Another good buy opportunity??+++++++++++++++++++++From Ageis 2...

Another good buy opportunity??

+++++++++++++++++++++
From Ageis 2 May

Event
PDN's first operational deposit, Langer Heinrich has just completed its first quarter of production. It is currently
running at 70% of design capacity. The Malawi government has approved the development of the Kayelekera
uranium deposit, with capex estimated to be up to US$185M. Construction is about to commence.
Implications
As well as developing a number of advanced projects such as Langer Heinrich and Kayelekera, PDN has
embarked on an acquistion growth strategy. PDN purchased Valhalla Uranium via a friendly scrip-bid and the
company appears to be successful in its hostile take-over of Summit Resources. We believe that there is
significant unrealised benefit in these two acquistions, with a number of potential deposits which could increase
PDN's Uranium reserves by up to 46% and can be mined concurrently with the much larger Valhalla prospect.
We believe that PDN's next acquisition will be the Bigrlyi uranium project in Northern Territory - the company
currently controls 41.7%. Both Energy Metals (53.3%) and Southern Cross Exploration (5%) have publicly stated
that they have had expressions of interest regarding the sale of their holdings in Bigrlyi. Although we decreased
FY07 production 47% to reflect the company's guidance we have also updated the market value of PDN's
holdings in both Bigrlyi and Deep Yellow. Our valuation has increased by 23% to $9.18 and our 12-month price
target has increased by 17% to $12.63. With a stronger medium term production profile and continued Uranium
price strength we are changing our recommendation from a Hold to a BUY.
Investment Opinion
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.
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 over-turning its 3-
mine uranium policy. We believe that PDN is a strong entry option to those who want to invest in the high-risk
uranium sector.
Paladin Resources Limited
ASX: PDN Bloomberg: PDN AU Reuters: PDN.AX 02 May 2007
$9.26
BUY
3Q07: Langer Heinrich begins to contribute
# of Shares: 550M Market Cap: $5,283M Current Price: $9.26
% All Ords: 0.3% % Sector: 1.0% 12 Month Target: $12.63
FIGURE 1: SHAREPRICE CHART TABLE 1: EARNINGS SUMMARY
Yr to Jun 2006A 2007F 2008F 2009F
NPAT Rep ($M) (8.5) 27.2 191.6 267.1
NPAT1 Adj ($M) (7.5) 28.5 191.6 267.1
EPS (c) 0.0 5.6 35.0 48.6
DPS (c) 0.0 2.0 10.5 14.5
P/E (x) 0.0 >99 26.4 19.1
Yield (%) 0.0 0.2 1.1 1.6
Franking (%) 0 100 100 100
EPS growth (%) n/a n/a 520.5 38.6
1 Profit & EPS adjusted for options, goodwill, notional earnings
and non recurring items.