Paladin Energy Ltd (ASX:PDN) primarily explores for uranium in Australia and Southern Africa.

Shares in energy stock Paladin Energy have soared today after the company announced a 47% increase in first quarter production compared to the previous quarter.

PDN also said that spot price for uranium is beginning to show signs of strengthening as new demand emerges.

Paladin also re-affirmed its full year production target and earnings guidance, making it one of the days hot stocks.

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Paladin Energy (ASX:PDN) is a uranium miner, with projects located in Africa and Australia.

PDN’s long-term goal is to establish itself as a uranium producer through identifying, acquiring and evaluating advanced uranium projects.

Today, PDN completed a $68.2 million institutional placement, priced at $1.20 per share.  This represents an 8.4% discount to its last closing price.

The group said the raising, combined with future operating cash flow and asset sales, will give it the financial flexibility to achieve its objectives.

The stock has been smashed after coming out of trading halt, and it has so far been the worst performer in the Australian share market.

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Paladin Energy (ASX:PDN) is a uranium miner, with projects located in Africa and Australia.

PDN’s long-term goal is to establish itself as a uranium producer through identifying, acquiring and evaluating advanced uranium projects.

The group’s current focus is on its African projects: Langer Heinrich (Namibia) and Kayelekera (Malawi).

PDN has been one of the shares to sell this year after facing a number of challenges including a nuclear crisis in Japan.

The future was looking bright for uranium companies like PDN as world energy needs surged on the back of expansion and industrialisation in China and India.

Nuclear energy seemed the next biggest thing until disaster struck this year following the earthquake and tsunami in Japan.

As Japan’s nuclear crisis deepened, the less attractive uranium looked as an energy source for the future.

Germany’s plans to move away from uranium entirely by 2022 have hurt uranium companies further.

In addition, a looming global economic crisis is threatening to slow energy demand worlwide.

Production lacks energy

PDN had a bad start to the year after downgrading its FY11 uranium production guidance to between 6.0 million – 6.3 million pounds (Mlb), from the previous 7 million pounds.

PDN said that second quarter production rose 7.6%, however full year output was going to be affected by power and maintenance disruptions at its Malawi-based Kayelekera mine.

Paladin Energy shares slid 7.7% following the update. To make matters worse, PDN’s final FY11 production came in at 5.7Mlb, completely missing the mark.

Following Japan’s nuclear crisis, PDN announced that it does not have any commercial relationship with Japanese utilities.

It further said that it had a strong balance sheet and is in a good position to meet global uranium demand given the expected supply disruptions.

FY results

Last month, PDN reported an FY11 net loss of US$82.3 million after costs related to acquisitions and mine expansions more than offset higher revenue from increased production.

This was wider than the US$52.9 million net loss reported in the previous year and was also larger than the average US$44 million net loss analysts had expected.

PDN said its costs rose due in part to lower uranium prices in the wake of Japan’s nuclear crisis.

Looking ahead

PDN and its uranium sector peers have been under pressure after a catastrophic earthquake and a tsunami crippled reactors at the Fukushima Dai-Ichi reactor in Japan.

The event has raised fears regarding uranium as an energy choice. Whilst uranium is one of the greenest forms of energy when contained, disasters such as Chernobyl have led to long-standing controversy regarding nuclear power.

With Germany looking to move away from uranium entirely by 2022, there are wide fears that other developed nations will also reconsider their stance on uranium.

This uncertainty is likely to see uranium miners under pressure in the medium to long term with potentially devastating long term effects.

PDN’s price action has suffered, reflecting the underlying issues the company has been facing.

We feel PDN will continue to struggle on a combination of high debt levels, a tough economic outlook and a weak uranium market.

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Paladin Energy (PDN) is a uranium miner, with projects located in Africa and Australia.

PDN’s long-term goal is to establish itself as a uranium producer through identifying, acquiring and evaluating advanced uranium projects.

The group’s current focus is on its African projects: Langer Heinrich (Namibia) and Kayelekera (Malawi).

PDN shares have slumped in the few months since the Japanese nuclear crisis and the company last week released a reassuring statement aimed at stopping the share price rot.

PDN says its financing facilities are in good standing and clarified that it currently has no plans to raise fresh capita – debt or equity – outside of the financing of its stage 3 expansion of its Langer Heinrich project .

The uranium miner says the feasibility study on its stage 4 expansion is proceeding as schedule and the company is expecting a positive outcome.

PDN also said that key shareholder Newmont Mining (one of the world’s largest gold miners) has indicated it will hang onto its 6.71% stake in PDN in the near-term and that the company has mechanisms in place if Newmont decided to sell out.

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