Tuesday, August 5, 2014

Seeking Alpha: Paladin Energy Increasingly Leveraged To A Uranium Price Recovery

I haven't been very bullish at all about the prospects for uranium miners, as I believe investors have overestimated the near-term impact of Japan's plans to restart its nuclear reactors and China's intentions to add nuclear power. I'm not surprised, then, that uranium spot prices have broken through $30/lb, nor that Paladin Energy (OTCPK:PALAY)(PDN.TO) shares have fallen another 15% or so since my last article.

Like Ur-Energy (NYSEMKT:URG), I believe Paladin remains a very highly leveraged play on virtually any good news in the uranium sector. Paladin is going to have to get creative about its financing/liquidity options if spot prices don't increase into the $50's/lb, but the company does at least have a quality operating asset and good exploration assets if prices do recover. I do think uranium prices should find a bottom fairly soon and that the risk is to the upside, but investors considering Paladin Energy need to appreciate that outsized exposure to uranium price appreciation comes with outsized operating risk should prices stay below $50/lb indefinitely.

Follow this link to the full article:
Paladin Energy Increasingly Leveraged To A Uranium Price Recovery

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