Bloomberg News

Guangdong Nuclear Bids A$2.2 Billion for Australia’s Extract

February 14, 2012

(Updates with Extract shares in fifth paragraph.)

Feb. 14 (Bloomberg) -- China Guangdong Nuclear Power Group Co. bid A$2.2 billion ($2.35 billion) for Extract Resources Ltd. as an offer for shareholder Kalahari Minerals Plc triggered an approach for the owner of the fourth-largest uranium deposit.

An unconditional cash offer of A$8.65 a share was made to Extract, Taurus Mineral Ltd., a venture of the state-owned company and China-Africa Development Fund, said today in a statement to the Australian stock exchange. Guangdong Nuclear has an interest of 42.7 percent of Extract through its Dec. 8 bid for Kalahari Minerals, it said.

China’s second-largest reactor builder is seeking new supplies of uranium to feed rising demand for atomic power. Guangdong Nuclear said earlier this month it had purchased 89.5 percent of Kalahari, triggering an offer for Extract at a price pre-determined by Australian regulators of A$8.65 a share.

“This offer should be considered against the significant risks associated with the development” of Extract’s Husab uranium deposit in Namibia, the statement shows. “These risks include obtaining the significant funding required.”

Extract closed little changed at A$8.57 in Sydney trading today. The Perth-based company said Jan. 16 it was accelerating talks with other parties on potential alternative offers.

Namibian Uranium

Rio Tinto Group, owner of the world’s third-biggest uranium mine at Rossing in Namibia, 7 kilometers (4.4 miles) from Extract’s Husab deposit, said last week it’s held talks with Guangdong Nuclear on jointly developing the two sites. London- based Rio Tinto owns 14.2 percent of Extract and last month accepted Guangdong Nuclear’s offer for its 11.1 percent stake in Kalahari.

Extract is seeking to develop Husab at a cost of about $1.7 billion with a mine that may last for more than 20 years. The company raised its estimate of reserves at the project in August by 37 percent to 320 million pounds of uranium oxide. Extract said a year ago it was in talks with Rio Tinto on a potential combination of the two assets.

Guangdong Nuclear bid 632 million pounds ($994 million) for Kalahari Minerals on Dec. 8.

--Editors: John Viljoen, Alex Devine

To contact the reporters on this story: James Paton in Sydney at jpaton4@bloomberg.net; Jesse Riseborough in London at jriseborough@bloomberg.net

To contact the editors responsible for this story: John Viljoen at jviljoen@bloomberg.net; Amit Prakash at aprakash1@bloomberg.net


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