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Extract Says No Merger Talks With Rio

TALKS between Extract Resources and Rio Tinto over the development of uranium assets in Namibia may lead to a joint venture, but a merger is not on the cards, Extract's chairman said.

Steve Galloway also told Reuters in an interview last week the company had no intention to sell its Husab uranium deposit, the fifth largest of its kind in the world. Analysts have long said Extract could be an eventual target for Rio, whose Rössing mine is near Extract's Husab deposit. Speculation was renewed this week when the two companies said they were in talks to combine their uranium projects.

"We have engaged in discussions with Rio Tinto on joint development options, not an acquisition or merger," Galloway said. "The projects are sufficiently close together to consider sharing common services and facilities and saving time and money in the process." Extract, the Namibia-focused uranium developer, is 41 per cent owned by Kalahari Resources and its primary asset is the Husab deposit. Husab is expected to come on stream in early 2014 and produce up to 15 million pounds of yellow cake a year, making it potentially the second-largest uranium mine in the world.

"If an agreement with Rio Tinto can be made I expect this development process can be accelerated," Galloway said.

In addition to Rio Tinto, Extract has been seen as a potential takeover target of French energy group Areva or Asian firms, which are eager to secure supplies of uranium as their countries aim to build more nuclear plants to cut their reliance on coal for power generation. Rio Tinto's Rössing is Namibia's oldest and largest uranium mine, producing 1,36 million pounds of uranium oxide in the quarter to end-December, compared with 932 731 pounds produced by Paladin Energy's Langer Heinrich mine. - Nampa-Reuters