Australia | Oct 31 2006
By Greg Peel
At the risk of dwelling on Paladin Resources (PDN), the release of its quarterly report finds all tracking along smoothly with regards to the commissioning of Langer Heinrich, and the bankable feasibility study for Kayelekera. Paladin expects Langer to be producing uranium by the first quarter 2007.
This has news has been met with enthusiasm at ABN Amro. This is significant as ABN is one of only three brokers in the FNA database of ten major brokers and advisors that covers the stock.
The uranium spot price has just surpassed US$60/lb for the first time, following news that Cameco’s Cigar Lake mine in Canada will be closed for maybe a year due to flooding. ABN’s analysts calculate the market is currently implying a spot price of US$65/lb for Paladin, while their own analysis suggests a peak of US$75/lb is more appropriate.
This has the effect of raising ABN’s 12-month target price for Paladin to $6.47 from $5.43 previously. ABN’s increase follows a Deutsche Bank increase earlier in the month from $5.27 to $6.07 (pre Cigar Lake)
Deutsche upgraded its rating to Buy at the same time, joining ABN, while UBS remains at Neutral given Paladin’s recent run. UBS retains a target of $5.50, but also noted Paladin’s progress towards production in a report this morning.
Those wishing to learn more about Australia’s (soon to be) number three uranium producer can do so with “You Gotta Have Faith: The Rise And Rise of Paladin Resources” (30/10/06).
See also Monday’s Weekly Analysis “Uranium In The Hot Spot”.