Top Gainer: Paladin (PDN)

 Closing price  $2.66
 Change  +0.25
 % change  +10.4%

 

Paladin Energy – a uranium exploration company with projects in Australia and Africa – has been hammered since the disaster in Japan, tumbling from $5.00 in March to a 12-month low of just $2.29 two days ago. It has since rebounded off this yearly low, jumping 8.7% on Wednesday and a further 10.4% on Thursday after Citi upgraded the stock from a hold to a buy.

Although it’s obvious that the meltdown in Japan didn’t exactly help uranium stocks, it was the reported change in policy from the Namibian Government for the stgelopment of minerals that turned the share price slide into a rout. Paladin’s wholly owned Namibian subsidiary company, Langer Heinrich Uranium operates mines integral to PDN’s earnings in Namibia.

One thing’s for sure, the market didn’t listen to Paladin’s MD John Borshoff when he announced to the market on May 11, 2011 that “the proposed changes to Namibian Mineral Policy will not affect Paladin interests,” with the share price tumbling a further 10% over the following three days.

“The Company welcomes the media statement released by the Minister yesterday clarifying the proposed
changes to The Minerals Act. In his statement he advised: ‘The existing exploration and mining licenses will not be affected.’ Importantly Mr Katali also stated that the proposed changes should in no way be construed to indicate that the Government of Namibia intended to nationalise the mining industry,” wrote Borshoff in an ASX release. “Paladin is a significant investor and employer in Namibia and the Company was pivotal in pioneering the renaissance of the Namibian uranium industry. Paladin continues to invest heavily in Namibia, with Stage 3 expansion of Langer Heinrich nearing completion and preliminary planning well advanced for Stage 4, which would double production of LHUPL by 2015. The removal of any doubt over sovereign risk in relation to Paladin’s interests in Namibia is very welcome and paves the way for continued significant investment,” he said.

Although uranium stocks – and the arguments of nuclear power advocates in Australia – have taken a severe hit since the Japan nuclear disaster in March, analysts have counselled against hasty selling. Raymond James mining analyst Bart Jaworski is bullish on the sector and PDN specifically. “We have updated our outlook on uranium supply/demand fundamentals and, after revisiting our reactor model and making adjustments to our projected reactor build-out per region, our outlook beyond 2011, to our surprise, remains fairly bullish,” he says.

Jaworski’s top picks in the sector are Hathor Exploration (HAT) and Paladin Energy (PDN), predicting improved performance in uranium toward the end of the year. “We continue to believe that the uranium industry will again find its legs and that the public perception of nuclear power will shift positively,” Jaworski wrote in a recent report. Adam Schatzker, an analyst at RBC Dominion Securities, also rated Paladin as a top pick.

Based on Thomson Reuters data, 35% of analysts have a buy on PDN, 53% have a hold and 12% have a sell. This is compared to 39% with buys, 39% with holds and 22% with sells three months ago. 

 

Chart: Share price over the year to 22/06/2011 versus ASX200 (XJO)

Stock code: PDN

Charts: Paladin Energy Limited

More news: Paladin Energy Limited

 

Biggest Loser: Medusa (MML)

 Closing price  $6.61
 Change  -0.60
 % change  -8.3%

 

After hitting an all-time high of $8.71 less than four weeks ago, Medusa Mining was the day’s biggest loser, tumbling 8.3% to $6.61. 

Although the Australian-based Phillipine-focussed gold producer has been hammered in June, falling 24% in just over three weeks, the stock has been a standout performer this year in a sideways market, rising 62.39% over the past 12 months on the back of rising bullion prices.

Goldman Sachs is keen on the stock, recently purchasing shares in MML for its Resources Fund. “MML offers low-cost gold production and a significant opportunity to expand its resource inventory through near-mine exploration,” said Goldman Sachs in a research note.  

The principal activities of MML include mineral exploration, evaluation, stgelopment and mining/production of gold. MML’s projects include multiple mines in the Phillipines, where it produced 90,000 ounces of gold last year.

Major shareholders are Bendigo & Adelaide Bank and Trust Company Fiduciary Services. P/E ratio is 13.7.

Based on Thomson Reuters data, 50% of analysts have a buy on MML, 33% have a hold, 17% have a sell, compared to three months ago when 70% had buys, 30% had holds. 

 

Chart: Share price over the year to 22/06/2011 versus ASX200 (XJO)

Stock code: MML

Charts: Medusa Mining Limited

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