polo resources: strong interest in ext stake

DJ - Polo Resources: Strong Interest In Extract Resources Stake

By David Winning
Of DOW JONES NEWSWIRES

SYDNEY (Dow Jones)--Polo Resources Inc. (PRL.LN) has received strong interest from mining companies and offtakers in its stake in Australia's Extract Resources Ltd. (EXT.AU), which owns one of the world's largest undeveloped uranium deposits in Namibia, Polo's managing director said Wednesday.

London-listed Polo, which has appointed BMO Capital Markets to advise on its strategic options, will likely decide whether to sell its 9.29% stake in A$1.8 billion-valued Extract within the next two months, managing director Neil Herbert said.

"From our side we'd like to put more investment in coal over the coming year and that's part of our rationale for coming out of uranium," Herbert told Dow Jones Newswires.

"We are looking at a number of additional projects" in the coal sector, he added.

Herbert didn't disclose the identities of any of the possible bidders for the company's stake in Extract, which is based in Western Australia state.

Shares in Extract jumped to A$7.20 at end of trading Tuesday from A$4.49 on March 31 last year, when Polo first said it had invested in the company.

The share price rise reflects promising drilling results at its Rossing South mine in Namibia, as well as rising interest in uranium as Asian and other countries prepare to install vast amounts of new nuclear power capacity in coming decades.

Polo's strategic review is taking place as Extract prepares to weigh up bids from companies interested in developing the Rossing South mine, which is located to the south of Rio Tinto Ltd.'s (RTP) producing Rossing mine.

Extract says Rossing South has the potential to produce 15 million pounds of uranium oxide a year.

Herbert added that 25 uranium exploration licenses spread across the Dornogovi and Dornod districts in Mongolia held by a joint venture between Polo and Peabody Energy Corp. (BTU), the largest coal miner in the U.S., were "non-core" assets and could also be sold.

Polo's joint venture with Peabody has 54 licenses in the South Gobi area and elsewhere in Mongolia. Its most advanced development in the country is the Erds Coal project, which contains an estimated 807 million metric tons of thermal coal reserves.

Herbert said valuations of coal assets in Mongolia are looking "very expensive" by some metrics, and this may prevent the company adding to its roster of projects there in the near term.

"Sales prices (of coal) in Mongolia are very low compared to international markets so far," he said.

Polo's push into the coal sector has also involved taking strategic stakes in miners Caledon Resources PLC (CDN.LN) and GCM Resources PLC (GCM.LN), which have coal projects in Australia and Bangladesh, respectively.

-By David Winning, Dow Jones Newswires; +61-2-82724688; [email protected]


(END) Dow Jones Newswires

March 03, 2010 00:03 ET (05:03 GMT)

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