Paladin reveals talks with NGM for possible takeover deal
Uranium miner Paladin Energy Ltd (ASX: PDN) said on Monday that negotiations are underway with NGM Resources Ltd (ASX: NGM) for a possible takeover agreement on the latter's mining operations in Australia, West Africa and Madagascar.
Paladin said that "it is currently undertaking due diligence on NGM Resources Ltd and is negotiating with the board of NGM in terms of a potential takeover bid," as it clarified that the board has yes to arrive at a decision on the matter.
At present, NGM is undertaking uranium and nickel exploration projects in Queensland, Madagascar and Niger, which is also the world's fourth largest producer, and carries a market capitalisation of about $16.78 million as against Paladin's, which now holds 22.48 percent stake in NGM, current $2.59 billion worth of capitalisation.
Just last week, NGM has reported that its drilling operations in Niger's Tim Mersoi basin proved to be successful while at the same time, the company revealed that rich deposits of iron ore and mineral sand concessions were located in Madagascar.
James Wilson of DJ Carmichael pointed to NGM's uranium prospects in Niger as the most likely reason why Paladin is interested in acquiring the company as he noted that the site was considerably proximate to key operations being maintained by companies such as Rio Tinto Ltd, Niger Mining Services, Areva and Global Uranium.
Mr Wilson told AAP that the targeted site is a significant part of the world for miners and owning a pocket of land on the area is quite important as he stressed that "it might not be on initial results they (NGM) have now, but it might be on future development and everything about the tenement shows that it has a potential upside."
He also emphasised that the targeted Niger prospect is located just near to a power station and an airstrip as he predicted that Paladin should have the required capital to push the project to its next level.
As of 1236 AEST on Tuesday, Paladin Energy shares were trading at $3.58, declining by three cents from the previous trading day while NGM shares entered trading halt on the day before.