Mineral explorer NGM Resources Ltd (ASX: NGM) expressed dismay on Wednesday as it reacted on last week's revelations by Paladin Energy Ltd (ASX: PDN) of backing out from the two companies' merger deal that the latter has attributed to the worsening security situation in Niger.

NGM maintains a uranium mining site in Niger, which is the target of the $27 million scrip takeover deal with Paladin but the company was advised by its suitor on Friday last week that the conditions of the bid could not be met anymore as it cited that the escalating incidence of terrorism in the area was a grave concern for Paladin.

Paladin argued that the abduction of 16 French uranium mining employees by alleged Al-Qaeda operatives pointed to security aggravations that were integral to the defeating condition provisions of the NGM-Paladin deal.

Paladin said that the kidnapping incident put into question "NGM's ability to safely access, explore and develop the resource base of its exploration tenements following the completion of the takeover bid."

The suitor company further added that with security allegedly compromised, "safety concerns would prevent Paladin Group expatriate personnel from working in Niger's uranium region within a suitably secure environment for an, as yet, unknown period of time," thus the decision by Paladin to allow the bid to simply lapse on October 8.

On its part, NGM said that it would challenge Paladin's move before the Takeover Panel as it stressed that "the risks associated with doing business in Niger are well known and NGM believes that there is currently no basis to believe that NGM's operations at Agadez have been, or are likely to be, materially adversely affected by the events in Arlit."

More so, the target company said that NGM shareholders would be the most affected by Paladin's withdrawal from the deal as it asserted that a failed deal would result to returned NGM shares even as the NGM board "recommends that shareholders closely monitor developments in relation to the Takeover Panel application and decide whether or not to accept the offer before its expiry."

As of 1347 AEST on Wednesday, NGM shares slid by 5.4 cents or 36 percent to trade down at 9.6 cents while Paladin shares were firmly trading at $3.70.