, advanced as much as 33 percent. Deep Yellow said in a statement to the Australian Stock Exchange it couldn't explain the gain.

Honeymoon Suspension

Uranium One said May 14 it was suspending development of the Honeymoon project in South Australia as it focuses on developing its principal assets in Kazakhstan, South Africa and the U.S. The suspension will ``allow for evaluation of corporate development opportunities for the project,'' the Toronto-based company said.

Paladin's next uranium production mine, after the Kayelekera project under construction in Malawi, will probably be at the Angela deposit in Australia's Northern Territory, which may start up in about 2013, Citigroup said. It may also consider buying projects in North America that are in production or close to starting up, it said.

To contact the reporter on this story: Angela Macdonald-Smith in Sydney at [email protected]

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