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Thursday September 11st, 2008 / 9h00

(Adds analysts comments, background) By Ross Kelly Of DOW JONES NEWSWIRES SYDNEY -(Dow Jones)- Rio Tinto Ltd. (RTP) said Thursday it has raised its holding in Namibia-focused uranium miner Extract Resources Ltd. (EXT.AU), which is trumpeting promising developments at its Rossing South venture.

Rio said in July it wants to double uranium production by 2013 amid surging demand for alternative energy sources, as it defends a takeover proposal from rival diversified mining giant BHP Billiton Ltd. (BHP.AU)
Listed on the Australian and Toronto stock exchanges, Extract is currently in the midst of its own merger proposal with AIM-listed copper prospector Kalahari Minerals PLC (KAH.LN). Kalahari has the necessary board approvals to buy the 61% of Extract it doesn't already own and dual list the company on AIM and the ASX.
Rio has bought 10.9% of Extract, while it also owns 14.9% of Kalahari, giving it 16.7% of Extract and a combined holding in both companies worth just under A$40 million.
A Rio spokesman said it didn't buy the Extract stake to spoil the Kalahari deal.

"Extract's made several announcements on drilling results at Rossing South and Rio's interested in their early stage exploration program," he said.
Extract's Rossing South operations are located just seven kilometers away from Namibia's massive Rossing uranium project of which Rio has 68.6%.
A resources analyst that did not wish to be named said Rio would "put its foot on Extract" if developments at Rossing South improved.
"It's a very small deal, but it's quite important for them to keep the back door locked," he said.
Ambrian mining analyst Brock Salier said Rio's move signalled the "world-class nature" of the Rossing South ore zones.

Extract executives are currently in Namibia but company secretary Rance Dorrington said Rio's interest was an endorsement of Rossing South's potential.
He said the venture was "shaping up as one of the next major uranium developments in the world."
There is no official resource at Rossing South but drilling to date prompted Extract to recently release a preliminary target estimate of between 126 million and 198 million pounds of uranium oxide.
Extract shares on Thursday rose 4 cents to A$1.25, giving the Perth-based company a market capitalization of A$266 million.
Rio Tinto also has a 68.4% interest in uranium miner Energy Resources of Australia Ltd, which operates the Ranger Mine in Australia's Northern Territory.

In July, it sold its Kintyre uranium project in Western Australia for about A$515 million as part of a A$10 billion asset disposal program initiated as part of its BHP defense.
"They may have sold Kintyre, but they like Namibia," the analyst said.
ERA also owns the controversial Jabiluka uranium mine in the Kakadu National Park in the Northern Territory where mining has been suspended pending permission from the traditional landowners.
Rio is also scouring uranium mining opportunities in Kazakhstan and Jordan.
In 2007, uranium output at Rossing was about 6.7 million pounds and at Ranger about 11.7 million pounds.

By Ross Kelly, Dow Jones Newswires; 61-2-8235-2963; [email protected]
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