time to short this high flyer?, page-22

re: real value Found one for you..Steve..

posted by jhamann..



In answer to Alan Partridge about forward projections.

Langer-Heinrich was 61 pct completed as at the end of March. The Langer-Heinrich project is within budget and is on schedule for commissioning in September, with the mining contract recently awarded for a July start.

PDN as you know have recently secured two additional sales contracts with US power utilities. The new contracts cover deliveries between 2007-2012 for more than 4.5 mln pounds of yellowcake. The new contracts are in addition to Paladin's first sales contract from the Langer-Heinrich project, which were announced in January. The pricing in all three contracts is market-related at time of delivery and subject to escalating floor and ceiling components.

The three contracts together total more than 6.6 mln pounds of yellowcake.

According to a World Nuclear Association report, estimated global uranium requirements in 2005 were 168 mln pounds, leaving a shortfall of 59.6 mln pounds which is supplied from diminishing secondary sources.

6.6 million pounds/2204.62(how many lbs make a tonne) = 2993 tonnes over five years.

If you divide this over five years you get
598 tonnes less new contracts/increased production.
ERA produced 5552 tonnes year ended Feb 06.

Revenue from ERA's tonnage was 266 mill. Prices fixed until 2008. At current prices PDN's average annual would be 24 mill.

Market cap for ERA is 2,783 mill and PDN is 2,018 mill.

ERA share price is 14.59
PDN is 4.55

What I think you need to calculate though is if the uranium price will continue to rise at .50 each month for at least 30 mths and then revenue forecast changes dramatically in 2.5 yrs to 73 mill at a per lb price of 55.5. Now 36% of ERA's Rev.

Best contrast I can draw to show at 4.55 x a 3.6 premium that 16.38 would the relative comparison to ERA's current price.

It just speculation and creative maths but PDN is not overpriced. I think fair value.