Mr. Rick Crabb reports

PALADIN ENERGY LTD: PLACEMENT, ENTITLEMENT OFFER AND UPDATE ON OPERATIONS AND OUTLOOK

Paladin Energy Ltd. is taking a number of measures to recapitalize the company and address its medium-term financing requirements, including the convertible bonds due in November, 2015. Following these measures, and other initiatives to be implemented in early 2015, Paladin expects to be fully financed until at least June, 2016.

Highlights:

• Placement to HOPU Clean Energy (Singapore) Pte. Ltd. of approximately $61-million (Australian) (approximately $52-million (U.S.)), at 42 Australian cents per share:
  • HOPU to subscribe for approximately 144.9 million shares, representing 15 per cent of Paladin's current capital base, at 42 Australian cents per share, a approximately 15-per-cent premium to the 30-day VWAP of 36.4 Australian cents per share;
  • All necessary approvals have been received and the investment is not subject to any conditions;
  • Wendong Zhang, senior managing director of HOPU, has been invited to join the board of Paladin;
  • Foreign Investment Review Board approval has been received that allows for an investment by HOPU in Paladin of up to 19.99 per cent;
  • HOPU Investments is a private equity firm focusing on China-related investment opportunities;
• Underwritten entitlement offer to raise approximately $144-million (Australian) (approximately $125-million (U.S.)), at 26 Australian cents per share:
  • Fully underwritten one-for-two entitlement offer to raise approximately $144-million (Australian) (approximately $125-million (U.S.));
  • The entitlement offer price of 26 Australian cents per share represents a approximately 23-per-cent discount to TERP;
  • HOPU has committed to subscribe for its full entitlement under the institutional tranche of the entitlement offer and will participate in last-in-relief subunderwriting of the retail tranche of the entitlement offer to bring its shareholding up to a maximum of 15 per cent of issued capital following the placement and entitlement offer;
• Proceeds from the placement and entitlement offer are intended to address Paladin's existing 2015 convertible bonds:
  • Further initiatives intended for early 2015 to provide cash buffer for working capital to finance operations and financing costs, such that Paladin will be fully financed to at least June, 2016.

Chief executive officer and managing director, John Borshoff, commented: "The recapitalization package will allow Paladin to significantly derisk its balance sheet and enhance its future funding flexibility. We look forward to welcoming HOPU to the Paladin share register as a long-term, strategic investment partner with financial capacity. HOPU's investment demonstrates its confidence in the uranium industry and its understanding of Paladin's unique positioning in the uranium sector. It also increases Paladin's funding options going forward."

Paladin chairman Rick Crabb welcomes Mr. Zhang to the Paladin board: "Mr. Zhang's experience as a Chinese banker on Wall Street and strong connection through the HOPU network into Chinese industry will provide a fresh dynamic to our board. I am very much looking forward to the new paradigm that the HOPU strategic investment presents for our company."

HOPU chairman, Fang Fenglei, said: "Paladin is a successful explorer, developer, operator and acquirer of uranium assets. We are extremely pleased to enter into a strategic partnership with a reputable player with strong operational capabilities. We look forward to working closely with Paladin's team in the pursuit of its future strategic objectives."

Operational outlook update

Paladin has also today confirmed that it remains on track to meet production guidance for fiscal 2015 at 5.4 million pounds to 5.8 million pounds U3O8. The Langer Heinrich mine has now successfully introduced the new resin in the NIMCIX circuits and scaling issues are fully resolved. The new resin will reduce operating costs through reduced reagent consumption and will also increase the circuit uranium transfer capacity and overall process recovery. Construction of the bicarbonate recovery plant at Langer Heinrich is well advanced and scheduled for commissioning in January, 2015.

The above-mentioned initiatives put Paladin in a strong position to achieve its long-term C1 cost target of low $20 (U.S.) per pound at Langer Heinrich.

Uranium outlook

The initiatives announced today are occurring at an opportune time as the uranium market is clearly recovering from its post-Fukushima malaise with Paladin well situated to benefit from any upturn. Uranium spot price recovery in recent months from a low of $28 (U.S.) per pound to a recent high of $44 (U.S.) per pound indicates both a tightness in supply and the effects of possible realignment of some supply sources due to negative geopolitical developments. With China as the nuclear growth leader, confirming its strong commitment in build up of its reactor fleet over the next 30 years combined with supply shortfalls identified in the midterm, Paladin believes uranium is set for a long period of price strength.

Primary product available for the spot market has declined appreciably, largely due to production cutbacks that occurred during fiscal 2014, which are all now affecting supply into the spot market for fiscal 2015 and beyond. Factors contributing to production cutbacks and availability of product in the spot market include: Paladin placing Kayelekera on care and maintenance; Paladin's sale of a minority equity stake in Langer Heinrich with its associated off-take arrangement; the sole uranium producer in Uzbekistan (Navoi) realigning previous spot market material into multiyear sales agreements with two major utility buyers; and U.S. ISR producers and Rossing restricting production only to what they need to deliver into long-term contracts. Consequently about 10 million pounds to 12 million pounds of annual production is removed from the market, thus creating a supply squeeze in the prompt spot market.

Also, in Japan, authorities have cleared the final hurdle for restart of the Sendai 1 and 2 reactors, paving the way for a revival of the stalled Japanese nuclear industry. Start-up of the Sendai 1 and 2 reactors will signify confidence in follow-on approvals on those applications accounting for 18 additional reactors located across 12 sites in Japan.

Placement to raise approximately $61-million (Australian)

Paladin has today signed a subscription agreement with HOPU, one of the leading China based private equity firms, under which HOPU will unconditionally subscribe for approximately 144.9 million fully paid ordinary shares in Paladin, being 15 per cent of Paladin's current capital base, representing approximately 13 per cent of Paladin's issued capital following the placement.

The placement will raise approximately $61-million (Australian) (approximately $52-million (U.S.)) based on an issue price of 42 Australian cents per share, representing an approximately 11-per-cent premium to the closing price of Paladin shares on Nov. 21, 2014, and an approximately 15-per-cent premium to the 30-day volume weighted average price of Paladin shares traded on the Australian Securities Exchange for the period ending Nov. 21, 2014. The new shares issued under the placement will rank equally in all respects with existing Paladin shares. As the placement shares will be issued on Nov. 24, 2014, prior to the entitlement offer record date, HOPU is expected to be eligible for participation in the entitlement offer.

In addition to the placement, HOPU has committed to subscribe for its full entitlement under the institutional tranche of the entitlement offer (representing an investment of approximately $19-million (Australian)), and will participate in last-in-relief subunderwriting of the retail tranche of the entitlement offer to bring its shareholding up to a maximum of 15 per cent of issued capital following the placement and entitlement offer.

Depending on the acceptances under the entitlement offer, HOPU's pro forma shareholding postcompletion of the placement and entitlement offer, will be between 13 per cent and 15 per cent.

Paladin intends to enlarge its board by appointing Mr. Zhang from HOPU as a director. Mr. Zhang has over 23 years of experience in financial services and international capital markets and was among the first generation of Chinese bankers on Wall Street. Previous experience includes three global investment banks in three cities and co-founder of two boutique investment advisory firms focusing on Chinese opportunities. Mr. Zhang holds a BA in engineering and economics from Dartmouth College.

Entitlement offer to raise approximately $144-million (Australian)

Eligible shareholders (being shareholders with a registered address in Australia or New Zealand and, for the institutional component only, shareholders in certain other jurisdictions) will be entitled to subscribe for one new Paladin share for every two existing Paladin shares held as at 7 p.m. (AEDT) on the record date of Thursday, Nov. 27, 2014. The entitlement offer price of 26 Australian cents per new share represents an approximately 23-per-cent discount to the theoretical ex entitlement share price of 33.6 Australian cents per share. New shares issued under the entitlement offer will rank equally with existing ordinary shares.

The institutional tranche of the entitlement offer is open from Monday, Nov. 24, 2014, to Tuesday, Nov. 25, 2014, and the retail tranche of the entitlement offer will be open from Monday, Dec. 1, 2014, to Wednesday, Dec. 10, 2014. Further details of the retail entitlement offer will be despatched to eligible shareholders on Monday, Dec. 1, 2014. Existing retail shareholders will have the opportunity to apply for additional shares above their entitlement as part of the retail entitlement offer. The entitlement offer is non-renounceable and entitlements will not be tradable or otherwise transferrable. The entitlement offer is fully underwritten.

Continuing initiatives

Paladin is engaged in discussions with major international nuclear utilities, which have expressed a strategic interest in Paladin with a view to crystallizing considerable value in early 2015.

The rationale for these entities is the opportunity it provides to access the Paladin platform including technical capabilities and intellectual property, world-class asset pipeline, the opportunity to enter into additional arm's-length offtake contracts and possible equity participation on developing projects. This in turn will provide additional funds to both deleverage the balance sheet and support growth objectives. As an alternative to this strategic investment, Paladin will consider a potential long-dated convertible bond, the attractiveness of which will be considered against any proposals received from potential strategic partners.

The board of Paladin reiterates that, given the status of these initiatives and the measures announced today, it considers there will be no requirement for a further call on Paladin shareholders to meet its debt obligations in the medium term and expects to be fully financed until at least June 30, 2016. With an improving uranium price environment as well as continued strategic interest in the company and its operations, Paladin believes that it is also well placed to address the expiry of its remaining convertible bonds due in April, 2017.

J.P. Morgan Australia Ltd. is acting as financial adviser to Paladin in relation to the placement, and as a sole underwriter, bookrunner and lead manager for the entitlement offer.

                   KEY DATES FOR THE ENTITLEMENT OFFER 
Key events                                                            Date

Trading halt, institutional entitlement offer
opens and placement settlement and allotment         Monday, Nov. 24, 2014                                   
Institutional entitlement offer closes and        
institutional entitlement offer shortfall                                   
bookbuild                                           Tuesday, Nov. 25, 2014 
Trading halt lifted                               Wednesday, Nov. 26, 2014                      
Entitlement offer record date                          7 p.m. (Sydney time)      
                                                   Thursday, Nov. 27, 2014
Retail entitlement offer booklets dispatched and  
retail entitlement offer opens                        Monday, Dec. 1, 2014                             
Institutional entitlement offer settlement         Wednesday, Dec. 3, 2014
Institutional entitlement offer allotment           Thursday, Dec. 4, 2014 
Retail entitlement offer closes (cheques only)        Friday, Dec. 5, 2014   
Retail entitlement offer closes (Bpay only)       Wednesday, Dec. 10, 2014                      
Retail entitlement offer allotment                Wednesday, Dec. 17, 2014                      
Quotation of retail entitlement offer shares       Thursday, Dec. 18, 2014
Retail entitlement offer holding statements       
dispatched                                           Friday, Dec. 19. 2014                            

Eligible retail shareholders will be sent a retail entitlement offer booklet on Dec. 1, 2014, including a personalized entitlement and acceptance form which will provide further details of how to participate in the retail entitlement offer.