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Niger Uranium Diversifies Into Kalahari Minerals, And May Take A Direct Interest In Extract Resources Too


By Our Man in the City



The uranium price may be treading water at the moment, but the market is heating up for Niger Uranium which has just taken a surprise investment in Kalahari Minerals. Niger's new 17.8 per cent stake is a crafty way of gaining exposure to a promising uranium project in Namibia, run by Extract Resources. The Husab deposit is 5 kilometres south of Rio Tinto's huge Rossing uranium mine, and drill results to date suggest Extract has got its hands on the next bonanza asset in the radioactive sector.
Kalahari consolidated its common uranium assets with Extract in March 2007 for a 36.2 per cent holding in the latter. This investment has been Kalahari's saving grace, as its share price has soared on the back of Extract's exploration updates. Now Niger Uranium clearly wants a piece of the pie and has used an investment in Kalahari to play the same game. Extract is expected to undertake a share placing soon and it seems Niger is ready to snap up a direct holding, using its Kalahari position to jump the queue and join the inner circle of investors.

If there's a man who knows how to make money from uranium, it's Niger Uranium's chief executive Ian Stalker, best known for building up UraMin, which was taken over at a healthy premium by French nuclear giant, Areva. And despite the recent weakness in the uranium price - caused by a short-term increase in supply - Mr Stalker is bullish about the commodity and its role in the next generation energy sector.

“There's a joke here in South Africa about the energy market”, says Mr Stalker on a phone call to Minesite. “What existed before candles in South Africa? Electricity!” The country's ongoing energy problems, which are partly due to shortages of coal, is another tick in the box for supporters of nuclear power. “I'm bullish on uranium as the long-term supply is not going to meet demand”, adds Mr Stalker.

Niger Uranium was set up in 2007. It took the exploration assets from UraMin and added brownfield targets from NWT, an exploration group. Results from the first phase of drilling reported in January revealed a modest start to the company’s life. They included samples showing up to 1% copper - which neither the company nor the market had expected. The next round of exploration results are due within the next few weeks, and will focus on Irhazer and In Gall, two project areas from the NWT stable that are located in the same geographic areas as two producing Areva mines. The former UraMin assets, Kamas and Dabala, haven't been worked yet, as security problems in the north of Niger have prevented the company from conducting aerial surveys.

Turbulence in the country is a big problem for Mr Stalker and his team, and fighting by rebels and bandits could well deter investors from buying into the business. “We're consolidating ground in Niger as, apart from the French activities, it's virgin territory for uranium mining. It's the third largest country for uranium but it also has a reputation for terrorist activities, so we're using the Kalahari investment to diversify our interests”, says Mr Stalker. “Namibia is a much more stable place and already home to two large uranium mines”.

Mr Stalker watches his words carefully as he talks. He says there are several developments in the pipeline that must remain secret for the time being. He does admit, however, that the Kalahari investment positions Niger Uranium closer to a near-term producing mine than its current assets. So does that mean Niger wants to form a working relationship with Extract? “I can't possibly comment”, he says, wryly.

Julian Emery, an analyst at stockbroker Ambrian, says the Husab project, particularly the Rossing South section, could become a 'major high-grade uranium resource'. But he warns that it has no surface expression, will require a long-term drill programme, and that there may be environmental issues to be addressed.

Bringing in Ian Stalker's expertise, along with a team that includes former UraMin collegues, is a logical strategy to getting the mine into production. Yet Extract's recent progress will not have gone unnoticed in the wider mining community. Unless Niger Uranium strikes a deal first, it may face serious competition from rival companies eager to help Extract in its path to glory.