Extract reveals bumper Rossing South resource Tuesday, 27...

Extract reveals bumper Rossing South resource

Tuesday, 27 January 2009
Kate Haycock

EXTRACT Resources has unveiled a considerable maiden resource at its Rossing South project in Namibia, and the company believes this is the highest grade granite-hosted resource yet discovered in the African nation.

The Perth-based explorer today released its first resource figures from the deposit, discovered only a year ago.

The project area now has a JORC-compliant inferred resource, prepared by Coffey Mining consultants, of 115 million tonnes grading 430 parts per million uranium for 108 million pounds contained uranium at a cut-off grade of 100ppm.

The resource was defined at Zone 1 of the Rossing South project area, and the company said drilling is still open along strike and down dip.

Originally, the company was eyeing an initial resource containing around 57-92.5 million pounds but said today the resource was much better than anticipated because grades were significantly higher than expected.

Extract also has high hopes for Zone 2 at the project, where it has defined a 2-kilometre strike length which also remains open down dip and along strike.

The next step for the company is feasibility work at the project, which it hopes to have completed within two months.

Extract managing director Peter McIntyre told MiningNews.net the company was not entering the significant investment of the feasibility study lightly.

“The size of the resource and the grade gives us a lot of confidence about going into the feasibility study,” he said.

“After discovery, to come up with this size resource after only 12 months is an outstanding result.”

While the company is working on the feasibility it is also going to continue drilling at Rossing South to grow the resource.

“We know we have substantial mineralisation at Zone 2, and that will be the focus over the next six months. There’s a big footprint at Zone 2 and we’ve got some significant intersections,” McIntyre said.

The company hopes to have a resource for Zone 2 by mid-year which will overlap with its feasibility study, and with $A20.5 million cash on hand at December 31 the next stage of work is fully funded.

“We haven’t slowed down, we’ve continued at a very aggressive pace over the past 12 months and we will continue that over the next 12 months,” McIntyre said.

McIntyre also said the grade confirmed the project was the highest grade granite-hosted uranium deposit in Namibia, which has two major uranium mines – Rio Tinto’s Rossing and Paladin Energy’s Langer Heinrich.

While on a project level the company has delineated two Namibian resources in the past year and has a strong cash base, at a corporate level Extract is facing challenges from its largest shareholder, Alternative Investment Market-listed Kalahari Minerals.

Kalahari, which owns 39% of the junior uranium explorer, has called for Extract’s North American chairman Richard Buchan to resign.

The two companies were, until late last year, planning to merge before Kalahari pulled out of the deal.

Kalahari said it was concerned the merger would have given major Extract and Kalahari shareholder Rio Tinto a 19.8% stake in the merged company – and Rio would have been able to increase this stake without being subject to Australian takeovers law.

Rio bought substantial holdings in both companies on-market after a fire sale by RAB Capital, and it was clear its interest was in Extract’s uranium projects in Namibia, just south of Rio’s majority-owned Rossing uranium mine.

Kalahari said its shareholders believed Rio would be able to buy out the merged company without paying a control premium.

A shareholder meeting to decide the fate of Kalahari’s proposals will be held in Perth on February 2.