FRUSTRATED at fallout from the collapse of Lift Capital weighing on its share price, established uranium miner Paladin Energy yesterday warned Merrill Lynch that it could face a potential damages claim from any fire sale of Paladin stock.

Paladin founder and managing director John Borshoff said he was concerned generally that sentiment in solid companies was being undermined by investor "skittishness", sparked by the quick liquidation of stakes subject to margin loans at collapsed brokers Opes Prime and Lift Capital. He said sudden share sales by creditors "seem to have no awareness of companies' basic fundamentals".

Two Paladin directors, chairman Rick Crabb and company secretary Gillian Swaby, have launched legal action against Lift and its secured creditor, Merrill Lynch, to stop them from selling almost $58million worth of their Paladin stock that was subject to margin loan facilities with Lift.

The combined stake amounts to about 2 per cent of a miner capitalised at $2.6 billion. Yesterday, Paladin shares slumped 30c, or 6.5 per cent, to $4.30, wiping $184 million off its market value. Mr Crabb and Ms Swaby claim they remain beneficial owners of the stock and had arranged for the settlement of their loans before Lift Capital called in McGrathNicol as administrators late on Thursday last week. "Myself and Mr Crabb have margin lending facilities and we want to clearly secure our shareholdings," Ms Swaby said yesterday.

A Federal Court hearing yesterday in Perth on Mr Crabb and Ms Swaby's application was adjourned until tomorrow.

Paladin is producing uranium at a mine in Namibia and expects to complete construction of a second mine in Malawi by the end of the year.