china plans bid for uranium miner kalahari

China plans bid for uranium miner Kalahari Helia Ebrahimi
October 11, 2011

CHINA is about to push the button on a £650 million ($A1.03 billion) bid for London uranium miner Kalahari Minerals as the country gathers up uranium assets to boost atomic generation.

China Guangdong Nuclear Power Group, which is China's second-biggest nuclear reactor builder, is putting together a 270 pence-a-share bid for AIM-listed Kalahari.

The deal, which could be announced as early as this week, will add to the might of China's growing nuclear dominance. The country is in the process of building 25 reactors - which make up half the world's new atomic power capacity.

Advertisement: Story continues below On Friday, shares in Kalahari jumped 7.2 per cent to 248p. This values the Chinese offer at a 9 per cent premium to Friday's close and puts Kalahari's market capitalisation at £622 million.

The state-backed Chinese group bid for Kalahari in March, with a higher 290 pence-a-share offer. But despite shares initially jumping to 309p, the Fukushima nuclear plant disaster in Japan led to China Guangdong pulling its offer.

First, China Guangdong tried to reduce the bid to 270p a share. But the Takeover Panel refused to allow any reduction, imposing a three-month cooling-off period, as per takeover rules. The Chinese, being advised by Deutsche Bank, are thought to have rekindled conversations once the deadline was lifted in mid-August.

At its half-year results at the end of September, Kalahari said it was focusing on ''achieving value for all stakeholders''. The company made a £13.3 million loss for the half-year but said that losses had narrowed 41 per cent compared with the last set of results. However, because it is such an early-stage company, current financial results have less bearing than project pipelines and development.

Its jewel in the crown is a Namibian uranium mine, Husab, which Kalahari owns through a 42.7 per cent stake in Extract Resources - an Australian company that also has Rio Tinto on its share register. Husab is forecast to become the world's second-biggest uranium mine. At its results, Kalahari said it would take 33 months from project approval to get the mine fully operational. Kalahari also mines gold, copper and other base metal interests in Namibia.

China Guangdong's approach is the latest example of Beijing's determination to build up both its natural resources - such as shale gas - and its nuclear power arsenal. Last month, China's Minmetals launched a $US1.2 billion bid for Anvil Mining, a copper producer in the Democratic Republic of Congo.

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