July 21, 2010 / 2:00 PM / in 8 years

UPDATE 2-Paladin Energy plans A$27 mln buyout of NGM Resources

* Offer price represents 61 pct premium

* Says NGM directors intend to accept offer

* Paladin shares down 3 pct (Adds details, comments from Paladin, updates share movement)

By Bhaswati Mukhopadhyay

BANGALORE, July 21 (Reuters) - Australia-based Paladin Energy Ltd (PDN.AX) PDN.TO said it plans to make an offer to buy out the remaining shares of NGM Resources NGM.AX it does not already own for about A$27 million ($23.9 million), to boost its uranium production.

Africa-focused uranium miner Paladin, which on Tuesday said it was in talks to take over NGM and was currently undertaking a due diligence, currently holds about 22.5 percent of NGM’s ordinary shares.

The offer will comprise one fully paid Paladin share for every 23.9 fully paid NGM shares, implying a price of 15 Australian cents per NGM share based on Tuesday’s close.

The offer price represents a 61 percent premium to NGM’s July 16 closing price of 9.3 Australian cents.

“We feel the demand for uranium for nuclear plants is growing rather sharply... So, we are looking for the most promising sources of uranium in the world,” said Greg Taylor, investor relations, Paladin Energy.

Through its subsidiary, Indo Energy, NGM owns three uranium exploration concessions in Niger, home to some of the world’s largest deposits of uranium.

Nuclear energy is gaining momentum as a carbon-free energy source for nations seeking to reduce harmful emissions. [ID:nLDE66J159]

World annual reactor-related uranium requirements are projected to rise to between 87,370 and 138,165 tons of uranium by 2035.

Paladin was looking at other M&A opportunities in Australia, Africa, North America and Asia that would bring in additional uranium inventory or production, Taylor said.

The proposed deal with NGM will be a significant addition to its portfolio of early stage uranium exploration projects, Paladin said in a statement.

“We cannot say now when (the deal) would contribute to Paladin’s actual earnings because there is not even a mine development plan in place. There are years and years of work to be done,” Taylor said.

Earlier this month, Paladin reported a 110 percent jump in its quarterly production and forecast output of 7 million pounds for 2011. [ID:nSGE66I0FF]

NGM directors intend to accept the offer in respect of their own shareholdings in the absence of a superior offer, Paladin said.

NGM has agreed to pay Paladin a break fee of A$400,000 in certain circumstances.

Shares of Paladin were down 10 Canadian cents at C$3.23 Wednesday afternoon on the Toronto Stock Exchange.

$1=1.132 Australian Dollar Reporting by Bhaswati Mukhopadhyay in Bangalore; Editing by Anne Pallivathuckal

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