In all the discussion about whether or not and if so when Extract might be up for sale, has anyone read chairman Steve Galloway's speech at the dual listing of Extract's (and Kalahari's) shares on the NSX in Windhoek on Oct 29?
I have posted below. Also the comparative valuations of Extract and the five other uranium explorer stocks listed on NSX's Development Capital Board (DCB) by sponsoring broker IJG Securities of Windhoek. They rate Extract as the most expensive stock in terms of cost per pound U308 in the ground (ie current resource estimates)but say the stock is still a buy. Bannerman comes out the cheapest as although the Etango project next to Extract's Husab licence area is going well and it has the next-biggest resource so far to Rossing South, presumably because Bannerman's share price has languished.
SPEECH BY STEVE GALLOWAY, CHAIRMAN OF EXTRACT RESOURCES ON THE OCCASION OF THE LISTING OF THE COMPANY ON THE NSX 29 OCTOBER 2009
Chairman of the Namibian Stock Exchange, Ladies and gentlemen. It is indeed a big day in the life of Extract Resources to list its shares on the Namibian Stock Exchange, and significant that we are listing alongside our largest shareholder Kalahari. I pay tribute to everyone in Kalahari and Extract who made this possible, and in particular to the NSX staff and committees and IJG, for getting us across the line.
As Mark has mentioned the companies with which he has been closely associated, have already made major contributions to Namibia over the past four years. Extract Resources and its wholly-owned subsidiary Swakop Uranium , have made stunning progress over the past 4 years and particularly over the past 20 months, since the discovery of Rossing South. There is no longer any doubt that this is a world-class uranium deposit, and we are on track to develop a world class mine for our shareholders and for Namibia.
Extract Resources was a small exploration company which not many had heard of until a year or so back. Even after the discovery of Rossing South in Feb 2008, the company and its management kept a low profile, and the discoverers, Martin Spivey and Peter McIntyre, and their teams just got on with the job of developing a large resource in record time, currently not far short of 300m lbs in the Inferred and Indicated categories at grades which are superior to all other known alaskite-hosted deposits in Namibia. The company is today a Top 100 ASX-listed company with a market capitalisation of more than A$ 2 billion, and prospects of becoming a major global uranium player, with first production in 2013.
I was given the privilege of serving on the Board of Extract just over a year ago and am currently the Non Executive Chairman. The Board took great delight in securing the services of Inge Zaamwani-Kamwi as a non-executive director in April this year, and Chris McFadden(Rio Tinto) and Steve Dattels(Polo) added further expertise when they joined as shareholder representatives in July. Kalahari has had a representative in Neil Mclachlan for some time and have been invited to nominate a second board member, while John Main joined as an independent director in February this year. This is an exceptionally active, diverse and capable board and I thank them for the huge contributions to date.
The management team, under Peter McIntire’s leadership, which took this company from a start-up exploration company to a major uranium company have done an incredible job. Peter, Martin Spivey, Andrew Penkethman, Rance Dorrington, Sadike Nepela, Ninette Kröhnert and your staff can be hugely proud of what you have achieved.
We now move into a new phase. The listing here today marks the transition from exploration to development. With an initial scoping study completed the pre-feasibility study is well-advanced and the feasibility study due for completion by mid next year. We have already taken the bold and unusual step of employing the team who are going to build this mine. Norman Green, already well-known to many as the builder of the Skorpion Zinc Mine and Refinery in the Karas Region is back to build an even bigger mine in the Erongo region on our Husab Project. Norman has just been appointed CEO of Swakop Uranium, and I am confident will do us and Namibia proud again. He will employ a strong team men and women, as staff and contractors, maximising employment of Namibians and local contractors, and will deliver a fully operational mine in 2013. This mine will create massive benefits not only to the Erongo Region but to the whole Namibian economy, and of course to shareholders, for many years to come, and comes at a very opportune time.
Extract Resources itself, while prioritising the rapid development of the Husab Project, and in particular the Rossing South, will continue to look at other opportunities and have engaged Rothschild to review various strategic options for the company going forward. A Group Managing Director will be appointed early in 2010, once the path forward for the company is clear.
The support of our shareholders to date has been massive and Government Ministries, public utilities and others, have immediately appreciated the significance of this discovery and provided their fullest cooperation. We realize fully the sensitivity of developing mining operations in a park, albeit on the fringe of the Namib Naukluft park and adjacent to the large Rossing Uranium infrastructure, and have engaged with all relevant governmental and non-governmental agencies in this regard. I can assure you that we will apply the highest global environmental standards on this project and Norman’s track record at Skorpion gives us the utmost confidence in his approach.
Ladies and Gentlemen, it is time now to work and to deliver to our shareholders and to the Namibian nation, one of the most significant uranium projects in the world. Thank you for your attendance and interest. We will keep you fully informed along this exciting journey we have embarked upon together.
IJG Report "Initiating Coverage" 29 10 09 Extract Resources is currently valued at US$6.93/lb U3O8, making Extract stock the highest priced on the list of uranium exploration companies with assets in Namibia. With current resource of 267 Mlbs at 492 ppm U3O8, delineated over just the past 18 months, and the potential for an increase in resources to +450 Mlbs resource, Rossing South is one of the world‟s largest undeveloped uranium deposits and envisaged to become the 5th largest uranium development in the world according to management. Even though Extract‟s stock is trading on the relatively high side, we believe this premium is warranted by the attractive exploration upside coupled with the fact that we believe Rossing South is a world class discovery and with strong uranium market fundamentals in the medium to long term. We initiate coverage with a Buy Recommendation.
We compared the price investors are willing to pay per lb of U3O8 in the ground for the major uranium exploration companies operating in Namibia. To arrive at a comparative value we have adjusted the companies‟ market capitalisation by subtracting cash on hand. The adjusted market capitalisation in US$ is then divided by the known resources to arrive at the price that the market is willing to pay for 1 lb of U3O8 that company has access to.
Adjusted Market Cap (US$)m Extract 1849.04 Bannerman 193.83 Deep Yellow 358.43 WME 57.53 Forsys Metals 279.75 Xemplar 18.08
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