Chinese poised to pounce on Extract Resources by: Sarah-Jane...

Chinese poised to pounce on Extract Resources
by: Sarah-Jane Tasker
From: The Australian February 06, 2012 12:00AM

China is expected to make a bid for Africa-focused Extract

CHINA is set to launch a $2.2 billion bid for Australian-listed Extract Resources after securing a controlling stake in the company's major shareholder.
The Africa-focused company is expected to today update the market after China Guangdong Nuclear Power Corporation announced late on Friday that it had secured 89.5 per cent of Kalahari Minerals, which has a 43 per cent stake in Extract.

Securing more than a 50 per cent interest in Kalahari has triggered a $8.65 cash-a-share bid for Extract because of a ruling by the Australian Securities & Investments Commission.

CGNPC has until March 1 to lodge a bidder's statement in relation to Extract.

Shares in Extract were placed in a trading halt on Friday, at $8.57 a share, awaiting an update on the Chinese offer.

The uranium-focused company's shares were hovering around $8 a share prior to CGNPC and Kalahari confirming they had resumed takeover discussions after previous talks failed following Japan's Fukushima disaster.

Mining giant Rio Tinto and Japan's Itochu were instrumental in China getting past its 50 per cent condition in the Kalahari bid after last week agreeing to sell their stakes into the offer.

But both will now be closely watched for their thoughts on the downstream Extract bid, as Rio has a 14.2 per cent stake in the new target, while Itochu holds a 10.3 per cent interest.

Extract's Husab project, which contains the fourth-largest uranium-only deposit in the world, is near Rio's Rossing uranium mine in Namibia and market speculation has centred on potential synergies between the two projects.

Extract had flagged in February last year that it was in talks with Rio about jointly developing their neighbouring uranium projects.

China first approached Kalahari in March last year, with a pound stg. 632 million bid in a joint venture with China-Africa Development Fund.

The move prompted Extract to request ASIC to intervene and ensure that the same offer be made to all of its shareholders.

The original Kalahari talks broke down after the Chinese attempted to lower the offer following Japan's nuclear disaster after the tsunami.

After talks resumed, ASIC ruled the Chinese must bid for Extract if they secured more than 50 per cent of the rights in Kalahari. Extract's independent directors have consistently said throughout the process they would make a recommendation if a bid was made but alternatives were still being actively investigated.

ALL GOOD NEWS FOR DYL. WHEN IS THE MARKET GOING TO WAKEUP AND START VALUING DYL WHAT IT IS WORTH????

I have stated it before, but simply using the Kalahari Resources numbers for control of 43% of EXT and based on a simple look through value for just the Omahola JORC (hard rock) resource announced alone today would mean assigning a value of around 23cps for DYL. Furthermore, EXT and DYL are neighbours and it is rediculous that PDN can continue to babysit DYL as it currently is doing to the detriment of DYL shareholders.

It begs the question, why wouldn't PDN take DYL out at these depressed prices (considering they already own 19.9%).

What it all does mean is when the market realises, DYL will move very quickly.....