update

Australia's Extract on halt for China-Kalahari bid talks

MELBOURNE, Dec 8 (Reuters)

* Bid for Kalahari likely to trigger compulsory offer for Extract

* Extract's Namibia uranium project eyed

* Extract, Kalahari shareholders Rio Tinto and Itochu key to outcome

Trading in Extract Resources was halted on Thursday ahead of a possible Chinese takeover of its top shareholder Kalahari Minerals , which could trigger a bid for the $2 billion Australian-listed uranium developer.

State-owned China Guangdong Nuclear Power Corp is due to announce on Thursday the outcome of talks with Kalahari, whose key asset is a 43 percent stake in Extract.

The coveted prize is Extract's Husab uranium project in Namibia, the world's fourth-largest uranium deposit, which won a mining license last week.

Under Australian rules, CGNPC would have to follow up with a bid for Extract once it owns more than 20 percent of the company, unless the securities regulator grants an exception.

If CGNPC does not go ahead with a bid for Kalahari it will be forced to wait a further six months before it can return with another offer.

CGNPC first approached Kalahari just before Japan's Fukushima nuclear disaster in March. It has cut its proposed offer by about 16 percent, reflecting the uncertainty over uranium demand following the Japanese disaster, last month discussing a price around 611 million pounds ($958 million), or 243.55 pence a share.

Analysts estimate that based on a 243.55 pence a share bid for Kalahari, Extract would be worth between A$8.75 and A$9.00 a share, which is up to 11 percent above Extract's last trade.

Key to the outcome of any bid will be Rio Tinto and Japan's Itochu Corp, which both own stakes in Kalahari and Extract. Rio Tinto and Itochu together effectively own one-third of Extract through direct and indirect stakes.

Extract and Rio Tinto have been discussing combining the Husab project with Rio Tinto's neighbouring Rossing uranium mine, and analysts see the global miner potentially working with the Chinese in Namibia.

Deutsche Bank is advising CGNPC, Azure Capital and Ambrian Partners are advising Kalahari, and Rothschild is advising Extract.

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