Paladin increasing its stake in Australia

Paladin Resources (PDN-T, PDN-A) is looking to increase its bet on the future of uranium mining in Australia.

After acquiring Valhalla Resources last year — primarily for its stake in the Valhalla/Skal project in eastern Queensland, Australia Paladin announced a takeover bid for Summit Resources (SMM-A) which holds the remaining 50% of the project.

Paladin is offering one of its common shares for every 2.04 Summit shares which values Summit at approximately A$1 billion and provides roughly a 34% premium.

While Summit has copper, gold, phosphate and iron ore exploration projects all in the same region, its share in the well advanced Valhalla uranium deposit near Mount Isa is what drew Paladins attention.

While Summit has recently said production at Valhalla could begin as early as 2010, for that to happen the government of Queensland would have to reverse its moratorium on uranium mining.

Paladin says 2012 is a more realistic expectation for production start-up.

“While ultimate development of the resource depends on a change of policy in Queensland, Paladin looks forward to progressing the exploration and appraisal of Valhalla/Skal and the other deposits to ensure readiness if and when this policy change occurs,” said Paladins managing director John Borshoff in a statement.

Valhalla has an indicated resource of 21.3 million tonnes grading 0.08% U3O8 for 37.4 million lbs U3O8 and an inferred resource of 12 million tonnes grading 0.075% U3O8 for 19.6 million lbs U3O8.

Drilling at the Skal uranium deposit, 10 km east of Valhalla, has identified uranium mineralization similar to Valhalla. Summit has said the site has a historical estimate of 4.2 million tonnes grading between 0.10% U3O8 and 0.13% U3O8 for 11 million lbs. U3O8.

Currently, Paladins most advanced uranium projects are in Africa.

Its 100% owned Langer Heinrich in Namibia went into production in December of last year, on time and on budget. First sales are expected to be made in early 2007.

A new resource estimate there puts measured and indicated resources at 37.2 million tonnes grading 0.06% for a total of nearly 50 million lbs and inferred resources at 43.4 million tonnes grading 0.06% for a total of 56 million lbs U3O8.

Last week Paladin announced it signed a development agreement with the Government of The Republic of Malawi, for its other African project — Kayelekera.

It has an 85% stake in Kayelekera, with the Malawi government holding the remaining 15%. Measured and indicated resources at the project stand at 15.3 million tonnes grading 0.09% U3O8 for 30 million lbs U3O8.

Kayelekera is expected to produce 3.3 million lbs per year of U3O8 for the initial 7 years and 1.17 million lbs U3O8 per year for the last 4 years.

In Toronto on Feb. 28 Paladin shares were off 9 or 1% to $8.21 on 6.4 million shares traded.