Originally posted by Universal Exports
The fundamentals for uranium as a commodity are clear, but I think the point of the post you were replying to was that as a company representing a leveraged play, PDN has a host of company specific risks on top of uranium fundamentals:
- their main mines operate in jurisdictions with regulatory and sovereign risk
- their development sites are in jurisdictions which may inhibit development
- there is a possibility of a capital raise to continue care & maintenance until uranium prices recover
- and a host of other company specific risks
Believing in the upside in uranium's fundamentals - and buying that London listed ETF holding uranium inventory - versus buying a specific uranium explorer or producer and taking on company specific risk are two very different things.
Anyone holding BKY or VMY over the last 12 months will understand that uranium companies don't necessarily track the U price, and I'm still unclear whether that also applies to PDN or not. That insight - versus enthusiasm about the uranium price in general - is what is key.
To your point on ETF have a look at Howard Mark's Oaktrees Investor Letters over the last 3 Quarters are there are many inherent risks with ETF's, particularly if some funds have invested and have redemption's. I would move with caution with ETF's.
On PDN, to your points
- Disagree on jurisdictions with sovereign risk. Namibia is the most friendly jurisdiction globally for Mining, China bought Rossing mine 45km away and has set up a 4 block size Embassy to help build out its Nuclear Program. Paladin if you have read what China is doing (Jiang / NDRC / Science Direct paper) could well be next target for takeover. China needs 1.47 b pounds of Uranium.
- They don't need to develop. They already 2 built mines.
- The have 5 other assets they own, and PPE is > mkt cap, who said they need to raise. They have 3.5 yrs of FCF before needing any capital, name me a Uranium miner who is not in a better position of strength (none). They could sell one of the 5 sites (non Langer) and bank serious upside. Unlike Juniors who need over $750m CAPEX, PDN could also do off-takes
On BKY they have shown to have Spanish regulation risk, with little chance of getting off the ground potentially which is a shame and needs US$235m and VMY needs US$350m but had good institutional backing today, which is hats off - a tide lifts all boats and i hope they all succeed. I should add even thou Paradice invested in VMY, by Adam Harvey a very very good Fund Manager, if you talk to anyone in Sydney circles (whom he also owns 10% of Paladin), it only cost him like $2m to get into VMY and he runs a fund with over $2 billion, so its a free option.
Cameco on TEV/EBITDA mutiple of x13 is comparable to PDN - no other listing on ASX comes close to PDN.
This is helpful by BMN on how much juniors each need to raise in CAPEX. Notice it didn't include PDN, because on each metric it smashes the comparables.
(20min delay)
