Ann: Maiden Uranium Resource at Valhalla North Pr, page-8

re: Ann: FSN: Maiden Uranium Resource at Valh... he's a genius - way ahead of his time.

ALAN KOHLER: The hottest stock on the ASX at the moment is the uranium developer Paladin Resources, which is up five-fold since this time last year and 50-fold in a couple of years. Unlike the other prospectors that are going off like nuclear explosions on the sniff of an association with uranium, Paladin is unaffected by the ban on new mines in Australia, having left for the more favourable environment - for mining, that is - of Africa. I caught up with Paladin chief executive John Borshoff in Toronto this week during a investment roadshow.
Well, John Borshoff, you're now sitting on a company worth $2 billion, the main asset of which you bought for $15,000. How does that feel and how did it happen?
JOHN BORSHOFF, MANAGING DIRECTOR, PALADIN RESOURCES: It felt, even at the time when we bought it - I mean it was a major commercial decision because we only had about $50,000 in the bank. So we had to decide very carefully and even negotiate the price down somewhat so it could get into our affordability range. That just shows you how dead uranium was as late as 2002 and that nobody in the world was looking at uranium ever going through the sort of resurgence that it has. Now, looking in hindsight, I just feel, you know, that all that belief is being vindicated.
ALAN KOHLER: As you say, you've believed in uranium for a very long time. Did it ever waver? Did you ever think, "This is hopeless. It'll never happen"?
JOHN BORSHOFF: To tell you the truth, no. For a little while, we subsidised our effort by dabbling in the hi-tech boom, but we never gave up on our uranium assets. We maintained our capital base, we didn't have to restructure, and we sort of grew from that 0.8 of a cent, I think, to what we are today, all in a matter of - well, since November '03.
ALAN KOHLER: And has what has happened to Paladin exceeded your expectations?
JOHN BORSHOFF: When we were sitting at about $0.40, I made a prediction to my group that I thought in 4-5 years we would get to $1 billion and that seemed fantasy to my people. Whether it was $1 billion or $2 billion at that time, it was just, it was so absurdly high that everybody was saying, "Okay well, this guy is a bit silly anyway. "It's gone from $0.01 to $0.40". It's more the acceleration, I guess, that's taken so little time for the the swing to occur and it's essentially a rebound coming out of a 25-year stagnation.
ALAN KOHLER: Of course, what's happened to Paladin has spawned a lot of imitators and there's now a lot of hype around uranium in the market. What do you make of all the hype surrounding uranium now?
JOHN BORSHOFF: In 2002, or as late as early 2003, where there were not many people in in the uranium sector, then as prices started to move, as the other, other sort of metal - or the companies which were stagnating, they just essentially moved in on uranium both with legitimate reasons and opportunistic reasons and I think that when you marry that with the lack of general expertise in the world in uranium, a lot of it having died away in the 25-30 years, you have a situation where the ignorant are leading the blind in sort of a way - and I say that in terms of the market. I mean, anything that's put out in the market, everybody believes without discrimination, it appears.
ALAN KOHLER: Yeah, but are a lot of wild claims being made in the market now. What do you think of the claims?
JOHN BORSHOFF: Well, some of the claims are not based on what uranium pricing is today. Obviously, some of them must be on expectation that uranium will continue its climb and that maybe, you know, at significantly higher prices some of these deposits may come into economic sort of condition.
ALAN KOHLER: What do you personally think the uranium price is going to do over the next five years or so?
JOHN BORSHOFF: Oh, well, I believe that if you're looking at the uranium industry as it is now, and if your looking at the - commercial uranium has only been in existence for about 38 years and the nuclear electrification for that period and if you put that in a bracket looking over a 100-year period, you'll see that uranium at this stage only represents an embryonic part of what, I think, the nuclear industry will be in the future. So we're looking at a paradigm shift here and that paradigm shift has happened at the speed it's happened because the nuclear reactor utilities were working behind the scenes. It was an industry that nobody wanted to hear about. It just became more and more efficient, making electricity more cheaply and economically, and meanwhile, the supply industry was going the other way in terms of consolidation and going into a bunker of survival. So now you almost have a situation like that aircraft on an aircraft carrier where it's all sprung back ready to fire and you just let her go and it's just shooting upwards and onwards and I think that the price was $40 in 1978 - or $43 - now we're $42 in long term, and that $43 in 1978 represents about $106 today, and I see that there is room for significant increase in uranium pricing, and I believe -
ALAN KOHLER: To $100 again?
JOHN BORSHOFF: I think its not inconceivable. I think if the supply industry doesn't get its act together and really starts getting new mines on schedule over and above those which were known four years ago, I believe that there are supply squeezes up ahead, and those supply squeezes will be peaks over and above a rising trend in the price of uranium.
ALAN KOHLER: Is it ironic do you think that uranium is possibly that uranium is the only product in which Africa is a less risky place to look for it and mine it than Australia?
JOHN BORSHOFF: I think that's - you know people should really look in the mirror on this one. We made our decision in year 2000 that Australia, where we had two of our significant assets, posed a political risk for us and we had to diversify to that stable place called Africa and I think that the resource future in the sort of early 21st century belongs to Africa. Australia and Canada have become overly sophisticated. They measure progress in other aspects than economic development, and rightly so, but I think there has been a sort of overcompensation in terms of thinking about environmental issues, social issues, way beyond what is necessary to achieve good practice.
ALAN KOHLER: Do you believe that the restrictions on uranium mining in Australia will be lifted?
JOHN BORSHOFF: Undoubtedly. I think that you've got this remarkable thing happening between China and Australia and everybody thinks that this is just a China-Australia thing in the uranium industry. It's a global impact. It's a dynamic which is yet to fully impact in the global sense as the - that uranium that was earmarked from Australia to the western reactors. Part of that now conceivably can be seen moving north and that leaves a perception of a vacuum there to be filled in the mid- to long-term. I see that with China moving in - which is, by the way, it is the first time the old communist bloc, if you like, particularly in uranium, is engaging the western world. Russia hasn't done that yet.
ALAN KOHLER: And finally, you're due to commission your $15,000 mine in Namibia in September. That will be a red letter day, I guess?
JOHN BORSHOFF: Certainly will. It'll be the first new uranium mine that has been developed - the complete, conventional one - in 25 years and I think that is a very important occasion in the supply industry sort of catalogue, or will be, and I believe we'll be the only company that will complete a second mine before anybody else gets something on the drawing board.
ALAN KOHLER: I'll have to leave it there but thanks very much, John Borshoff.
JOHN BORSHOFF: Thank you.