uranium

Australia's ERA stake sale at A$9-A$10/share-source
SYDNEY, Dec 6 (Reuters) - UBS and Merrill Lynch are to offer 47.8 million shares in Energy Resources Australia Ltd. to institutions at a 31.5 percent discount, in a deal worth up to A$478 million ($359 million), a source close to the matter said on Tuesday.
The stake, amounting to about 25 percent of the company, is being sold by Canadian group Cameco Corp. , French group COGEMA and Japan Australia Uranium Resource Development Company Ltd.
The offer to institutions is being made between A$9-A$10 a share, compared with Energy Resources Australia Ltd.'s (ERA) Monday close price of A$13.13. ERA shares were placed on a trading halt early on Tuesday, pending an announcement.
Uranium miner ERA has a market value of A$2.5 billion, and Reuters Estimate forecasts an earnings per share (EPS) of 18.7 cents for calendar 2005, a drop of 7.4 percent from last year. EPS is projected to rise to 51.7 cents in 2006, offering the company a forward multiple of 25.3.
Shares in rival Paladin Resources Ltd. lost 3 percent to A$1.925 and some investors attributed the fall in part to the heavy discount offered for the ERA sale. Paladin trades at a forecast price to earnings multiple of 4.8.
"We are not going to participate, we feel we have got it covered through our Rio holding," said Robert Patterson, managing director of Argo Investments Ltd.

Rio Tinto Ltd./plc. , the world's second-biggest miner, is the single biggest holder in ERA, owning a 68.39 percent stake. Rio shares were down 1.1 percent in an overall weaker market.
The source said final pricing would come through a bookbuild, with an announcement expected later in the day.
ERA shares have nearly doubled in 2005, compared with a 14.2 percent rise in the benchmark S&P ASX 200 index , buoyed by a surge in uranium prices. The sale of the quarter stake will boost the amount of floating stock from 6.5 percent.
"There are environmental issues with ERA mines. But the market has been excited about uranium plays, and that is why they are up at this price," Patterson added.
Another fund manager, who declined to be named, said he was curious why Rio decided against buying the stake.
"If people are looking for an earnings growth story, it is probably not going to happen here. You won't get the full recognition of this uranium price upside for a long-time," the fund manager said.
Uranium is used in most of the world's nuclear plants and soaring oil prices and international attempts to reduce greenhouse gas emissions have thrown the spotlight back onto nuclear energy after many years of disfavour. ($1=A$1.33)
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PS…As tradem on SS board has said..
” love to know how they calculated the forward multiples for PDN. Once production starts, PDN's P/E will move in alignment towards ERA. If it is only 4.8 now and rises to 25” Geeeeessssseesssss…….