{"id":11352,"date":"2024-06-25T07:18:50","date_gmt":"2024-06-25T07:18:50","guid":{"rendered":"https:\/\/economicherald.net\/?p=11352"},"modified":"2024-06-25T07:18:50","modified_gmt":"2024-06-25T07:18:50","slug":"monsters-of-rock-an-acquisition-no-one-asked-for-has-paladin-in-the-red","status":"publish","type":"post","link":"https:\/\/economicherald.net\/?p=11352","title":{"rendered":"Monsters of Rock: An acquisition no one asked for has Paladin in the red"},"content":{"rendered":"<p>Like its ASX uranium counterpart <a href=\"https:\/\/stockhead.com.au\/company\/boss-energy-boe\/\">Boss Energy (ASX:BOE)<\/a> , the yellowcake firm <a href=\"https:\/\/stockhead.com.au\/company\/paladin-energy-pdn\/\">Paladin Energy (ASX:PDN)<\/a> has opened the chequebook (figuratively at least), claiming Canada\u2019s Fission Uranium Corp (TSX:FCU) in a C$1.114 billion all-scrip deal.<\/p>\n<p>Paladin will, at least, not part with oodles of cash in the transaction, with its shareholders to boast 24% of the combined entity once the 0.1076 share for 1 deal closes.<\/p>\n<p>It\u2019s been pitched at C$1.30 a share, though a 4.5% dive in Paladin stock today will make that ratio a little less attractive.<\/p>\n<p>A 30% premium to Fission\u2019s 20-day VWAP and 25.8% premium to its last trading price of C$1.03, Paladin investors would wind up with 76% of the combined entity and a TSX listing to go with it.<\/p>\n<p>Paladin is, of course, restarting production from its Langer Heinrich mine in Namibia, which had been on ice since 2018 before hitting commercial production for the second time in March.<\/p>\n<p>It comes after uranium oxide prices lifted from under US$30\/lb three years ago to US$107\/lb in January, reverting back to US$83.50\/lb yesterday.<\/p>\n<p>Langer Heinrich is expected to run for 17 years and produce 6Mlbpa. But like Honeymoon mine owner Boss Energy, Paladin appears keen to expand and diversify.<\/p>\n<p>Boss bought a 30% stake in the White Mesa project in the United States, due to start production this year, ahead of the completion of its Honeymoon restart in South Australia.<\/p>\n<p>Paladin, similarly, will diversify, but into Canada\u2019s renowned Athabasca Basin, home to the world\u2019s highest grade uranium mines.<\/p>\n<p>Fission owns the Patterson Lake South project, which could produce 9.1Mlbpa for a decade once it\u2019s in production, which is expected from around 2029.<\/p>\n<p>PLS\u2019 Triple R deposit (yeah, spelled out like that for some reason), contains a reserve of 93.7Mlb at 1.41% U3O8, well below other deposits in the Athabasca, but well above the low grade style of deposit PDN is currently mining in Namibia.<\/p>\n<p>Paladin, which would have combined U3O8 resources of 544Mlb and reserves of 157Mlb, would boast a \u201cCanadian hub\u201d of sorts, with Paladin already owning the Michelin deposit.<\/p>\n<p>A PFS on that asset, which is in not in Saskatchewan\u2019s Athabasca but the remote territory of Labrador, is due in FY2026.<\/p>\n<p>\u00a0<\/p>\n<h2>No asset sales<\/h2>\n<p>Both Paladin MD Ian Purdy and Fission boss Ross McElroy expressed confidence the new asset could navigate the Canadian provincial and federal approval processes, saying the timeline for PLS was realistic.<\/p>\n<p>Asked by Bell Potter\u2019s Regan Burrows whether any of Paladin\u2019s secondary assets could be up for grabs in an enlarged group \u2013 including exploration projects in uranium shy jurisdictions WA and Queensland \u2013 Purdy said nothing would be on the market.<\/p>\n<p>\u201cAbsolutely not Regan, it\u2019s like saying which child do you want to give away?\u201d Purdy purred.<\/p>\n<p>\u201cThe portfolio just works so well. We\u2019ve got a producing asset in Langer Heinrich that\u2019s going to be pushing out cash starting next month.<\/p>\n<p>\u201cWe\u2019ve got a serious project that\u2019ll be ready for development \u201927-\u201929 which will go after. The Michelin project is PFS, which is fantastic, but low spend.<\/p>\n<p>\u201cAnd the exploration potential will wind up and wind back as we choose to, depending on out priorities, our free cash and our targets.<\/p>\n<p>\u201cThe Australian assets \u2026 we\u2019re not required to work them but there\u2019s fantastic long-term optionality. We\u2019ve got a project pipeline that is in production today that could theoretically producing uranium by 2060.<\/p>\n<p>\u201cI\u2019ll be long gone, Ross may still be here, but I\u2019ve got no intention to rationalise our portfolio.\u201d<\/p>\n<p>The company wouldn\u2019t comment specifically on the price used to back the deal, though Purdy said the deal made sense in any price environment.<\/p>\n<p>\u201cIt\u2019s interesting, this is a transaction Ross and I agree we would do at any point in the cycle, it just makes sense putting those assets together,\u201d Purdy said.<\/p>\n<p>\u201cWe\u2019ve got world quality assets that stack up in the full cycle and the combination and opportunity this provides, and the scarcity factor of large global uranium producers with growth prospects and exposure to the upside on uranium \u2026 you can count on less than one hand.<\/p>\n<p>\u201cIt\u2019ll work at any point in the cycle.\u201d<\/p>\n<p>An answer that of course begs the question why is wasn\u2019t done at a far cheaper point in the cycle when these stocks cost less and, by the by, Langer Heinrich was on ice owing to weak uranium prices.<\/p>\n<p>PDN closed 5.14% lower today after announcing the deal late yesterday, while Fission surged 15.5% in overnight trade to C$1.19 (MC C$998m).<\/p>\n<p>\u00a0<\/p>\n<h2>And on the markets<\/h2>\n<p>It was a more positive day for resources stocks, who joined the broader ASX to move into the green, materials up 1.83% for the day.<\/p>\n<p>Higher precious metals prices helped, while talk from US Fed figures on cutting interest rates is getting a bit more hopeful.<\/p>\n<p><a href=\"https:\/\/stockhead.com.au\/company\/coronado-global-resources-crn\/\"><strong>Coronado Global Resources (ASX:CRN)<\/strong><\/a> was little changed despite a decision from Czech coal and energy investor Sev.en Global Investments not to buy The Energy and Minerals Group\u2019s majority stake in the ASX listed US-Australian coal miner.<\/p>\n<p><a href=\"https:\/\/stockhead.com.au\/company\/spartan-resources-spr\/\"><strong>Spartan Resources (ASX:SPR)<\/strong><\/a> was up on news Citi brokers were in the market trying to buy a 10% stake in the rising gold explorer.<\/p>\n<p>\u00a0<\/p>\n<h2><strong>Today\u2019s Best Miners <\/strong><strong><\/strong><\/h2>\n<p><a href=\"https:\/\/stockhead.com.au\/company\/spartan-resources-spr\/\"><strong>Spartan Resources (ASX:SPR)<\/strong><\/a> (gold) +11.6%<\/p>\n<p><a href=\"https:\/\/stockhead.com.au\/company\/chalice-mining-chn\/\"><strong>Chalice Mining (ASX:CHN)<\/strong><\/a> (nickel\/PGE) +6.5%<\/p>\n<p><a href=\"https:\/\/stockhead.com.au\/company\/west-african-resources-waf\/\"><strong>West African Resources (ASX:WAF)<\/strong><\/a> (gold)\u00a0 +3.9%<\/p>\n<p><strong><a href=\"https:\/\/stockhead.com.au\/company\/iluka-resources-ilu\/\"><strong>Iluka Resources (ASX:ILU)<\/strong><\/a><\/strong> (mineral sands\/rare earths) +3.6%<\/p>\n<p>\u00a0<\/p>\n<h2><strong>Today\u2019s Worst Miners <\/strong><strong><\/strong><\/h2>\n<p><a href=\"https:\/\/stockhead.com.au\/company\/piedmont-lithium-pll\/\"><strong>Piedmont Lithium (ASX:PLL)<\/strong><\/a> (lithium) -6.7%<\/p>\n<p><strong><a href=\"https:\/\/stockhead.com.au\/company\/red-5-limited-red\/\">Red 5 (ASX:RED)<\/a><\/strong> (gold) -6.2%<\/p>\n<p><strong><a href=\"https:\/\/stockhead.com.au\/company\/paladin-energy-pdn\/\"><strong>Paladin Energy (ASX:PDN)<\/strong><\/a><\/strong> (uranium) -5.1%<\/p>\n<p>\u00a0<\/p>\n<p><em>At Stockhead, we tell it like it is. While Spartan Resources was a Stockhead advertiser at the time of writing, it did not sponsor this article.<\/em><\/p>\n<p>The post <a href=\"https:\/\/stockhead.com.au\/resources\/monsters-of-rock-an-acquisition-no-one-asked-for-has-paladin-in-the-red\/\">Monsters of Rock: An acquisition no one asked for has Paladin in the red<\/a> appeared first on <a href=\"https:\/\/stockhead.com.au\/\">Stockhead<\/a>.<\/p>","protected":false},"excerpt":{"rendered":"<p>Like its ASX uranium counterpart Boss Energy (ASX:BOE) , the yellowcake firm Paladin Energy (ASX:PDN) has opened the chequebook (figuratively at least), claiming Canada\u2019s Fission <a href=\"https:\/\/economicherald.net\/?p=11352\" class=\"read-more-link\">[more&#8230;]<\/a><\/p>\n","protected":false},"author":0,"featured_media":11353,"comment_status":"","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[],"class_list":["post-11352","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-finance"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.5 - 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