UPDATE 1-Paladin Energy offers to buy Fusion for A$17.8 mln

Dec 2 (Reuters) - Australian uranium miner Paladin Energy Ltd (PDN.AX)(PDN.TO) said it intends to buy mineral exploration company Fusion Resources Ltd FSN.AXFNS.TO for A$17.8 million ($11.35 million) to expand its portfolio in the Mt Isa region of Queensland.

Under the "off-market scrip offer," Fusion shareholders will receive one Paladin share for every six Fusion shares, implying a price of A$0.365 per Fusion share based on Paladin's Tuesday closing price of A$2.19.

The total offer price is a 59 percent premium on the Dec. 1 closing price of Fusion shares on the Australian Stock Exchange, Paladin said.

Subiaco, Western Australia-based Paladin develops uranium projects in Africa and Australia and has a majority interest in a portfolio of uranium exploration projects in Australia.

Paladin said Fusion's directors had unanimously recommended that Fusion shareholders accept the offer, in the absence of a superior offer.

It also expects Fusion to have a closing net cash balance of about $14.0 million at the end of the offer period.

Fusion has agreed to pay Paladin a break fee of about A$400,000 in certain circumstances, including a successful competing takeover proposal, Paladin said.

Paladin's shares were up 4 percent at C$1.94, while those of Fusion were trading at 22 Canadian cents Tuesday morning on the Toronto Stock Exchange.

Shares of Fusion closed at 23 Australian cents Tuesday on the Australian Stock Exchange. ($1=1.568 Australian Dollar) (Reporting by Shradhha Sharma in Bangalore)