Barcelona (Platts)--5Aug2010/721 am EDT/1121 GMT

China Guangdong Nuclear Power Holding Corporation (CGNPC) could invest in Australia-based uranium miner Paladin Energy and use Paladin to help develop the Chinese company's Australian uranium properties, under an agreement announced Thursday. The wide-ranging memorandum of understanding between Paladin Energy and CGNPC subsidiary Uranium Resources, sets a framework of co-operation for long-term sales of uranium, potential participation in Paladin's growth strategies, and possible expansion of joint-venture relationships in Australia's Northern Territory with Energy Metals, Paladin said. Uranium Resources holds a 69.34% interest in Energy Metals through another subsidiary, China Uranium Development. "We think this announcement by Paladin is a very positive development and highlights the growing need for uranium globally," Toronto-based RBC Capital Markets said in an equities research note Thursday. "In the coming months and years we expect many more similar deal structures and corporate transactions (JVs and M&A) between uranium producers, developers and explorers and utilities and reactor vendors (particularly from China, Japan, Korea, India and Russia)," RBC said. "With a looming shortfall in uranium supplies, especially post-2014, we believe these strategic relationships will prove extremely valuable for utilities," it added. Although the CGNPC-Paladin MOU is non-exclusive, "it provides a further platform from which Paladin can build upon its already impressive growth," Paladin said. "Paladin has a strong project development pipeline and remains the only fully independent publicly listed uranium company with a geographically diversified production base," Paladin said. Paladin currently has two operating uranium mines in Africa: Langer Heinrich in Namibia and Kayelekera in Malawi, but it has undeveloped uranium resources in Australia, separate from those owned by Energy Metals. Last month, Paladin announced a takeover bid for NGM Resources of Niger, whose most advanced project is the Takardeit deposit. In January NGM declared a maiden inferred resource estimated at 11 million lbs of uranium oxide or U3O8 at Takardeit. Paladin itself has been considered a potential takeover target since Canada's Uranium One bought up to 3% of its shares on the open market in April and May. Uranium One has subsequently said it sold most of its shares in Paladin so it could concentrate on its deal with Russia's Atomredmetzoloto, or ARMZ. The Russian company is buying 51% of Uranium One. Paladin shares rose more than 7% Thursday to A$4.09 (US$3.74) on the Australian Stock Exchange. --David Stellfox, david_stellfox@platts.com Similar stories appear in NuclearFuel. See more information at http://www.platts.com/Products.aspx?xmlFile=nuclearfuel.xml