Monday, 26 March, 2007

The Age

Canadian outfit Denison Mines is firming as a potential suitor to buy uranium explorer Energy Metals Ltd, after Paladin Resources Ltd poured cold water on speculation it was pursuing the company.

Energy Metals revealed it had been approached by a number of major uranium companies interested in its advanced assets.

Denison is the company's second largest shareholder and Paladin is in a joint venture with Energy Metals at the advanced Bigrlyi project in the Northern Territory.

But Paladin managing director John Borshoff told AAP the company had its "hands full" with a potential takeover of Summit Resources Ltd and that it not had discussions with Energy Metals about a bid.

StockResource analysts said Denison and Paladin were the obvious candidates likely to be interested in gaining control of Energy Metals.

"There is an increasing amount of corporate activity occurring in the Australian uranium sector as the long awaited rationalisation and consolidation phase commences," StockResource said in a March 7 client note.

"Sooner or later Energy Metals is likely to be caught up in this activity.

"However, while Paladin is an acquisitive mode, it would struggle to deal on Energy Metals while the Summit takeover is in progress."

Energy Metals executive director Lindsay Dudfield wouldn't be drawn on specific companies it was taking but said the "informal" discussions were continuing.

"There are a number of parties ... that we have been, and are continuing to have, discussions with," he told AAP.

"These are informal, no proposals have been put on the table at this stage.

"There are two obvious parties that are already involved if you like, one is our joint venture partner (Paladin Resources) ... and the other one is also Denison Mines who are on the register."

The news sparked investor in Energy Metals and its shares surged 18.6 per cent or 80 cents to a 12-month closing high $5.10.

Energy Metals was spun-out of gold and base metal explorer Jindalee Resources Ltd in 2005.

Jindalee holds a 38 per cent controlling interest in Energy Metals but Mr Dudfield, who is also managing director of Jindalee, said the value of the investment had never been fully reflected in Jindalee's share price.

"We (Jindalee) have been trading at an unacceptable discount ... one way to fix that is by converting that control block into something that is negotiable and then returning it to our shareholders," he said.

"So a takeover is one of a number of options that are in front of us.