The Australian Financial Review PUBLISHED: 11 May 2011 Online Angela Macdonald-Smith
China Guangdong Nuclear Power dropped its proposed $1.1 billion takeover offer for Kalahari Minerals, the biggest shareholder of Namibian uranium explorer Extract Resources, but has reserved the right to return to the table should Rio Tinto or another rival try to elbow into Extract's huge Husab uranium deposit.
The Chinese nuclear giant had wanted to lower the price of its planned offer for London-listed Kalahari by about 7 per cent to 270p a share from 290p after a worldwide slump in uranium equities in the wake of the Japanese nuclear crisis.
But the UK Takeovers Panel has blocked the move, confirmed in a decision overnight from its appeals committee.
Shares in Extract eased 30c, or 3.9 per cent, to $7.40 after falling to an intraday low of $6.87 amid concern by investors that the withdrawal of the Chinese proposed bid for Kalahari removed any possibility of a follow-on takeover bid for Extract itself.
China Guangdong agreed to be bound by the ruling of the UK panel's hearings committee and said it no longer wanted to proceed on the terms as first announced on March 7.
Under UK takeover regulations that would prevent the Chinese firm from making a firm offer for Kalahari at less than the original price for three months, but China Guangdong has listed a number of conditions that would allow it the right to return with a bid.
Those include any approach by a third party for Kalahari or Extract, the announcement of any deal that would materially reduce Kalahari's current 42.79 per cent holding in Extract, or any transaction that would reduce Extract's interest in Husab.
The comprehensive list of provisions signal that China Guangdong's interest in Kalahari and Husab is far from extinguished, analysts told Resources Daily on Wednesday.
Even so, the withdrawal of the planned offer appears on the surface to open the way for Extract's second-biggest shareholder, Rio Tinto, to pursue a joint development of Extract's huge Husab uranium deposit with its own existing Rossing mine in Namibia. Extract has been in talks with Rio and others on options to improve the economics of the project, which would cost almost $US1.7 billion to develop on a stand-alone basis.
Extract said Wednesday in a statement it was continuing with work on extending the resource at Husab and on the "ongoing partnership process to evaluate development options" for the project.
Separately on Wednesday, uranium producer Paladin Energy said Namibia's mines minister had clarified proposed changes to that nation's mining legislation that had recently weighed on the share prices of both Paladin and Extract.
Namibian Mines and Energy Minister Isak Katali said existing exploration and mining licences would not be affected by plans to hand rights to strategic minerals, including uranium, to a state-owned mining company.
"Paladin has welcomed this clarification, which removes any uncertainty over its operations in Namibia," Paladin said.
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