Sept Qtr (1Q12) Results In-Line. "PDN reported adjusted Sept-Qtr
(1Q12) EPS $0.01. Adjusted results compare to our estimate of
break-even. As previously reported on October 31st, 1Q12 production
at Langer Heinrich (
) of 0.849Mln lbs U3O8 was below our estimate (1Mln lbs) while
Kayelekera production of 0.395Mln lbs was in-line. Reported sales
came in at 2Mln lbs at an average realized price of $51.33/lb."
View: Slight positive. "Cash costs at Langer-Heinrich of $32/lb
were in-line despite production being impacted by six days of
downtime required for the tie-in of Stage-III equipment and
stronger Namibian Dollar. Mgmt noted that the LH Stage-III
expansion is 99% complete and the Stage-IV feasibility study is
expected to be finalized at the end of December along with the
Environmental Impact Assessment. Cash costs at Kayelekera of $40/lb
were better than expected despite a total of six weeks of downtime
due to plant upgrades and unscheduled maintenance. Kayelekera
operated at 50% of nameplate during the quarter. We forecast mine
and plant optimizations will reduce cash costs to $30/lb by the
June-Qtr (4Q12) vs. $35/lb in Sept-Qtr (1Q12). As a result of weak
uranium prices, PDN reduced the carrying value of Kayelekera to
$337Mln (from $470Mln, total impairment $133Mln)."
Catalyst: "Seeking out JV's for farm-out of minority interests
in non-producing Australian assets is underway. Mgmt commented that
responses so far have been encouraging and incremental progress
should be made in the Dec-to-Mar quarters. We estimate PDN's total
development portfolio is worth $438Mln (based on an in-situ vale of
$3/lb). As such, we estimate proceeds from the sale of a 20%
stake(s) could raise proceeds of $85-90Mln."
Valuation: "Our TP of C$3/share is based on 1.2x our NAVPS of
C$2.70/share. Our valuation includes $0.70/share for exploration
and development properties."