CCO - Someone trying to cause a stirÉPaladin May Be ‘Attractive’ Target for Cameco, Areva (Update1)
By Angela Macdonald-Smith
March 17 (Bloomberg) -- Paladin Energy Ltd., the Australiancompany producing uranium in Africa, may be an “attractive”acquisition target for larger producers such as Cameco Corp. andAreva SA, JPMorgan Chase & Co. said.
The Perth-based company’s share price reflects little valuefor its undeveloped uranium resources and prospects, meaning thecompany may be targeted by larger companies looking foruncontracted material for delivery to customers or for their ownuse, JPMorgan said in a March 16 report.
Cameco, the world’s largest uranium producer, is “highlylikely” to make an acquisition, Canada’s National Post saidMarch 11, citing RBC Capital Markets analyst Fraser Phillips.Spot prices for uranium, used to make nuclear fuel, have slumpedmore than 30 percent in the past six months because of sales byfinancial investors raising cash, weighing on Paladin stock.
“We believe that now is the ideal time for long-termuranium players such as Cameco and Areva to be acquiring what wesee as under-priced assets,” JPMorgan analysts led byMelbourne-based Brendan James said in the report. “We believepotential acquirers would be looking quite closely at Paladin’sproject pipeline and exploration potential.”
Paladin gained 32 cents, or 10 percent, to A$3.48 on theAustralian stock exchange, the biggest jump for 10 weeks. Thestock outpaced a 3.1 percent advance in the exchange’s benchmarkindex. JPMorgan has an “overweight” recommendation on thestock.
Paladin shares should rally in the lead-up to theQueensland state election on March 21 given that the latestpolls show a lead for the opposition Liberal National Party,which is likely to overturn the state’s ban on uranium mining,The Royal Bank of Scotland said in a separate March 16 report.
The stock may also benefit from the start up of anexpansion of Paladin’s Langer Heinrich project in Namibia and ofits Kayelekera mine in Malawi, both due this quarter, Sydney-based RBS analyst Lyndon Fagan said in the report. RBS initiateda “trading buy” on the stock.
To contact the reporter on this story:Angela Macdonald-Smith in Sydney atamacdonaldsm@bloomberg.net
Last Updated: March 17, 2009 01:39 EDT