Paladin proposes $18m bid for Fusion

Paladin Energy has proposed an $18 million all-scrip takeover for Perth-based Fusion Resources, in a move that will expand the uranium miner's land holding in Queensland.

Paladin announced late this afternoon that it will offer one of its shares for very six Fusion shares held, representing a price of 36.5 cents for each Fusion share, a premium to the company's last traded price of 23 cents.

Fusion directors have unanimously recommended the offer to shareholders in the absence of a superior offer, and have indicated an intention to accept the offer.

The Perth-based minnow holds the Valhalla North uranium project in Queensland, located some 45 kilometres from the Valhalla and Skal uranium projects owned by the Isa Uranium joint venture of which Paladin holds a 90.95 per cent interest.

"The proposed acquisition represents an important addition to the portfolio of uranium exploration projects in the Mt Isa region currently controlled by Paladin, and another step forward in Paladin's aim of developing a world-class uranium mining and processing operation in Queensland," Paladin said.

"Whilst this ultimately depends on a change in State Government policy in Queensland regarding uranium mining, Paladin plans to continue to progress exploration and appraisal of the Mt Isa projects to ensure readiness if and when this policy change occurs."

Paladin added that both a bidder's and target statements will be available in the next two to three weeks.

The offer is expected to close in mid-January.

As part of the takeover proposal, Fusion, which is also listed in Canada, has agreed to pay $400,000 break fee should the deal not be successful.

Paladin's announcement is pasted below:

Paladin Energy Ltd (ASX: PDN, TSX: PDN) ("Paladin") and Fusion Resources Limited (ASX: FSN, TSX: FNS) ("Fusion") are pleased to announce that Paladin intends to make an off-market scrip takeover offer ("Offer") for Australian and Toronto Stock Exchange listed minerals exploration company Fusion.

The consideration under the Offer will comprise 1 fully paid ordinary Paladin share for every 6 fully paid ordinary Fusion shares, implying a price of A$0.365 per Fusion share based on today's closing price of Paladin shares on the ASX of A$2.19.

The Offer values Fusion at approximately A$17.8 million and provides an attractive premium of 59% to the closing price for Fusion shares on the ASX on 1 December 2008 of A$0.23, being the last trading day prior to Fusion shares being placed in a trading halt. The Offer is subject to a number of conditions, which are set out in detail in Appendix 1 to this announcement.

Fusion's directors have unanimously recommended that Fusion shareholders accept the Paladin offer, in the absence of a superior offer. They have also indicated that they intend to accept the Paladin offer in respect of their own shareholdings, in the absence of a superior offer.

Fusion is a minerals exploration company with 100% ownership of a number of uranium exploration projects in the Mt Isa region of Queensland and a portfolio of interests in copper / gold exploration projects in north Queensland. In addition, Fusion is expected to have a closing net cash balance (after allowing for all creditors, contingencies and accruals for any liabilities), of at least $14.0 million at the end of the Offer period.

Fusion's most advanced project is the Valhalla North Uranium Project, which is located approximately 45 kilometres north of the Valhalla and Skal uranium projects owned by the Isa Uranium Joint Venture ("IUJV") participants. Paladin has an effective 90.95% interest in the IUJV through its wholly owned subsidiary Valhalla Uranium Limited ("Valhalla Uranium") and its 81.9% interest in Summit Resources Limited ("Summit").

Fusion expects to announce a maiden JORC compliant resource for Valhalla North before the end of calendar year 2008 (it is a condition of the Offer that Fusion announces a JORC compliant resource of not less than 6Mlbs at a cut off grade of not less than 250ppm of uranium oxide (U3O8) prior to the Offer closing). Fusion's other uranium projects near Mt Isa are the Andersons South uranium project and the Mary Kathleen South project.

The proposed acquisition represents an important addition to the portfolio of uranium exploration projects in the Mt Isa region currently controlled by Paladin, and another step forward in Paladin's aim of developing a world-class uranium mining and processing operation in Queensland. Whilst this ultimately depends on a change in State Government policy in Queensland regarding uranium mining, Paladin plans to continue to progress exploration and appraisal of the Mt Isa projects to ensure readiness if and when this policy change occurs.

Fusion shareholders who accept the Offer will:

- retain the exploration upside associated with Fusion's projects and continued exposure to potential changes in Australian State Government uranium mining policy;

- benefit from becoming shareholders in a uranium producing company, inherit a management team and board with the requisite skills and demonstrated ability to bring a uranium operation into production; and

- obtain increased liquidity of their investment through owning Paladin shares.

Fusion has also agreed to pay Paladin a break fee of approximately A$400,000 in certain circumstances, including a successful competing takeover proposal. A copy of the Takeover Bid Implementation Agreement is attached as Appendix 2 to this announcement.

Paladin's financial adviser in respect of the proposed acquisition is Azure Capital and its legal adviser is Blakiston & Crabb. Fusion's legal adviser is Hardy Bowen.

Indicative Timetable

Paladin's Bidder's Statement and Fusion's Target Statement are both expected to be available in two to three weeks and despatched to Fusion shareholders as soon as possible thereafter. The Offer is expected to close in mid January, subject to any unforseen events.

Background Information - Paladin Energy Limited

Paladin is listed on both the Australian Securities Exchange and the Toronto Stock Exchange under the symbol "PDN" with a number of international subsidiary listings. Paladin is a uranium resources company with a focus on the development and operation of uranium projects in Africa and Australia.

During the past three years, Paladin has developed and commissioned the 100% owned Langer Heinrich uranium mine and processing plant in Namibia and begun construction of the Kayelekera uranium mine and processing plant in Malawi (with commissioning of this project expected in the first quarter of 2009). In addition, through its acquisition of 100% of Valhalla Uranium and 81.9% of Summit, Paladin has a majority interest in, and control of, a portfolio of uranium exploration projects in the Mt Isa region of Queensland (complementing its portfolio of existing Australian uranium exploration
projects).

Further information regarding Paladin and its key assets can be found in Paladin's latest Annual Report (a
copy of which can be found on Paladin's website, www.paladinenergy.com.au)

Background Information - Fusion Resources Limited

Fusion is a mineral exploration company focused on uranium exploration in Queensland. Fusion has a number of prospective, 100% owned uranium exploration projects in the Mt Isa region, as well as a portfolio of copper / gold projects located in North Queensland.

Fusion's principal asset is the Valhalla North Uranium Project which is located approximately 45 kilometres to the north of Paladin's Valhalla and Skal uranium projects. Fusion has identified two key prospects at Valhalla North; Duke Batman and Honey Pot.

Fusion is currently finalising a uranium mineral resource estimate in accordance with the JORC code and National Instrument 43-101 'Standards of Disclosure for Mineral Projects' in relation to Valhalla North, which is expected to be released in the December 2008 quarter.

Fusion's other Mt Isa uranium projects include the Andersons South project and the Mary Kathleen South project, and has a number of other early stage gold and base metal exploration projects located in Queensland.