Paladin looks to take over fellow Australian Uranium miner

Australian-based Paladin Resources (PDN-T, PDN-A) is looking to bolster its position at home as it has announced a friendly bid to take over Valhalla Uranium (VUL-A).

Paladin is offering one Paladin share for every 3.16 Valhalla share — a premium of approximately 41% to the volume weighted average price for Valhalla shares in the 20 trading days prior to today.

The deal is worth roughly $146 million.

Valhalla’s directors are recommending acceptance of the offer.

If the deal goes through it could add up to three projects to Paladin’s pipeline all in Australia.

That would not only bolster its development pipeline, the company says, but also would provide more diversification in geographical, political and resource terms.

While Paladin does have two projects in Western Australia — its main assets are in Africa.

Its Langer Heinrich project in Namibia is on schedule to be commissioned on Sept. 22 of this year. Its Kayelekera deposit is located in northern Malawi in southern Africa, and a feasibility study is scheduled to be done in December 2006.

Paladin says it is especially bullish on Valhalla’s Valhalla and Skal projects.

Valhalla has a 50% interest in the deposits. Perth-based Summit Resources (SMM-A) manages the property and holds the other 50%.

The Valhalla deposit has an identified JORC code mineral resources consisting of measured and indicated resources of 8.8 million tonnes grading 0.147% U3O8 for a total of 28.4 million lbs of U3O8 and an inferred resource of 2.7 million tonnes grading 0.135% U3O8 for a total of 8 million lbs of U3O8.

In addition, Summit has reported historical estimates of 9 million tonnes at between 0.08% U3O8 and 0.1% U3O8 for 20 million lbs. of U3O8.

The Skal uranium deposit, 10km east of Valhalla, has also been drill tested with significant contained uranium identified in mineralization of a similar style to Valhalla.

Unfortunately, a federal policy instituted in 1984 has placed a virtual moratorium on uranium mine development in the country. The policy called for the limiting of uranium mines to three, and while it officially expired in 1996 it has unofficially been extended, halting uranium development.

A spokesperson for Paladin says the policy has come under hot debate in the recent years, and that the company believes it may be reversed in two to four years.

Paladin says it will help Summit push ahead on exploration and the appraisal of the deposits to make sure it is ready if the policy does change.

Valhalla also holds interests in the Ngalia Basin uranium project containing the Bigrlyi Deposit as well as the Pine Creek uranium project in the East Alligator River area.

Paladin says its bidder’s statement will be available in two to three weeks and sent to Valhalla shareholders as soon as possible thereafter.

In Toronto on July 10, Paladin’s shares were off 4.6% or 18 to $3.72 on one million shares.