kah sees china follow-on bid for ext afr 27/10

Kalahari sees China follow-on bid for Extract

The Australian Financial Review
PRINT EDITION: 27 Oct 2011
Perry Williams

London-listed Kalahari Minerals, the largest shareholder in Australian-listed uranium explorer Extract Resources, expects its suitor China Guangdong Nuclear Power to also make a bid for Extract over the medium term.

"I do not think there is any suggestion they would not want to do that," said Kalahari executive chairman Mark Hohnen on the sidelines of the Commonwealth Business Forum in Perth. "It's a matter of timing, I would have thought."

Kalahari, which owns 42.8 per cent of Extract, confirmed earlier this month that it had resumed talks with CGNPC on a possible recommended takeover offer.

Any bid is expected to be priced no higher than 270 pence per share, the level the Chinese company had proposed to cut its earlier proposed offer to after the Fukushima nuclear accident in March.

Mr Hohnen would not be drawn on a specific price.

"All I can say is my shareholders have an expectation of real value," he said.

Under Australian takeover regulations, the purchase of Kalahari by CGNPC would require the Chinese to make a follow-on bid for Extract at an equivalent price.

Mr Hohnen said an announcement will be made by November 11 on whether a deal will go ahead between Kalahari and CNGPC.

Mr Hohnen also hit out at Rio Tinto's holding in the company, describing it as "crazy" and adding that Rio would never be offered a seat on the company's board.

Rio holds a 11 per cent stake in Kalahari and a 14 per cent holding in its major asset, Extract - prized for its Husab uranium project in Namibia - and is thought to be eager to simplify its different shareholdings in the two companies.

Mr Hohnen said the mining major's holding in his company was not helpful.

"Unfortunately when they came on the register in 2008, I think they told their powers that be that they control Extract. Well they don't. Kalahari is the gatekeeper and their holding in Kalahari is crazy ... because they won't be allowed a board seat and Kalahari controls Extract."

Speculation has arisen that Rio could mount its own counter-bid to China Guangdong Nuclear Power's $1.1 billion tilt for Kalahari. Analysts have also raised the prospect of Rio looking to jointly develop Extract's Husab deposit with its own adjacent Rossing mine but Mr Hohnen said he was not aware of specific moves by Rio.

"Rio talks the whole time," said Mr Hohnen. "I'm sure that Rio is talking to everyone but no, I'm not [aware of specific talks]."

http://www.afr.com/p/business/companies/kalahari_sees_china_follow_on_bid_h7yj7w7aJbfBEUt95NRvsJ