Tommytwo, as requested:Shares in uranium producer Paladin Energy...

Tommytwo, as requested:

Shares in uranium producer Paladin Energy shares look cheap in light of Russian company ARMZ’s bid to privatise Canada’s Uranium One, analysts believe.ARMZ has offered $C1.3 billion ($1.25 billion) for the 48.6 per cent of Uranium One that it doesn’t already own, valuing the company at $C2.7 billion.Using the 2013 forecast production multiple paid by ARMZ, Patersons analyst Simon Tonkin arrived at a $1.86 billion enterprise value for Paladin.This equates to a per-share value of $2.22, well above the stock’s current price of $1.14.But Tonkin pointed out that Uranium One’s production costs are much lower than Paladin’s ($US19 a pound versus $US34 a pound of uranium oxide).Adjusting for the cost differential, he still arrived at a price of $1.24 a share.Paladin’s current share price looks even more anaemic if the resource pounds/enterprise value multiple used in the ARMZ-Uranium One transaction is applied, according to Tonkin.ARMZ is paying $11.08 a pound for Uranium One’s 269 million-pound resource base; Paladin has a 370 million pound resource base. Multiplying that figure by $11.08 gives an enterprise value of $4.1 billion.Adjusting for cash, debt and less competitive costs brings that back to $2 billion, which equates to $2.39 a share.Paladin is due to report its December quarter production figures on Thursday.Tonkin is expecting a solid operational performance from the company’s mines in Namibia and Malawi with production forecast at 2.1 million pounds.He also anticipates that the effects of cost-saving initiatives implemented by the company will have begun to show.h