Australian Financial Review PUBLISHED ONLINE: 08 Mar 2011 10:14:12 Street Talk Edited by Sarah Thompson and Paul Garvey
While the market has been focused on a tie-up between Extract Resources and minority shareholder Rio Tinto for the development of Extract's huge Husab uranium deposit in Namibia, the Chinese are trying to sneak in the back door and grab the resource.
China Guangdong Nuclear Power is proposing a bid of GBP765 million ($1.23 billion) for Kalahari Minerals, whose biggest asset is a 43 per cent stake in Extract.
The cash offer, which is being recommended by Kalahari's board, represents a premium of 11 per cent to the London-listed company's previous close and a more generous 38 per cent premium to its average closing price over the past six months.
China Guangdong still needs the OK from the Australian Securities and Investments Commission as buying Kalahari would give it more than 20 per cent of Extract.
The offer pits China's second-biggest builder of nuclear reactors against Rio, which owns about 14 per cent stake in Extract and 11.5 percent of Kalahari.
Extract has been in talks with Rio about developing its Husab resource through Rio's neighbouring Rossing mine and also advised last month it was in negotiations with Kalahari to "simplify" the shareholding structure. The proposed Chinese bid has thrown all that up in the air.
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