Old news but looks goodJamie FreedMarch 21, 2007Paladin says its...

Old news but looks good

Jamie Freed
March 21, 2007

Paladin says its offer for Summit is fair
Miners' struggle to reach Valhalla turns ugly
Uranium heads for $US100

URANIUM explorer Summit Resources has indicated it is holding out for Paladin Resources to raise its $1 billion scrip offer.

In a target's statement rejecting the bid, Summit's board said it believed the offer undervalued the company and was "unlikely to be Paladin's last move".

But Summit directors declined the opportunity to provide shareholders with an independent expert's report valuing their company.

They said it would be difficult to obtain an appropriate valuation, given Summit had not finalised a development scenario for its uranium deposits in Queensland's Mt Isa region.

"Your directors resolved that they were in the best position to assess the offer, bearing in mind the extensive work that members of the board have undertaken on the Mt Isa uranium project over the last 17 years," they told Summit shareholders.

Summit added that Paladin's offer valued it only on the basis of its resources as delineated under Joint Ore Reserves Committee rules, rather than the "unrealised potential" of its "world-class project in a world-class region".

Paladin chairman Rick Crabb said Summit's reasoning was flawed, because it was a scrip bid.

"We have potential for more resources [at our own projects] as well," he said. "We have a world-class project in Namibia which is up and running."

UBS yesterday released a report valuing Paladin's 50 per cent share of the Valhalla uranium project at $US840 million, and said the bid valued Summit's half of the project at $US703 million ($1.06 billion).

"We think that Paladin will come back [with a higher offer] because it's our belief at this stage that they won't secure control of the company with an offer on the table and they really need a world-class project in a first-world country, and that's something they don't have," Summit managing director Alan Eggers said.

But Mr Crabb indicated that Paladin had no immediate plans to raise its offer.

"Whilst we technically reserve the right to consider our bid, I think it's a fair and reasonable offer, certainly in the absence of another bid or an independent valuation of what [Summit's board] thinks it's worth," he said. "I think if there was another counterbidder they would be out by now."

Paladin is offering one of its shares for 2.04 Summit shares.