The West Australian West Business (Page 31) Monday, December 13, 2010
As Extract Resources moves into the final stages of a definitive feasibility study over its Namibian Husab project, expectations of a corporate play for the uranium hopeful are easing.
For some investors and analysts it has been a long question of when, not if, Extract will be taken out by a bigger suitor. Topping the list of likely suspects is major shareholder Rio Tinto, which owns the Rossing a mere six kilometres from Husab.
But speculation is growing that a deal at the asset level may be more likely. In particular, the idea of an Extract-Rio joint venture is gaining traction.
One of the major obstacles of any takeover of Extract is its tightly held share registry, which includes London listed Kalahari Minerals (42.8 per cent) Rio (effectively 19.9 per cent because it also has a stake in Kalahari) and Japanese giant Itochu (16 per cent, which again includes a stake in Kalahari)
According to Deutsche Bank analysts Paul Young and Ben Wilson, a JV with Rio would be the most value-accretive option for Extract. They suggest Extract could strike a JV with Rio over zone one of Husab only, potentially leaving the door open for other deals to be done.
Extract is eyeing the sale of further assets for off take, with Asian uranium traders or nuclear operators the most likely counter parties, according to Young and Wilson.
Shareholders will have to wait for early in the new year for a final price tag on Husab because the study has been delayed until the first quarter of 2011.
Last years scoping study suggested Husab could cost about $US704 million ($714 million) to develop but analysts suggest it will top $US1 billion
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