hold the line, page-5

Yellowcake

You raise a good point, which is that PDN may be tempted to sell its stake in SMM.

However, Paladin has raised a substantial amount of money from the institutional share placement and the sale of the 25% stake in its Langer Heinrich mine in Namibia. Of course, depending on where uranium prices go, this may not be sufficient, and PDN may need to find more cash in the future to weather the storm.

However, I think Paladin is aware that it is unable to obtain much value from selling SMM on-market, because due to the low liquidity of the stock, this would potentially send the share price into an abyss. This would not yield much cash, and it would damage PDN's balance sheet.

Paladin may however pursue and "off-market" sale, similar to the sale of the 25% stake in its Langer Heinrich mine in Namibia. An off-market transaction may be less detrimental to the share price, assuming that PDN is able to find an interested party. But I think all interested parties are watching their own cash and balance sheets at the moment.

The larger Australian miners are looking at decreasing costs at the moment. They don't seem to be very interested in the uranium sector at the moment. BHP is investing in technology to drive down production costs. And RIO has to deal with its own majority shareholding in ERA, which has its own issues (indefinitely suspended uranium processing operations at Ranger and the costs of reinstatement of the landscape).

Any sale of shareholding in SMM is more likely to come from further deals with Chinese or other energy companies who see an opportunity to secure long term supply security for their nuclear power plants. However, given China's demonstrated appetite for the established mining operations at Langer Heinrich, its more likely that PDN will be selling more of its shareholding in its existing mines.

I don't expect any major share trading activity in SMM from PDN or any other major players. They have their eyes on other matters.