EXTRACT SHARES SURGE AGAIN Rossing South Zone 2 resource confirms huge uranium potential While there were no surprises in Extract Resources' initial resource estimate on Rossing South Zone 2, it confirms the deposit as being among the world's largest uranium resources.
Author: Lawrence Williams Posted: Wednesday , 22 Jul 2009
LONDON -
Australian headquartered Namibian uranium explorer, Extract Resources (ASX/TSX: EXT), has now released the initial JORC compliant resource estimate for Zone 2 of its big Rossing South uranium prospect. This, as expected, shows a broadly similar uranium content to Zone 1, but at an even higher grade. On the news Extract's shares jumped again, having been boosted by an earlier media report that Stephen Dattels' Polo Resources, which with an associate company, has been stakebuilding in Extract and in its major shareholder Kalahari Minerals, to create tension between another major shareholder, Rio Tinto (which operates the big neighbouring Rossing uranium mine) and "another party". The quote is said to have come from Extract's Investor Relations Manager.
In effect there is nothing new for the markets in the latest resource statement as this had been well signalled. Only if the resource had been smaller than expected would this have surprised investors. But, nevertheless, the reality confirms Extract - and Kalahari which owns 40% of Extract - are sitting on a globally significant uranium deposit at shallow depth in a uranium mining friendly nation, and one which could be brought to production relatively quickly.
The figures for the Rossing South Zone 2 resource based on drilling to date is 122M lbs U3O8 at 543ppm from 102 million tonnes. Added to the latest Zone 1 figure this gives Extract a total resource of 267 million lbs of U3O8 grading an average 487 ppm making it one of the world's top 10 known uranium deposits. Furthermore Zone 1 and 2 mineralisation is still open along strike and down dip giving substantial potential for further size increases as drilling progresses.
Extract's Managing Director, Peter McIntyre, who is to step down in September under pressure from Kalahari Minerals, said that Rossing South continues to deliver on the upside, and has well exceeded the original targets established. The project has grown rapidly from the original discovery announcement in January 2008.
"That we now have combined resources for Rossing South of 267 M.lbs or 121,000 tonnes of U3O8 at such good grade is a measure of the world-class quality of the deposit." Mr. McIntyre said. He added that Zones 1 and 2 would continue to grow as they remain open in multiple directions. "The fact that we have delivered this after only 18 months of resource drilling gives us confidence that a resource well in excess of 300 m.lbs should be achieved by the end of the year."
Much of the interest around Extract stock, though, is based on an ensuing battle for control of the deposit with a huge amount of market activity - most notably by the aforementioned Polo Resources - almost certainly aimed at forcing the most likely project developer, Rio Tinto, to pay a very high price for the project.
As we reported on Mineweb earlier this month, the latest known interests in Extract Resources, which are fluid as interested parties have been buying in the market, include Kalahari Minerals (AIM:KAH), which now holds 40.0%, with announced stakes in the company also having been taken up by Rio Tinto (which operates the big existing Rossing uranium mine some 20km to the north), and Polo Resources. Rio also holds a significant stake in Kalahari as does a Polo associate by virtue of having the same chairman in Stephen Dattels, Emerging Metals. Rio is thought to own around 15% of Extract and a further 16% of Kalahari while Polo owns over 10% of Extract and Emerging Metals just under 10% of Kalahari. Niger Uranium owns over 15% of Kalahari and the CEO here is an ex-colleague of Dattels which may put Niger in the Polo camp.
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