Windhoek London-listed Kalahari Minerals Plc has flatly rejected proposals by Rio Tinto-owned Rossing Uranium to jointly develop the world class Rossing South (Husab Uranium) uranium deposit, The Southern Times has established.
Kalahari Minerals is the top shareholder in Toronto-listed and Australia-based Extract Resources.
The Perth-based Extract Resources wholly owns Rossing South, also known as the Husab uranium deposit, which has been confirmed as the highest grade granite-hosted uranium deposit in Namibia and one of the most significant uranium discoveries in decades.
Kalahari Minerals owns a 40.37 percent stake in Extract and Rio Tinto also owns a 14.7 percent stake in Extract in addition to a 15.8 percent stake in Kalahari Minerals.
The Southern Times understands that Rossing, Namibia's oldest uranium mine, has outlined a joint venture proposal to Extract to jointly develop the world class Rossing South deposit. Rossing South, also known as Husab project, is situated about seven kilometres south of the current Rossing uranium open pit.
Management at Rossing Uranium said it is feasible to process ore mined at Extract's Rossing South deposit. Ore from Rossing South could be transported by conveyor belt to the Rossing uranium plant for processing.
'This would cut down on capital requirements for Extract and introduce synergies which would enable Rossing and Extract to maximise value for their shareholders,' said Jerome Mutumba, Manager corporate and external affairs at Rossing Uranium.
Rossing Uranium proposes that processing uranium ore at its existing plant would minimise environmental damage. The Rossing South deposit is located in the Namib Naukluft Park.
However the major reason behind Rossing Uranium's push for a joint venture with Extract is that its current main pit has run out uranium ore. Furthermore, Rossing Uranium is running out of quality grade uranium ore resulting in a projected fall in uranium output from 4 150 tonnes in 2009 to 3 838 tonnes in 2010.
Werner Ewald, mine manager at Rossing Uranium confirmed that Rossing had run out of quality ore.
Ewald said that Rossing Uranium needed four years to expand its main SJ Pit, already 370 metres deep and too narrow to continue mining. Kalahari Minerals executive chairman Mark Hohnen told The Southern Times that Extract will develop the Rossing South deposit as a stand alone uranium mine.
Hohnen said in an interview that Kalahari Minerals would use its majority shareholding in Extract Resources to block joint venture proposal from Rio Tinto's Rossing Uranium.
Although Hohnen said that Extract will have to review all the available options first before making a decisions, indications point to the Australian junior miner ducking the Rio Tinto joint venture proposal.
Hohnen said that Extract will likely go on the market to raise nearly US$1 billion required and bring the mine into commercial production by 2014. 'I am aware that they (Rio Tinto) would like to do the joint venture but Extract (Resources) has to consider whether it's in the best interests of its shareholders and Namibian people,' Hohnen told The Southern Times.
'But I can see more benefits for Namibia in a new mine, we support Extract Resources in starting their own mine, Husab (Rossing South) has to be developed as a standalone project,' Hohnen said. Uranium production is expected to start in2014 at 5 700 tonnes a year, the equivalent of more than 10 percent of the uranium mined worldwide in 2008.
Extract this week announced the appointment of former Rio Tinto executive Jonathan Lesley as MD. 'He (Lesley) has to review everything and see what is in the best of Namibiawe are also mindful of the fact that the deposit is in a national park and the concern is economic impact versus environment impact.
I am glad that Extract has put in place a very professional team which will look into all those issues,' Hohnen said.
He maintained Extract Resources would not be bullied into a joint venture arrangement with Rossing Uranium. 'Rossing Uranium wants to present the fact that it is an easy thing to jointly develop but we have to weigh all the benefits for Namibia and Rio Tinto is only one of the many shareholders.
'Extract must carefully review all the opportunities in front of them to come up with the best way forward for shareholders and the people of Namibia,' Hohnen said.
EXT Price at posting:
$7.17 Sentiment: Hold Disclosure: Held
A personalised tool to help users track selected stocks. Delivering real-time notifications on price updates, announcements, and performance stats on each to help make informed investment decisions.
(20min delay)