Paladin Resources Ltd: Takeover Offer for Valhalla Uranium Limited
HIGHLIGHTS
- Off market, all scrip (share) offer comprising 1 fully paid ordinary Paladin share for every 3.16 fully paid ordinary Valhalla shares.
- Valhalla's directors have unanimously recommended acceptance of the offer in the absence of a superior offer.
- Represents a significant step forward in Paladin's growth strategy.
Paladin Resources Ltd ("Paladin" or "the Company") (TSX:PDN - News; ASX:PDN - News) is pleased to announce an A$174 million takeover offer for Australian Stock Exchange-listed mining company Valhalla Uranium Limited (ASX:VUL - News; "Valhalla"). The off market, all scrip offer will comprise 1 fully paid ordinary Paladin share for every 3.16 fully paid ordinary Valhalla shares, implying a price of A$1.45 per Valhalla share, based on the last traded price of Paladin shares on Thursday 6th July 2006 (prior to Paladin shares being placed in a trading halt).
The offer terms reflect a premium of approximately 41% to the volume weighted average price for Valhalla shares in the 20 trading days prior to today.
Valhalla's directors have unanimously recommended that Valhalla shareholders accept the Paladin offer, in the absence of a superior offer. They have also indicated that they intend to accept the Paladin offer with respect to their own shareholdings, in the absence of a superior offer.
The proposed acquisition represents a significant step forward in Paladin's growth strategy. It will bolster Paladin's development pipeline and provide further diversification in geographical, political and resource terms.
Valhalla is a Western Australian based resource company with interests in a number of uranium projects in Queensland and the Northern Territory. The most advanced project in Valhalla's portfolio is the Valhalla/Skal uranium deposits situated in northern Queensland. Valhalla has a 50% interest in these deposits with Summit Resources Limited ("Summit"), which is the manager of the project. 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.
Valhalla's share of resources via the Mt Isa Joint Venture is 14.2Mlbs U3O8 in JORC compliant Measured and Indicated Resource categories and 4.0Mlbs U3O8 in the JORC compliant Inferred Resources category as at 20th October 2005. In addition, Valhalla's share of incremental historical estimates is 17.8Mlbs U3O8 (based on information released by Valhalla's joint venture partners). Should the offer be accepted, Paladin will significantly increase its global uranium resource base.
The proposed acquisition is an excellent opportunity to add up to three potential projects to Paladin's medium to long term project pipeline. Paladin believes the Valhalla/Skal deposits are very competitive ore bodies with significant resources and very good grades. While ultimate development of the resource depends on a change of policy in Queensland, Paladin plans to support Summit in progressing the exploration and appraisal of this deposit to ensure readiness if and when this policy change occurs.
This is a very interesting acquisition. In my opinion it really signifies that Paladin's management is serious about becoming a very large uranium company over the next 10 years.
Because of the unfortunately long time periods to develop uranium mines, it may take some years for Paladin to become one of the largest uranium producers in the world but with a few more smart acquisitions like this, they may get there sooner than we may think.
Interestingly, this is a huge bet on a new Australian mine getting developed. The stuff has always been in the ground but the government has really been opposed to uranium mining until only recently.
But it's good they finally woke up because they have a mega giant by the name of China just miles away very hungry to get more uranium to power all its new plants that are going to come online over the next decade.