extract shares up after kalahari bid

Extract shares up after Kalahari bid.


Published 5:20 PM, 8 Mar 2011 Last update 8:48 PM, 8 Mar 2011


A Chinese state-owned uranium firm has launched a takeover bid for Extract Resources Ltd's largest shareholder, Kalahari Minerals plc.

Kalahari's shares on London's Alternative Investment Market for small cap stocks jumped 9.51 per cent to close at �2.85 ($A4.57) overnight.

Kalahari is also listed on the Namibian Stock Exchange in southern Africa, where Extract holds the Husab project, which it says is the world's fifth-largest known primary uranium deposit.

Extract said it would consider the implications of a possible recommended cash takeover offer for Kalahari, Extract's 42.79 per cent shareholder, by Chinese state-owned CGNPC Uranium Resources Co Ltd.

"In the meantime, shareholders are advised to take no action and await further advice from the board," Extract said in a statement.

The bid indicates the Chinese entity's increasing interest in uranium assets in Africa following its signing in August last year of a wide-ranging memorandum of understanding with Namibia and Malawi-focused Australian uranium miner Paladin Energy Ltd.

Shares in Extract on the Australian stock exchange closed up 68 cents, or 7.34 per cent, at $9.94 on Tuesday after reaching an earlier high of $10.

The uranium explorer last month said it was in talks with its second largest shareholder, Rio Tinto Ltd, about possibly combining the Husab project with the mining giant's neighbouring Rossing uranium mine.

It was also in discussions with Kalahari about "various options that might simplify the Extract/Kalahari shareholding structure".

The Chinese move on Kalahari could spur Rio to find a way to disentangle the cross shareholdings between Extract and Kalahari, analysts said.

"Rio has flagged a willingness to undertake those sort of small-to mid-tier transactions," analyst at ATI Asset Management, which owns Rio Tinto shares, Ben Lyons said.

"Rio's certainly got the balance sheet capacity to undertake these sorts of transactions."

Rio Tinto has said it is looking at acquisitions worth $US5 billion or less.

It has already made a $US3.9 billion takeover offer for Mozambique-focused coal miner Riversdale Mining , which is likely to be extended for a third time later this week.