I believe Rio is still in the box seat. They already own around 21% of EXT thought their holdings in EXT and KAH. This means that they could potently offer 25% more than any other bidder and still only have to fork-out the same amount of hard cash or script. Also there would be US$250-500m in capital expenditure savings as well as a shorter time to production because the infrastructure is already in place.
The question is, do they do it a lone, or as part of a consortium or joint venture with a third party, more likely than not the Chinese?
With regards to your comments that "Rio are waiting for the best timing"
1) "higher RIO Share price".
The trouble for Rio is that the longer they wait the more valuable EXT will become. As RIO's SP is currently trading around A$60 I don't think this would be a issue.
2) "lower uranium price"
I attended EXT's presentation at the Australian Uranium Conference last week. Michael J Connor - President of the Nuclear Resources International was a speaker on before hand. He had some great graphs showing the expected shortfall in uranium production and expected increased demand over the next five years. So I don't see the likelihood of uranium prices falling any time soon. In fact I see a greater chance of them steadily increasing.
3) "Most likely third part is Chinese, but RIO now is in bad relationship with Chinese, may need more time to sort out, and this cooperation may be an opportunity to change their relationship"
The Chinese are very pragmatic. If there is a chance that they could do a deal with Rio to have a stake in one of the world largest uranium mines, I'm sure they would. It may also be a way of saving face.
We are definitely living in 'interesting times'.
Regards
Steve
EXT Price at posting:
$7.42 Sentiment: LT Buy Disclosure: Held
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