One fund manager has singled out ASX uranium share Paladin Energy Ltd (ASX: PDN) as a stock that could have a good future.
Wilson Asset Management (WAM) believes the company could be well positioned as the world transitions away from energy derived from fossil fuels.
There are several different energy types that are seen as potential ways to replace fossil fuels, including wind, solar, green hydrogen, and hydropower. Nuclear is also viewed as an energy source that could be a good base power source.
On the ASX, Paladin is one of the main ways for investors to gain exposure to a nuclear future. The uranium mining and exploration company says nuclear energy generation is “clean and low-carbon”.
The ASX uranium share believes it can supply uranium to nuclear energy facilities worldwide. According to Paladin, uranium can be used for “dependable, decarbonised, 24/7 baseload energy that we can all rely on”.
The company says its Langer Heinrich mine in Namibia is “well on track to be a significant player in the decarbonisation economy in the near future”.
Why does WAM like Paladin Energy shares?
WAM noted the ASX mining share is currently restarting activities at the Langer Heinrich project after the mine was put into care and maintenance in 2018.
The fund manager pointed out the Paladin Energy share price rose last month after clarification by Namibia’s Ministry of Mines and Energy that it does not intend to nationalise existing mines.
In a statement, the Namibian government said it had “no intention to seize any stake from existing mineral or petroleum licence holders and remain[s] committed to uphold[ing] the sanctity of contract”.
Recently, the ASX uranium share held an investor day which, according to WAM, gave investors confidence the mine will see first production by “early 2024 without the need for further capital”.
Paladin said in its presentation the Langer Heinrich mine is a low-risk brownfield restart and that the US$118 million fully funded project remains “on track and on budget”.
It also noted that offtakes have been secured with leading global counterparts. The company believes it has found some good customers and also noted there is a growing supply deficit.
In terms of Paladin’s balance sheet, the company said it had US$132 million in available cash, with no corporate debt. It also said it has a “disciplined approach to growth plans ensuring future optionality and value are delivered”.
WAM also expressed confidence in the outlook for Paladin Energy shares:
We are pleased to see the steady progress on Paladin Energy’s return to production and we expect the company will benefit from a strong uranium price environment during 2024 and beyond.
