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By Servaas van den Bosch
WINDHOEK, Feb 23 (Reuters) - Talks between Extract Resources
and Rio Tinto over the development of uranium
assets in Namibia may lead to a joint venture, but a merger is
not on the cards, Extract's chairman said.
Steve Galloway also told Reuters in an interview late on
Tuesday the company had no intention to sell its Husab uranium
deposit, the fifth largest of its kind in the world.
Analysts have long said Extract could be an eventual target
for Rio, whose Rossing mine is near Extract's Husab deposit.
Speculation was renewed this week when the two companies said
they were in talks to combine their uranium projects.
"We have engaged in discussions with Rio Tinto on joint
development options, not an acquisition or merger," Galloway
said. "The projects are sufficiently close together to consider
sharing common services and facilities and saving time and money
in the process."
Extract, the Namibia-focused uranium developer, is 41
percent owned by Kalahari Resources and its primary
asset is the Husab deposit.
Husab is expected to come on stream in early 2014 and
produce up to 15 million pounds of yellow cake a year, making it
potentially the second-largest uranium mine in the world.
"If an agreement with Rio Tinto can be made I expect this
development process can be accelerated," Galloway said.
In addition to Rio Tinto, Extract has been seen as a
potential takeover target of French energy group Areva
or Asian firms, which are eager to secure supplies of
uranium as their countries aim to build more nuclear plants to
cut their reliance on coal for power generation.
Rio Tinto's Rossing is Namibia's oldest and largest uranium
mine, producing 1.36 million pounds of uranium oxide in the
quarter to end-December, compared with 932,731 pounds produced
by Paladin Energy's Langer Heinrich mine.
Total output for the country's two uranium mines last year
was 5,279 tonnes, compared to 5,429 tonnes in 2009.
Extract is currently in talks with Kalahari, hoping to
simplify the shareholding structure between the two companies.
"Because the shares are owned by some of the same people,
simplifying the structure makes sense," he said.
Galloway acknowledged that Extract is courted by Chinese and
other investors, but described such options as conceptual only.
"Chinese interests have visited many times, but haven't as
yet submitted a proposal," he said.
(Reporting by Servaas van den Bosch; editing by Agnieszka Flak)
(([email protected]; +27 11 775 3154; Reuters

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Keywords: EXTRACTRESOURCES/