"We like Paladin Energy Ltd. (PDN:TSX; PDN:ASX) and rate it as a buy with a $2.40 target price. Paladin has really delivered this year. Production and sales targets were met with realized prices 13% above spot. Cost-cutting targets at both operations exceeded expectations. Operations achieved capacity. Debt was trimmed. Production guidance was increased for next year and we believe a potential game-changing strategic initiative lies waiting in the wings. Paladin has huge leverage to rising uranium prices with costs that are coming down rapidly. We do expect a strategic partnership to be announced likely later this quarter. We believe that Paladin might be willing to sell about 20% of its Langer Heinrich mine in Namibia. Our NAV valuation suggests perhaps a $200–300M price tag for that. The company has a disciplined expansion approach here. We think right now is the time for investors to take advantage of the turnaround in Paladin. The stock still trades at a discount to its peers. With this strategic alliance, we do expect a rerating in the stock as debt levels fall further."
I am not the selling type unfortunately. I said I wouldn't buy anymore, but similarly 2.40 is too low to sell. Clearly, it won't happen this year anyway.
In the meantime, enjoy the ride.
PDN Price at posting:
64.0¢ Sentiment: Buy Disclosure: Held
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