Games and more games, page-41

Hi Sydney,

In the last quarterly conference call, the CEO took some pretty robust questioning from the analysts on the subject of a corporate transaction. He said they are talking to a number of parties basically about what those parties might be interested in. Some of the discussions involve a change of control and some don't. Worth a listen.

FWIW here's my 2 cents worth.

1. PDN is currently valued at way less than the intrinsic value because of the bond maturity in 2017 which they don't have the cash to meet.
2. Any corporate action will deal with this issue and so remove the discount in the SP - hopefully without savaging shareholders in the process.
3. The quantity of reactors coming on stream, particularly in China means that there will be significant inventory build up over the next 4 years. BUT
4. The market is still concerned about the Japanese inventory overhang post Fukushima, which will be resolved over the next year or two as the reactors progressively restart.
5. Current U3O8 prices are at about as low as they can go without shutting the industry down (at about the 25 percentile for all in costs or 75% of the industry is losing money)
6. If U3O8 prices rise, PDN has an operation on care and maintenance to restart giving more upside.
7. PDN is going to be cash positive for the current half for the first time in a long time having reduced costs materially - but the analysts won't factor this in until it happens.

Cheers,
Tim.