Free cash flow, page-8

Kenso - I think you're looking at this in completely the wrong way. U prices will go up - they simply have to as there is a KNOWN supply deficit right now and likely well into the future. Buyers of Uranium at the moment are again KNOWN to be holding out, they are not buying because they do not want to elevate the price of U or are unwilling to pay the higher prices that the suppliers are asking them to pay. Eventually there will be a catalyst that breaks this arm wrestle and prices will move higher - at that point this party is on as you'll have energy producers battling for the limited supply of Uranium. PDN - so long as U prices go up just 50% from here in the next 2 years - will restart operations and they shouldn't have an issue raising capital as their market cap is so low right now that it completely discounts their future cash flows to zero. 

L&H has capacity of 8m lbs per annum, while Kayelekera has capacity of 3.3m lbs. If they get just L&H up and running again near nameplate of 8m lbs (as per their latest preso) then you're talking about sales of US$320m per annum at US$40 bucks. For every 10USD move in the price of Uranium Paladin would add US$80m of revenue. 

With that said expect either a cap raise or debt funding round to be well bid when prices hit 40 or 50 USD a pound. 

Where will the stock price be if U prices hit US$60-80 a pound? Well I'd say first we're in a raging bull market at that point, and revenues from Paladins operations could yield as much as US$880,000,000 at US$80 a pound and at full capacity for both L&H and K. With EBIT of $US440m per annum and a P/E of 10 then we'd have a Market Cap around A$4-5b maybe more. That gives you a 17 bagger from current prices or stock price of around $2.72 per share. 

My numbers are rough but in line with what we saw in the last U bull market, with the worst performers stock price up 22 times.