Is PDN the elephant in the room?
Yesterday on the Australian Stock exchange PDN volume hit 46 million shares but the price didn’t turn a hair. In fact, it opened at the .65 level and the sellers were all over it, steadily taking it down throughout the session to a close of .565 a gain of ½ cent on the day.
The debt refinancing seems to make eminent sense, - to enable the operation to get through this immediate rough patch. Conversely, the refinancing terms, - reduced payments and debt covenants extended for longer terms might just end up being the carrot for PDN to dig a bigger hole for itself.
Did they get the refinancing because of the impending Chinese deal or was it the other way around? We’ll never know least wise when it’s so critical for an investor to know these things.
And what does the Chinese deal do for PDN? To cede 25% control of that Langer mine so they can keep the operations running, “working like a stupid” like someone pumped on a Jeffrey, possibly earning as much as a dollar a lb. until they are completely bled out of capital, producing in a market that is currently well supplied? And if that were to happen, the real beneficiary would be CNNC who could take over the complete operation for bargain basement prices. All this is just business of course.
They say the best cure for low prices is low prices and PDN may be the next example of this adage. I really hope not, but one has to consider the possibilities. And PDN’s first trading day (after the news) in Australia may suggest the market is taking this tack. But it could also be expressing disappointment that PDN, who wanted to be an independent uranium house, is running out of cash and can no longer pursue that option.
Maybe the best move for PDN would be to pay down the debt with that 195 mill and mothball operations for a while. I think the preferred uranium investment right now is one that is not producing.