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Chronic Investor...

Rio takes Kalahari Minerals stake
Created: 11 September 2008
Written by: Martin Li

It seems that managers of Kalahari are not the only ones to recognise the value of a strong position in Namibia's considerable uranium resource base. Just days after the announcement of the merger between Kalahari Minerals and Extract Resources, mining giant Rio Tinto has taken a 14.9 per cent stake in Kalahari and 10.9 per cent stake in Extract

That gives the Anglo-Australian major, which already runs the massive Rossing project in the country, a 16.55 per cent interest in the proposed merged group. Broker Ambrian comments that "although some of the shares were bought on the market, the majority were bought at a 15 per cent premium to Kalahari's market price and a 22 per cent premium to Extract's".

The sums of money involved here are, of course, small beer to a behemoth like Rio Tinto (which is itself the subject of a takeover bid from rival BHPBilliton), but it shows the high hopes the industry has for Extract's Husab deposit, which lies just to the south of Rossing.

IC VIEW:
BuySHARE TIP UPDATE:

Kalahari's shares edged up to 36p, above our buy recommendation (29p, 6 July 2007), and with Rio's interest confirming the world class nature of the Namibian uranium project, and the major very likely to return for more, they remain a buy.