FWIW I feel that if Polo is able to act quickly enough, they should be able to mount a successful takeover bid for Caledon at around 100p or ~A$1.65. Which is about Polo's average cost of its current ~30% stake in Caledon.
Regards
Steve
I hold both EXT & CCD
Hi All
It seems to me that sometime between now and when Peter Mc was forced out, just over 6mths ago, the objectives of Kalahari and Polo have become no longer aligned.
The reason Peter Mc was forced out was that he wanted to go mining, preferable in a JV with Rio and KAH, Dattels and Co wanted to put up the for sale sign for a quick return.
Since then however, the scale and size of the resource has become clearer, being far greater than all, but some of the most optimistic poster on this BB, could ever have imagined.
Although I still don't think either KAH or Dattels are interested in taking EXT into production themselves, it does seem that KAH has more patience and is willing to wait longer to secure a greater return.
Waiting another 6 to 9 month would allow EXT time to increase the resource size to at least 600Mmlb, have done enough exploration outside Zones 1 and 2 to show the high probability of a further +400Mlbs and complete a DFS that will show that EXT will be one of the most, if not the most, cost effective and profitable uranium mine in the world.
Polo has stated that they want to focus on coal, they already own +30% stakes in both GCM Resources and Caledon Resources.
Polo have already made an unsuccessful takeover attempt for Caledon back in mid 2008.
IMHO Polo was counting on a quick sale of EXT to fund another takeover attempt for Caledon.
In early December last year Caledon's SP dropped to 35p, from around 60p, after the company abandoned attempts to find a buyer.
However since then coal prices, especially the coking coal that Caledon produces, has started to skyrocket. Price have almost doubled from US$120 to $200 p/t and there is speculation that the price could reach US$300 p/t before the end of the year.
Coal companies have again become flavor of the month, with a lot of M&A activity in the industry.
GCM has risen almost 5 fold since December form 50p to over 220p.
Caledon however has only just started to get notice again, with the SP only now starting to head back to 60p.
Hence Polo's dilemma. Do they go along with KAH and wait another 6-9mths in hope of securing a higher price and possibly miss out on a second chance at making a successful takeover bid for Caledon. Or, do they seek out a buyer for their EXT stake, even if at a discounted price, in hope of making more profit from a successful takeover bid for Caledon.
ISTM that Polo has decided it can't wait any longer and is prepared to do a deal for its EXT stake.
In the short term the effect this has on EXT's SP will greatly depend on the price Polo finally achieves for its EXT stake, as I discussed in an earlier post. However it should give us a floor price for EXT to trade around in the short term.
I still believe that by the end of the year EXT's SP will be far great than it is today, once the jorc update and DFS have been released.
FWIW I believe around A$12.50 without a takeover and between A$15-20 with a takeover.
Only time will tell if Dattels has made the right call.
Regards
Steve
CCD Price at posting:
92.0¢ Sentiment: LT Buy Disclosure: Held
