article on kalahari

From Minesite - interesting that a resource estimate is over 6 mths away. On this basis EXT is a 6mth story imo. Buy when no one wants em...

Listing on AIM in March this year enabled Kalahari to enjoy favourable conditions before life started to get difficult for junior explorers. It raised £6million at 15p and almost immediately put the money to work drilling for uranium in Namibia. Its most advanced prospect is Hsub and assays from 9 of the 15 holes drilled so far have returned grades of 2.32 kg/t U3O8 and 1.06 Kg/t U3O8 over lengths of 8 and 14 metres respectively. That might be hard for most of us to interpret but Peter Mcintyre, executive director, puts it into context by saying that at current metal prices those grades have the equivalent dollar value of 16 and 7 grammes per tonne of gold respectively. Put another way the grade at Rossing when it started was 0.3 kg/t. In other words Hsub looks very prospective. Kalahari owns 49 per cent, though Peter Mcintyre is also an Executive Director of Extract Resources that owns the remainder.

Peter is clearly excited about Hsub pointing out that the company has only investigated 480 metres of the 4 kilometres of strike length of the Ida zone that the radiometric survey identified as being prospective. So far only 4,730 metres of the 8,000 metre drill programme has been completed so the news flow should be maintained. A second target zone of 15 kilometres has also been identified even closer to Rossing and the company is about to start a reverse circulation drill programme on that. Drill results are only one part of the discovery process and it is difficult for the market to put a value on a company until a resource statement has been produced and for Hsub that is probably at least six months away.

The uranium story though is not about months but years. As energy and nuclear power buffs will know, current supply only meets 60 per cent of today’s demand and even though the West is not building any new plants, and probably won’t for ten years or so, others are. In Asia Peter reports that 28 new nuclear power stations are under construction and another 150 are planned. Even allowing for old plants closing it looks as if the demand side of the uranium equation looks pretty sound for a quite a few years to come.

Kalahari is not just about uranium though. It has a 100 per cent ownership of the Koperberg prospect where it is drilling on 20 metre centres to extend the resource along strike. Intersections of 17 metres of 2.48% copper and 10 metres of 2.48% certainly provide encouragement. Koperberg lies within the Dordabis Project zone where a resource of 250,000 tonnes of contained copper was identified some time ago. The company has hopes of taking one of these prospects into production by 2008.

At the current price of 16p Kalahari is capitalised at £16million but the fact that RAB Capital owns 21 per cent and Philip Richards owns a further 4.2 per cent is indication of how keen some key investors are on the story. On the other hand it can also be viewed as a negative factor as some investors are tending to short stocks where RAB is a big shareholder. With its location between the well established Rossing mine and the new Langer Heinrich mine of Palladin Resource it is certainly in the right area. A combination of good geography and the right minerals ought to make for a good story.