kah held talks with others ahead of chinese

Kalahari Held Talks With Others Ahead of Chinese Bid For Assets in Namibia

By Jesse Riseborough and James Paton - Mar 9, 2011 9:27 AM GMT+0800

Kalahari Minerals Plc (KAH), subject of a 756 million-pound ($1.2 billion) offer from China Guangdong Nuclear Power Group Co., said it held talks with other groups prior to the state-owned company's bid this week.

"Kalahari has been actively talking to a number of people, and whether it's Japanese, Russians, Chinese, we've been talking to a full swag," Mark Hohnen, chairman of the London-based company, said yesterday in a phone interview. Hohnen said he first visited the headquarters of China Guangdong in May 2009.

Kalahari closed 3.8 percent above the 290-pence offer price in London trading yesterday, signaling investors expect a higher offer for the company, whose main asset is a stake of about 43 percent in Australia's Extract Resources Ltd. (EXT) Rio Tinto Group, which owns shares in both Extract and Kalahari, is a possible counter bidder, according to Patersons Securities Ltd.

Extract rose a second day in Sydney, gaining as much as 8.7 percent to A$10.80, the highest since September 2009, compared with a 0.3 percent drop in the benchmark S&P/ASX 200 Index. The stock advanced 7.3 percent yesterday, giving the company a market value of A$2.5 billion ($2.5 billion).

The Australian explorer is seeking to develop the Husab uranium deposit in Namibia, 7 kilometers (4.4 miles) from London-based Rio's Rossing mine. Itochu Corp. (8001), a Japanese trading company, owns 14 percent of Kalahari and 10 percent of Extract, Bloomberg data show.

Exemption Request

China Guangdong said March 7 the bid is conditional on the Australian Securities and Investment Commission, or ASIC, granting an exemption allowing it to acquire more than 20 percent of Extract. The offer should proceed only if shareholders of Extract are "not disadvantaged in any way" and can receive "no less than equivalent terms to those offered to Kalahari shareholders," the Perth-based company said today.

China Guangdong wants to buy Kalahari without triggering a bid for all of Extract, Simon Tonkin, an analyst at Patersons in Perth said yesterday. With Kalahari owning 43 percent of Extract, Australian rules would normally require China Guangdong to make an offer for all of the company, he said.

The Australian explorer will address "any proposal or offer for Extract at the appropriate time," it said in a statement today. An agreement with ASIC on an exemption from provisions of the Australian Corporations Act may include a requirement to "make a downstream offer to Extract shareholders," the Chinese company said.

'Expect a Bid'

"I would expect they will make a downstream bid," Hohnen said, referring to an offer for Extract.

China Guangdong's offer for Kalahari is 17 percent above the average price of the target's shares in the 20 trading days before the announcement. That's less than the 33 percent average premium paid by Chinese companies for foreign mining companies in 10 comparable deals in the past decade, Bloomberg data show.

China may raise its 2020 target for atomic power generation to 86 gigawatts, with annual investment of 70 billion yuan ($10.7 billion), the state-run China Daily said Jan. 26. In comparison, capacity may total 11.7 gigawatts by the end of 2011, the National Energy Administration said.

The country will surpass the U.S. as the world's largest consumer of uranium during the 2020s as the nation's imports rise sharply to feed a growing nuclear industry, a high-level energy official told China Daily yesterday.

To contact the reporters on this story: Jesse Riseborough in London at [email protected];