Japans Itochu has grabbed a 10.3 per cent stake in Namibia-focused uranium explorer Extract Resources, becoming the Australian companys third-biggest shareholder and boosting its exposure to Extracts promising Rossing South deposit.
Itochu, one of the worlds major uranium traders, picked up a 9.2 per cent stake in Extract from investor group Polo Resources and the other 1.1 per cent from a related party. Extract said on Friday.
The acquisition, worth about $175 million at Fridays closing price of $6.95 (up 20c) is subject to the approval of Australias Foreign Investment Review Board and to clearance by Polo shareholders.
With expected production of 6.8 million kilograms a year, Rossing South is set to be the worlds second-largest producing uranium mine, behind Camecos McArthur River project in Canada.
The project has attracted the interest of international firms such as Russias Rosatom, Rio Tinto and Korea Electric Power, which are believed to have been among those that took part in a process run this year by Rothschild for Extract to sound out partnership proposals for Rossing South. Itochu is also understood to be part of that process. Talks with potential partner were under way, Extract chief executive Jonathan Leslie said last month.
Rio Tinto, which owns the producing Rossing uranium mine close to Rossing South, already has a 14.7 per cent direct stake in Extract and a minority interest in Extracts biggest shareholder, London-listed Kalahari Minerals.
Itochu is also Kalaharis biggest shareholder after buying a 15 per cent holding in March, so already had an indirect interest in Extract.
Extract believes the company can benefit from Itochus experience in the uranium market and operating in Namibia, chairman Stephen Galloway said on Friday.
The closer links with the Japanese trading house, which sells about 4000 tonnes a year of uranium, should also assist with funding for the $US1 billion project.
Extract is due to update its resource estimate for Rossing South by September and complete a feasibility study by years end. Initial output is due late 2013.
Polo Resources, listed on Londons Alternative Investment Market, said in March it had hired BMO Capital Markets to evaluate options for its stake in Extract.
EXT Price at posting:
$6.95 Sentiment: LT Buy Disclosure: Held
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