Paladin Energy (PDN-T) “remains the only significant public uranium producer without a strategic investor or alliance,” making the company “a very attractive takeover target,” Canaccord Wealth Management remarked in a note to clients in late August.
The comment came 48 hours after Cameco (CCO-T, CCJ-N) announced its hostile takeover bid for Hathor Exploration (HAT-T) – the same day Paladin revealed that a syndicate of banks had agreed to a US$141-million financing to expand its uranium mine in Namibia.
The money will go to the third-stage expansion of Paladin’s Langer Heinrich mine, which will raise production from its current capacity of 3.7 million lbs. yellowcake per year to 5.2 million lbs.
Initial funding had come from Paladin’s existing cash reserves, but now the expansion project is fully financed and “on track to reach nameplate capacity in the first quarter of 2012,” the company said in a statement on Aug. 26.
The facility hosts a six-year, US$135-million project finance facility and a US$6-million cost overrun facility.
Members of the syndicate include Société Générale; Nedbank Capital; Standard Bank; Barclays Capital, the investment banking division of Barclays Bank; and Rand Merchant Bank, a division of FirstRand Bank.
“The execution of the project financing facility in challenging financial markets is testimony to the Langer Heinrich mine’s status as a world-class operation, and the strength of the long-term fundamentals in the uranium market,” the company outlined in a press release.
Earlier in August, Paladin announced that it had signed a series of term uranium sales agreements for output from the stage-three expansion project.
The agreements were signed with three new customers in the U.S.
Production commitments from the new agreements total more than 2.8 million lbs. U308, with deliveries starting next year and extending through 2016.
Contractual pricing provisions incorporate fixed and base escalated mechanisms, ranging from the low- to mid-US$60 per lb. U308.
“We have consistently stated that nuclear fuel buyers continue to recognize the need to secure uranium supplies for the medium and longer term, despite the price volatility and perceived uranium market uncertainties caused by events in Japan,” John Borshoff, Paladin Energy’s managing director and chief executive, said in a press release on Aug. 22.
“These contracts, signed at prices well in excess of the prevailing spot price, only serve to further support this message.”
The Langer Heinrich mine is in the Namib desert, 80 km east of the Walvis Bay seaport and 40 km southeast of the hard-rock Rossing uranium mine operated by the Rio Tinto group and 15%-owned by the Iranian government.
The deposit was discovered in 1973 after a government-sponsored airborne radiometric survey.
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