Bloomberg News

Extract Speeds Partner Talks Amid Chinese Bid for 43% Holder

January 16, 2012

(Updates with company statement in second paragraph.)

Jan. 16 (Bloomberg) -- Extract Resources Ltd., owner of the world’s fourth-largest uranium deposit, is hastening talks with interested parties as a A$2.2 billion ($2.3 billion) bid from China Guangdong Nuclear Power Group Co. looms.

“Discussions with other interested parties are being accelerated in order to assess whether any alternative and superior proposals may be available for Extract shareholders,” the company said today in a statement. Guangdong Nuclear has proposed to make a cash offer for Extract should it win more than 50 percent of Kalahari Minerals Plc, the largest shareholder of the Australian company.

Guangdong Nuclear must offer A$8.65 a share for Extract should its 632 million-pound ($968 million) bid for Kalahari succeed, Australian regulators have ruled. Kalahari, whose directors have recommended the Chinese bid, owns 43 percent of Extract. Rio Tinto Group owns the Rossing uranium deposit in Namibia, 7 kilometers (4.4 miles) from Extract’s Husab project, and is a shareholder of both Extract and Kalahari.

It would be “very surprising” if Rio weren’t part of renewed partnership talks, and Extract’s other major shareholder, Tokyo-based Itochu Corp., was part of such discussions earlier, Extract Chief Executive Officer Jonathan Leslie said in an interview last month. The company has “existing contacts with all the major players in the uranium industry,” he said.

February Deadline

The offer for London-based Kalahari is conditional on Guangdong Nuclear gaining acceptances of more than 50 percent. Hong Kong-based APAC Resources Ltd. said Jan. 12 it has accepted the offer with regard to its 13.1 percent stake in Kalahari. The offer is due to close on Feb. 2.

Extract was little changed at A$8.51 by the close of trading in Sydney today, valuing it at A$2.1 billion. A mining operation at Husab has been estimated to cost $1.7 billion to build.

Kalahari advanced 0.1 percent to 242.75 pence in London at 9:02 a.m. Guangdong Nuclear offered 243.55 pence a share for Kalahari. Itochu, with a 13 percent stake, is the second-biggest holder in Kalahari.

--Editors: John Viljoen, Randall Hackley

To contact the reporter on this story: Jesse Riseborough in London at jriseborough@bloomberg.net

To contact the editor responsible for this story: John Viljoen at jviljoen@bloomberg.net


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