Paladin increasing its Australian holdings

Paladin Resources (PDN-T, PDN-A) is looking to increase its bet on the future of uranium mining in Australia.

After acquiring Valhalla Resources last year — primarily for its stake in the Valhalla-Skal project in eastern Queensland, Australia — Paladin has announced a take- over bid for Summit Resources (SRCSF-O, SMM-A), which holds the remaining 50% of the project.

Paladin is offering one share for every 2.04 Summit shares, valuing Summit at about A$1 billion ($907 million) and providing a premium of roughly 34%.

While Summit has copper, gold, phosphate and iron ore exploration projects in the same region, its share in the well-advanced Valhalla uranium project near Mount Isa is what drew Paladin’s attention.

Summit has said production at Valhalla could begin as early as 2010, however, for that to happen the government of Queensland would have to reverse its moratorium on uranium mining.

Paladin believes 2012 is a more realistic expectation for production startup.

“While ultimate development of the resource depends on a change of policy in Queensland, Paladin looks forward to progressing the exploration and appraisal of Valhalla-Skal and the other deposits to ensure readiness if and when this policy change occurs,” said Paladin’s managing director John Borshoff in a statement.

Valhalla has an indicated resource of 21.3 million tonnes grading 0.08% U3O8 for 37.4 million lbs. U3O8 and an inferred resource of 12 million tonnes grading 0.075% U3O8 for 19.6 million lbs. U3O8.

Drilling at the Skal uranium deposit, 10 km east of Valhalla, has identified similar uranium mineralization. Summit says the site hosts a historical estimate of 4.2 million tonnes grading between 0.1% and 0.13% U3O8 for 11 million lbs. U3O8.

Currently, Paladin’s most advanced uranium projects are in Africa.

Its 100%-owned Langer Heinrich in Namibia went into production in December, on time and on budget, with sales expected to begin soon.

A new resource estimate there puts measured and indicated resources at 37.2 million tonnes grading 0.06% U3O8 for a total of nearly 50 million lbs. U3O8 and inferred resources at 43.4 million tonnes grading 0.06% U3O8 for a total of 56 million lbs. U3O8.

Last week, Paladin announced it had signed a development agreement with Malawi’s government for its other African project: Kayelekera.

The company has an 85% stake in Kayelekera, with the Malawi government holding the remainder. Measured and indicated resources at the project stand at 15.3 million tonnes grading 0.09% U3O8 for 30 million lbs. U3O8.

Kayelekera is expected to produce 3.3 million lbs. U3O8 per year for the first seven years and 1.17 million lbs. U3O8 per year during the last four.

On the news of the takeover bid, Paladin shares were off 9 at $8.21 in Toronto on 6.4 million shares traded.