Analyst Actions: Credit Suisse Gives Paladin Energy "Outperform" Rating As Results Meet Expectations


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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 ( LH ) 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."

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Copyright (C) 2014 All rights reserved. Unauthorized reproduction is strictly prohibited.

This article appears in: Investing , Commodities

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