Nabila Ahmed From: The Australian February 25, 2011 12:00AM
RIO Tinto is believed to be in the final stages of its complex negotiations with Extract and its 40 per cent shareholder Kalahari Minerals over a uranium joint venture in Namibia. One of the important considerations for Rio is being able to take advantage of the higher value the market places on Extract's project compared with its peers.
With that in mind, it makes sense that the deal on the table is believed to involve a joint venture of the assets that would also allow Rio a bigger share of the holding company that houses the joint venture. Under this scenario, it would be logical for Extract and Kalahari, which also counts Rio as a 15 per cent shareholder, to merge. Rio and Extract/Kalahari would each own 50 per cent of the joint venture. Rio's interests in both Extract and Kalahari would be folded into the joint venture.
Conjecture that Kalahari is opposed to the joint venture that would enable Rio to treat Extract's higher grade ore from its Husab project through its Rossing plant (which is facing challenges including declining ore grades and an increasing capital expenditure profile) is not true.
It is believed Kalahari is supportive of the opportunity. But the London-listed group has taken a robust approach to discussions, keen to ensure it ends up with a fair deal.
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