Cameco Injects Some Excitement In Quiet Uranium Market

This story features PALADIN ENERGY LIMITED. For more info SHARE ANALYSIS: PDN

– Industry consultant TradeTech has left its price indicators for U3O8 unchanged
– TradeTech reports overall activity in the spot market is quiet
– Cameco has triggered market speculation for corporate interest in Paladin Energy

By Rudi Filapek-Vandyck

Shares in Australia's major independent producer of yellow cake, Paladin Energy ((PDN)), are making some sort of a comeback after the share price sank below $1.20 per share during the general equities sell-off last week. It's hard to imagine today but in the opening weeks of calendar 2007, when the uranium bubble was raging in full force, Paladin's share price temporarily surged above $10.

The positive boost underneath the share price since has little to do with price developments or market activity in the global spot market for U3O8, with industry consultant TradeTech reporting the market is quiet, if not very quiet. The consultant left its indicative spot price unchanged for the week ending on Friday, at US$52/lb.

So what's moving the share price of Paladin? Having just returned from a trip to Canada, I can report from first hand observation that take-over speculation over there is buzzing with a lot of excitement since local uranium giant Cameco surprised with filing a preliminary prospectus to raise as much as $1-billion through a combination of securities over the next 25 months. What had investors scratching their heads was that Cameco is not exactly short in cash at the moment, so the company clearly has unidentified plans.

Paladin is widely considered to be on Cameco's potential wish list. The recent recovery in share price has pushed the market capitalisation back above $1bn… no doubt, investors have put one and one together and decided it's worth the punt owning shares in the company right now.

Paladin shares are up close to 4% today at $1.315 on an overall mildly positive trading session in Sydney.

By the way, TradeTech has also left its medium-term and long term price indicators unchanged at US$54/lb and US$61/lb respectively.

 

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