As copper becomes ever hotter property and the tantalising price of $3/lb heaves into view, at least for the optimistic among us, companies with their focus on the metal naturally become more interesting. A recent newcomer to the London market, Kalahari Minerals [AIM:KAH] can offer investors no less than three copper projects, with a uranium joint venture thrown in to add piquancy to the proposition.

Altogether, Kalahari can already boast an estimated 250,000 tonnes of copper in the ground across its Namibian ground, which makes it clear that the company has moved beyond exploration and into the pre-feasibility phase with its two key projects. The area in which the company is operating was explored preliminarily by other players back in the 1970s, and a sizable portion of the presently known resources originate from this spell, but failure by those then exploring to come across any very large targets plus a deteriorating political situation in Namibia brought proceedings to a halt.



Now that the copper market looks very different and the politics of Namibia have improved, Kalaharis ground is a lot more desirable. Indeed, the companys Chairman Mark Hohnen admits that it has been lucky to have been able to stake the areas it has, which essentially amount to a large slice of the Namibian section of the Kalahari copper belt, which has some geological similarities with the much storied Zambian copper belt.

Kalaharis first order of priority is the Dordabis project, within which it has homed in on a deposit known as Koperberg. Drilling here has identified oxide and sulphide zones of mineralisation and recorded some good intersections, the highlight of which has been 5 metres graded at 3.43% copper. A small scale pilot processing plant is already recovering copper cathode on site.

The Koperberg resource is still open, and an alluring possibility raised by Hohnen is that it could conform to the Olympic Dam geological model. That is, a massive body of IOCG (iron oxide copper gold) mineralisation with significant smatterings of uranium. It is too early to tell whether this is the case or not, but such a scenario is certainly something pleasant to dream of for Kalahari shareholders, and the company has allocated funds specifically towards testing this hypothesis.

Kalaharis second key project goes by the name of Witvlei, and hosts five known copper deposits along with a number of prospects. The next step for the company will be to try and expand the existing deposits and define resources at the prospects in order to come up with a total resource of a potentially economic size.

If this resource development programme comes up with the goods, Hohnen suggests that an attractive option for Kalahari at Witvlei may be the tried and tested development model of establishing initial cash flow from oxide material before moving on to trickier-to-process sulphides. The same development path could also be worth considering at Koperberg if the Olympic Dam model is not found to hold true there.

Kalaharis only grassroots stage project is Ubib, which has been is known to host copper gold mineralisation with a hint of uranium but needs appraising more thoroughly before much more than this can be said. The project is located some 15 kilometres from Anglo Gold Ashantis Navachab gold mine, which obviously auspicates well. Current work is centred on stream sampling to help identify prospective target zones for the application of more advanced exploration techniques.

The Husab uranium project, which is a joint venture with Extract Resources [ASX:EXT] structured to give Extract 51% and Kalahari the remainder, has surprised both companies. Hohnen says that little was thought of Husab until last year, when some great radiometric anomalies were turned up. The presence of uranium along with other metals has now been confirmed, and diamond drilling to test the deposit at depth begins in the next couple of weeks.

Husab is located right between the Rossing uranium mine, owned by Rio Tinto [LSE:RIO; NYSE:RTP], and the Langer Heinrich deposit, which is being developed by the uranium darling of the Australian market, Paladin Resources [ASX:PDN]. Extract has already gained significant recognition from its constituency of investors for Husab, and if drilling confirms the joint venture partners optimism, then the project could well help win Kalahari some fans in the London market, where uranium plays are not as numerous as they could be, and hence much in demand.

Investment Outlook

Kalahari has raised 6 million by way of its AIM listing, and intends to devote the largest portion of this sum to work at Dordabis. Therefore, this is the project that investors should be keeping their weather eye on. Significant progress down the road to feasibility is sure to add value to the company, other things, such as the copper market, being equal.

But in addition to Dordabis, there is scope for either or both of Witvlei and Ubib to shape up and grab investors attention. Husab already stands out, and with a high level of market interest in new uranium projects still apparent, it is a nice asset for Kalahari to have.

Uranium rose as high as $136 per pound in 2007 (from a low of $8 per pound in 2002). That means the price of uranium jumped about 1600% between 2002 and 2007.

However, prices soon came crashing down:

As you can see, things haven't been pretty for uranium lately. The spot price for U3O8 recently fell another $2 per pound and now stands at $49 a pound.

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actually you can't see, because the chart didn't or wouldn't copy across

Thanks for the info....this drop might hold the sp back then...

it hasn't been a recent drop ..... indeed, price has recovered from about $40 over the last couple of months

Still climbing....gently day by day....now breaking new ground ..

9% rise so far today...160p....looking great..

Extract(pun)from todays RNS.

Kalahari Minerals plc, the AIM listed mining exploration and evaluation group
with a portfolio of uranium, copper and base metal interests in Namibia, is
pleased to provide an update released by Extract Resources Ltd (`Extract' or
`the Company'), in which Kalahari's subsidiary, Kalahari Uranium Limited, holds
a 40% interest.

Kalahari Chairman Mark Hohnen said, "This is great news with preliminary cost
estimates indicating that Rossing South could support a profitable, long life,
low cost, low technical risk uranium mine producing 14.8M lbs U3O8 per year,
making it one of the world's largest uranium mines. Importantly, Namibia
already hosts other world class uranium projects including Rio Tinto's Rossing
and Paladin's Langer Heinrich uranium mines, located either side of Extract's
project, therefore providing good infrastructure and knowledge of the sector,
which would greatly assist in the development of Rossing South.

"With a JORC compliant resource of 267 M.lbs U3O8 @ 487 ppm, Rossing South is
already one of the world's largest uranium deposits. However, it has
considerable additional potential as the uranium mineralisation on all zones
drilled to date is still open at depth and along strike. This confirmed
resource and the outstanding exploration potential still to be tested across
the whole Husab project should ensure a long and successful mining operation.
As we have mentioned in previous announcements, we believe that Extract has the
ground and potential to deliver on Kalahari's uranium estimates of a resource
in the region of 500 M.lbs U3O8.

"We look forward to receiving regular updates from Extract as it advances the
Prefeasibility Study, prior to embarking on the Definitive Feasibility Study
and ultimately potentially creating one of the world's largest uranium mines."

Extract announcement:

STUDY HIGHLIGHTS

* Production rate 15.0 M tpa

* Estimated head grade 487 ppm U3O8
cyril

banked 50% of these the other day at a respectable profit, albeit that it has proved pretty premature ..... never mind

Still in and wondering where the top is ?,....in future years this should be worth several times what it is today but there is the high possibility of a takeover before then.

my thought exactly ..... it's so easy to get sucked in and then to suffer, though in this instance, at least there is something (concrete!!) on which to hang ones hat ..... slightkly curiously perhaps, though sp is nicely up, trading volume is still very low at 115k

i was also interested to read the bit about sulphuric being a high cost item for them.
it's actually very cheap to produce, but i guess if you have to bring in parcel tanker loads from say india and then store it, the unit cost goes up several-fold

That'll be Rio's problem imo, as they seem fav's to any take over of the
Rossing South.With their own Rossing project next door, less inrurstructure and associated costs known.
EXT would be the obvious t/o target but KAH could be a cheap way of doing so?
cyril

More resource cheer from Kalahari - article on Growth Company Investor
http://www.growthcompany.co.uk/news/1063592/more-resource-cheer-from-kalahari.thtml

And thar she blows again....no stopping this at the moment...

And still the rise is continuing....amazing....just hoping we are not about to go over a cliff....where is the top ?....a bid from Rio might not emerge, so that is like clutching at straws....it would be nice to bank my gain here but I would kick myself into an early sale...decisions ..decisions...shall have to think this over a drop or two of wine this weekend ...

you can't go broke banking a profit ..... that said, i am marginally cross with myself for having sold 50% of my holding, albeit at a reasonable profit, about 2 weeks ago .... however, i was really a bit o'weight in these and really just brought the stake back to about 80% of my norm

You can't be more pi**ed off than me, I watched it come back to 116p and waited for a bit more, missed the boat altogether... Ah well. GKP made up for it..:)

.

How much higher can(will)it go short term is i suppose, the question. For me the driving force is undoughtably EXT's Rossing South's project,so we
should keep a close watch on the SP, which is A$8.13 at the moment.
On the face of it theirs not much left for KAH in relation to EXT's SP,so short term one could look at URU or EML(still kicking myself for not buying
EML at 5.12p earlier in the week,up over 25%). Take URU which i'm heavily
invested as cheaper way in,to value its 27.68m KAH's shares, a quick way
would be to take 23.5% of the SP. 181.75% works out at 42.7p (29.25p),a
discount of roughly 32%.

EXT seems to be a prime candidate for a take over and RIO is ideal placed to best develop this resource, Their's a belief that the SP could reach A$15
if taken out(which is just short of doubling the SP), so perhaps its this thats
keeping the momentum going???
cyril

BB .... you can't back 'em all .... if you did, you'ld lose your shirt .... whatever anyone says, buying shares is a gamble .... there are rarely any certainties, unless you are BM, and if you were, you would now be lolling around being served free B&B though in no great great comfort, rather than on your mega-yacht

August 17, 2009

A Bright Future Beckons For Kalahari Minerals As Extracts Uranium Resource Base Continues To Grow And Grow


By Charles Wyatt



Aim-traded Kalahari Minerals may have a portfolio of projects In Namibia that includes gold and base metal projects, but uranium via its 40 per cent holding in Extract Resources is key to its future. On the telephone from Perth executive chairman Mark Hohnen says the other assets, which include the Namib lead-zinc project, the Ubib copper-gold project and a couple of properties on the Kalahari copper belt are all being assessed at the moment, and that their future will be decided before the end of the year. Extract's main asset is the Husab uranium project, located approximately 45 kilometres north-east of Namibia's main port - Walvis Bay. The project is strategically located within what is called Alaskite Alley, which is named after the granitic rock there thats composed mainly of quartz and alkali feldspar, the same rock that hosts the uranium mineralization for several world class uranium deposits that are in the area.
Two of these deposits are already in production Rio Tintos 68 per cent owned Rossing Uranium deposit to the north, which supplies eight per cent of the worlds uranium, and the Langer Heinrich deposit to the east, owned by Paladin Resources. Rossing has been in production for the last 30 years, while Paladin Resources brought Langer Heinrich into production in early 2008. Both of these deposits are located within 30 kilometres of Husab, itself split into the Rossing South and Ida Dome deposits. The resources at Rossing South continue to grow and grow, and as the mineralization is open at depth and along strike there is no reason to believe that the end is yet in sight. Indeed, Mark Hohnen is prepared to suggest that Extract has the ground and potential to deliver a resource in the region of 500 million pounds U3O8. This would rank it near the top of the top ten of the worlds biggest uranium deposits.

Small wonder Rio Tinto is keeping a very close eye on progress and has shareholdings in both Kalahari Minerals and Extract Resources. At the moment these amount to only 13.9 per cent and 15 per cent respectively, but the UK giant must wish it had had the courage to make a pre-emptive move for both companies in the depth of the chaos that engulfed the junior mining sector at the end of last year. At that time the share price of Kalahari went as low as 25p, compared with the present 179p per share. Extract put up a similar performance. But at that time too, Rio Tinto had problems of its own with the Chinese, the Australian authorities, and BHP Billiton, so probably took its eye off the ball. Even the biggest mining companies are prone to do this when the worlds finances are in complete disarray.

At the beginning of July Extract announced a further 34 per cent increase in the resources at Zone 1 of Rossing South. At the time Mark Hohnen said: These results yet again underpin that Rossing South is one of the world's most significant uranium discoveries. The increase in resource for Zone 1 to 145 million lbs of U3O8 at 449 ppm [parts per million] is fantastic news and in line with our estimates. Additionally we were hugely excited about the increase in grade which makes Rossing South the highest grade granite hosted uranium deposit in Namibia. Mark was in danger of running out of superlatives, but later that month he had to dip into the barrel again when Extract announced a maiden resource for Rossing South Zone 2 of 122 million pounds U3O8 at 543 ppm.

This time he commented: "These are incredible results which ensure that Rossing South is now one of the largest uranium deposits in the world. The 82 per cent increase in the resource at Rossing South and the grade quality mean this project is truly world class. Including Ida Dome, Extract now has a JORC compliant resource in excess of 290 million pounds U3O8 of which 267 million pounds U3O8at an average grade of 487 ppm is from the two zones at Rossing South. Ida Dome should certainly not be overlooked as it also has the potential to expand its resource, but Mark is now starting to get excited about the potential of Zone 3 at Rossing South. Extract has not said much about this to date, but exploration is taking place there and the initial feedback is very promising. No wonder the estimate of an eventual resource for Rossing South plus Ida Dome has now reached the 500 million pounds mark.

The latest announcement from Extract is that a preliminary costs estimate study has been carried out at Rossing South, and the result is positive. The conclusion was that the project can support a viable open pit mining operation developed to feed a 15 million tonnes per year agitated tank sulphuric acid leach processing plant. Annual production has been estimated at 14.8 million pounds U3O8, with capital costs estimated at US$704million and operating costs coming in at US$23.60 per pound of U3O8. As Peter McIntyre, managing director of Extract says, this profitable operation could have a life of more than 20 years based on current resources. We are continuing with our metallurgical testwork and engineering optimization that will consider other options including a heap-leaching component.

The current market capitalisation of Kalahari is 344.75 million (US$558.4 million). Now that the stage has been reached of carrying out cost estimates it is permissible to put a value on the companys assets. At the moment Kalahari has a 40 per cent interest in Extracts uranium resources and it would be reasonable to value these at US$6.00 per pound, compared with the current market price of US$48 per pound, based on the prices applicable in recent takeovers. On this basis a value of US$700 million emerges, but this only applies to the current resources. If and when the combined resources reach 500 million pounds the value for Kalahari would be US$1.2 billion. It is worth remembering this hefty discount as Extract gets steadily closer to production, as Mark Hohnen reckons it will reduce steadily over the months ahead.

Talking about production, it is certainly Extracts intention to achieve this as soon as possible. Mark reckons that if everything goes to plan and schedule feasibility, funding and construction uranium could be produced from Rossing South by the end of 2012, with such a rapid startup being due to the prevalence of infrastructure and the projects proximity to the coast. Mining projects rarely run on rails so the beginning of 2013 looks a safer bet, but either way a bright future beckons for both Extract and Kalahari.

cyril

Nice one cyril! Could not resist adding at today's price.