new aegis report pdn

Paladin Resources (PDN): Having
its yellow cake and eating it
We have included PDN's acquisition growth strategy and potential deposits in our
valuation and our 12-month price target has increased by 17% to $12.63 while the
expected total return for PDN stands at +45%.
Company Risk: Share Price Risk: Ethical Rating:
What to do (Investors): BUY
Economic emergence of China and India means that global energy consumption will grow
approximately 2% p.a. till 2030. Increased volumes of greenhouse gasses from fossil fuels are
providing the political impetus to support nuclear power as the only alternative that has zero
emissions. Hence, we expect a number of new reactors to be ordered this decade. Long lead times
in bringing on primary supply and rapidly depleting secondary stocks mean that PDN will be strongly
supported in the long term.
What to do (Trader): SELL
The last review of PDN was in early April. We placed a Sell recommendation on the stock, with a
downside target of $8.73–$8.43. The stock peaked a week later at $10.80 and last week hit $8.43.
Although PDN has reached our downside target, and whilst it is oversold, we see no clear evidence
that the rout is over. The stock can continue its downward path and the next level of support is at
$7.45. That level will be critical to the medium-term outlook and we would monitor closely for signs of
a turnaround.
Fundamental View
PDN is commissioning the Langer Heinrich uranium deposit in Namibia and has gained approval to
commence construction of the Kayelekera uranium deposit in Malawi. The company also has four
other deposits in Australia awaiting government approval. Uranium has received a political boost,
with the Labor Party overturning its three-mine uranium policy. We believe that PDN is a solid entry
option to those who want to invest in the high-risk uranium sector.
KEY STATISTICS
FINANCIAL SUMMARY
COMPANY OVERVIEW
Price: $8.45
Price as at: 18-May-07
Market Cap ($M): 4,650.5
Equiv. Shares (M): 550.4
% Market: 0.22
12Mth Range ($): 3.30 - 10.80
Turnover ($M pa): 5,085.2
Index: S&P/ASX 100
Sector: Materials
Industry Group: Materials
Industry: Metals & Mining
Sub
Industry:
Diversified Metals &
Mining
Yr to Jun 06A 07F 08F
NPAT Rep ($M) (8.5) 27.2 191.6
NPAT1 Adj ($M) (7.5) 28.5 191.6
EPS (c) 0.0 5.6 35.0
DPS (c) 0.0 2.0 10.5
P/E (x) 0.0 >99 24.1
Yield (%) 0.0 0.2 1.2
Franking (%) 0 100 100
EPS growth (%) n/a n/a 520.5
1 Profit & EPS adjusted for options,
goodwill, notional earnings and non
recurring items.
Paladin Resources (PDN) is an
uranium producer, which is on the
acquisition trail for advanced
uranium projects. It has key JORCcompliant
uranium projects in
Australia and Africa, including the
Langer Heinrich Project in Namibia,
the Kayelekera Project in Malawi,
the Valhalla and Skal deposits in
Queensland and the Manyingee
and Oobagamba projects in
Western Australia.