Analyst Actions: Credit Suisse On Paladin Energy - Uranium Prices Remain Flat; Mgmt Issues Clarifying Statements

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Uranium Prices Remain Flat; Mgmt Issues Clarifying Statements

Event: PDN provided an investor update to clarify certain issues and comments following the release of Sept-Qtr financial results and conference call.

Impact: Neutral/In-line. PDN reaffirmed its FY13 production target of 8-8.5Mln lbs U3O8 and noted that post-qtr results, Langer Heinrich ( LH ) has produced at 110% of design rates, and Kayelekera at 96%. PDN also reiterated its cost cutting targets of 15% (minimum) at LH and 22% at Kayelekera over FY13/14 vs. FY12, primarily through (i) renegotiation of key consumables contracts; (ii) process optimization; and (iii) reduction in administrative/overhead expenses. As well, PDN reiterated its intention to use proceeds from its long-term offtake agreement prepayment from electricite de France (C$200Mln) to repay the remaining balance of the March 2013 convert-debt (C$134Mln).

UxC Uranium Update: Prices remain flat. The UxC spot price and LT price remains at C$41.25/lb and C$60/lb, respectively. Transaction activity during the past included seven spot market transactions (0.65Mln lbs U3O8). YTD (2012) spot market volume has totaled 35.8Mln lbs (211 deals) compared to 51.7Mln lbs in 2011 (357 deals) and 49.5Mln lbs in 2010 (269 deals). UxC notes that while several participants are active in the market, activity is likely to remain slow over the coming weeks due to normal seasonal buying patterns, with some year-end selling possible in December (source: Ux Weekly - Nov. 19, 2012).

Valuation: Maintain Outperform. Our TP of C$2.00 is based on 1x our NAVPS of C$1.93/share, and includes C$0.36/share for the Michelin project and C$0.62/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 The NASDAQ OMX Group, Inc.

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This article appears in: Investing , Commodities

Referenced Stocks: LH

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