Invest4ProfitPaladin Resources| PDN Posted: May 9, 2006 Paladin...

Invest4Profit
Paladin Resources| PDN
Posted: May 9, 2006

Paladin has a VERY bright future.
Existing shareholders should hold.
If the value becomes compelling:
It is a stock I will again recommend.
Business Model
Paladin is Australia's # 1 uranium developer.
Production is ramping up at Langer Heinrich.
Kayelekera is due for commissioning in Sept 2008.
Paladin's uranium resource is a massive 267.1 Mlb.
Paladin also has a 10.6% stake in Deep Yellow.
Investment Analysis
Since 2001 uranium prices have risen roughly 1400%.
Even so, there's the potential for further gains.
435 reactors produce 16% of the world's electricity.
Due to concerns over greenhouse gas emissions,
an increasing number of countries are now turning
to nuclear power.
28 nuclear reactors are currently under construction,
and another 222 are in the planning process.
How this demand will be met is still unclear.
Mined uranium supplies about half global demand.
For 20 years secondary sources filled the gap,
but now the secondary sources are in sharp decline.
Production has to rise to meet demand,
... but existing mines are already near full capacity.
In addition, Cameco's HUGE Cigar Lake project,
which was due to start in 2008, has been delayed
for at least a year.
Cigar Lake was expected to output 18 million pounds
of uranium annually, or 10% of demand.
No developer is better placed to benefit than Paladin.
By 2009 only 2 new uranium mines will come online,
... and Paladin owns 100% of both projects.
Once Langer Heinrich and Kayelekera are at capacity,
... PDN's uranium output is expected to hit 7Mlb a year.
By 2010 uranium output could be increased to 8Mlb.
Given the bullish long term outlook for uranium prices,
... at the right price, PDN is a great stock to own.
In conclusion, Paladin is a terrific stock for investors,
however that's based upon buying at compelling value.

Key Metric 2002 2003 2004 2005 2006
Uranium Price $US/lb $10.20 $14.45 $20.60 $36.38 $72.00

P/E Analysis
In 2008 I expect a net profit of $110 million.
Due to added production from Kayelekera,
I expect a net profit of $250 million in 2009.
Based on $9.60 the 2008 P/E is 58.4.
Looking out to 2009 the P/E is still at 25.7.
I do NOT recommend PDN at the current price.
It's not cheap enough.
For compelling value, at this stage, I'm looking
for a share price closer to $7.
I'm NOT forecasting a fall, but in order to see
compelling value, that is what needs to unfold.

Financials 2002 2003 2004 2005 2006
Market Capitalisation [$m] 5 7 3 47 1,867

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