Uranium Prices Remain Flat; Mgmt Issues Clarifying
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
) 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
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
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