ext to urgently resume partner talks

Bloomberg News
Extract to ‘Urgently’ Resume Partner Talks After China Bid (1)

Dec. 9 (Bloomberg) -- Extract Resources Ltd., owner of the world’s fourth-largest uranium deposit, will “urgently” resume talks with potential partners as a A$2.2 billion ($2.2 billion) takeover bid from China looms following an offer yesterday to buy its biggest shareholder.

Australian regulators have ruled that state-owned China Guangdong Nuclear Power Group Co. must offer A$8.65 a share for Extract should the Chinese company’s 632 million-pound ($988 million) bid for Kalahari Minerals Plc succeed. London-based Kalahari, whose shareholders have recommended the Chinese bid, owns 43 percent of Extract.

“At no stage have we ever been restricted from talking to anyone, so we have continued to have those partnership discussions and we are going to be resuming those as a matter of urgency,” Jonathan Leslie, chief executive officer of Perth- based Extract, said in a phone interview from London today.

Extract’s search for a partner to help develop its Husab uranium deposit, which has been estimated to cost about $1.7 billion, were slowed following the announcement of talks between Guangdong Nuclear and Kalahari in March, Leslie said. “We’ve got existing contacts with all the major players in the uranium industry, and the very fact that this offer has taken place shows the strategic importance of it.”

Rio Tinto

Rio Tinto Group, the world’s third-biggest mining company and owner of the Rossing mine adjacent to Extract’s Husab, is unlikely to make a rival bid as it may partner with Guangdong Nuclear in developing the asset should it be successful, BMO Capital Markets analyst Edward Sterck said yesterday.

Rio owns 14 percent of Extract and 11.5 percent of Kalahari, according to data calculated by Bloomberg. Extract in February said it was in talks with London-based Rio about merging the companies’ uranium projects in the African nation.

“We’ve continued to have discussions but the particular structure we were looking at then has been put on hold,” Leslie said today. It would be “very surprising” if Rio weren’t part of renewed partnership talks, and Extract’s other major shareholder, Tokyo-based Itochu Corp., was part of such discussions earlier, he said.

Rio’s Rossing mine is the third-biggest producer of uranium, accounting for about six percent of global supply, according to World Nuclear Association figures. Husab is about 7 kilometers (4.4 miles) from Rossing and 30 kilometers from Paladin Energy Ltd.’s Langer Heinrich project.

Tony Shaffer, a London-based spokesman for Rio Tinto, declined to comment.

“When we have discussions with people they know exactly what those parameters are now,” Leslie said today. “We are going to certainly look at all alternatives.”

To contact the reporter on this story: Jesse Riseborough in London at [email protected]

To contact the editor responsible for this story: John Viljoen at [email protected]

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