CA - Paladin's Acquisition Of Fission Uranium Makes Little Sense

2024-06-25 12:02:40 ET

Summary

• The company is buying Fission Uranium for C$1.14 billion ($833.6 million) in shares, which translates into around 0.6x NPV at spot uranium prices.
• However, I’m concerned that the acquisition of Fission Uranium is coming at the wrong time and the benefits for Paladin Energy are few.
• Paladin Energy can list on the TSX without an acquisition, it already has a large Canadian project at an advanced stage, and PLS won’t bring operational synergies of note.
• If uranium prices fall to $65 per pound, the price paid jumps to 0.95x NAV which is more common for production stage mining projects in a stable price environment.

Introduction

In August 2022, I wrote an article on SA about ASX-listed uranium miner Paladin Energy Ltd ( OTCQX:PALAF ) in which I said that restarting the Langer Heinrich mine made a lot of sense from a financial point of view. I've also written several articles about Canadian uranium miner Fission Uranium Corp. ( OTCQX:FCUUF ) ( FCU:CA ), the latest of which was in June 2021 when I said that the Patterson Lake South (PLS) uranium project needed high uranium prices to be economically feasible....

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