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.

Come mid year when another resource upgrade is planned and expected to exceed 400mlbs of uranium,the market will have to re-value this project(if not before)and i can see 250p. But its whetger we can reach maturity to see the real potential,something i douht will be allowed?
cyril
PS; A littke like RXP who are making staedy progress but ignored by the market,making both excellent long term holds.
aimho

only one way for this commodity to go - up

There's only one way for this commodity to go - up Feb 26, 2010
Print this article

The most compelling thing about uranium is probably best expressed in the chart below...



The uranium market has been in deficit for several years, living off the stockpiles of the Cold War. Put simply, we use more than we make.

Looking out to 2018, we're about 400m lbs short. To get some perspective on that number, look below at the table of the top ten producers of uranium in 2009 and the percentage of the total market each makes up.

The top producers, which make up nearly 90% of the market, produced about 110m lbs of uranium last year. So essentially, the industry needs to produce almost four times that to meet the estimated new demand through to 2018. On an annual basis, the industry will need to about double in size.

A sidelight to this is the fact that 63% of all uranium comes from just ten mines. This means that the global supply of uranium is susceptible to supply shocks. If one big mine floods or goes down for whatever reason, it'll make a big wave in the uranium market.


Top ten uranium producers
Company Uranium production
(million lbs) Primary
supply (%)
Kazatomprom 21.4 17.0
Cameco 20.2 16.0
Areva 18.5 14.7
Rio Tinto 14.1 11.2
Atomredmetzoloto 11.7 9.9
BHP Billiton 7.7 6.1
Navoi 6.6 5.0
ERA 3.6 2.9
Uranium One 3.6 2.9
Paladin 3.5 2.9

Total 110.6 87.6


It gets even more interesting...

Most of the best mines are already in production. As with everything else in the resource world these days, the low-hanging fruit is all gone. Future grades will be lower, meaning we'll have to mine a lot more ore to get a given amount of uranium. New mines are in more geologically challenging places. New supply is also coming from riskier places, such as Africa and Kazakhstan. All of this means that costs will go up.

These facts are reflected in the industry's cost curve, as you can see in the chart below.



This tells you that at current production about 130m lbs those last million lbs are a lot more expensive to produce than the first million. It also means that as the industry ramps up beyond 130m lbs to meet demand, costs will rise sharply.

This is not a perfect predictor, of course. There are new mines that will come online and produce uranium at low costs. But it bodes well for a higher uranium price in the future. The current spot price is around $45/lb. Only around 10%30% of the uranium traded in any year is sold on the spot market. Most uranium is sold to utilities via long-term contracts. The longer-term price of uranium over $60.

For some perspective on uranium pricing, consider that when uranium got hot in the summer of 2007, the spot price hit $136/lb. It's done nothing but go down since then. If you are a contrarian thinker, which is to say a good investor, that fact will attract you. I can tell you with great certainty that the uranium price won't go to zero. That downward trend will reverse, and based on all the data I presented above, it looks like a higher uranium price over the next few years is a sure thing or about as close to a sure thing as you can get in markets.

That's why the uranium price has to go up. If it doesn't, there is no incentive for producers to make more, and hence a lot of reactors are going to go without fuel. More importantly, it can go up. Simply put, the uranium price could double and it wouldn't affect the economics of a nuclear reactor much. This is not true with a lot of commodities. If the price of oil doubled, the global economy would double over in great pain and probably grind to a halt. Not so with uranium.

The biggest potential negative I see is the risk of some nuclear accident that derails this whole thesis as people abandon nuclear. But the industry has a clean safety record going back more than two decades now.

There are 436 reactors in the world that provide about 15% of the world's electricity. The new reactors have fewer moving parts and are much better than the old ones. And most of the world seems to be coming around to the green benefits of nuclear power; even President Obama's administration promises loan guarantees and other goodies for the builders of nuclear reactors. In our carbon-worried world, nuclear is a relatively clean source of energy.

For all these reasons, we see a massive buildup in reactors under construction, planned or proposed. The World Nuclear Association (WNA) says there are 52 reactors under construction, 135 reactors planned and 295 reactors proposed. This is what underpins that demand we talked about up top. Where are all those reactors going to be? Mostly, from China, India, Japan, and the US.

Once again, we have a resource story driven by China and India. Neither country produces much uranium. China produces less than 2% of the world's uranium. If you believe "buy what China needs," as I do, then uranium fits well with that worldview. In conclusion, I want to own uranium.

This article was written by Chris Mayer for the free daily investment letter DailyWealth
cyril

Australian Financial Review 17/03/2010

page 20 Street Talk

Extract keeps suitors in suspense

Uranium hopeful Extract Resources is nudging closer to the completion of its strategic review, with the outcome of the process, run by Rothschild, expected within the next month.

Extract owns the Rossing South deposit considered one of the worlds most promising uranium projects adjacent to Rio Tinto's Rossing mine in Namibia (Rio owns 16% of Extract).

As part of the review process, Extract has been talking to miners and uranium buyers about deals ranging from a stake in the project and a offtake agreement to a full takeover.

It had launched the project after receiving unsolicited expressions from several parties and the expectation is that the best proposals - of varying sorts will be put forward soon to allow it to make a decision.

Interestingly, the parties involved are believed to have signed standstill agreements, which presumably would expire, once Extract chose its path, paving the way for a takeover later if another deal is done at this stage.

At the moment, some think the most likely outcome is that a utility will take about a 15% stake to help develop the project. As Uranium One noted this week, with a $1.8 billion market value and no operating mine yet, Extract isn't a cheap proposition.

Extract has delayed the issue of an updated resource statement until the third quarter but there are suggestions it could a figure of up to 400 million tonnes of ore at a time.
cyril

Korea Electric May Bid for Stake in Extract Resources (Update3)
March 19, 2010, 3:52 AM EDT
More From Businessweek
Mark Zandi: My Favorite Indicator
Developing Countries: 'No Money, No Deal'
Dow Jones Executive Recruited To Be Bloomberg BusinessWeek President
China's Endless War on Online Porn
Testing Glitch Causes Problems for Thousands of Indian Applicants
Story Tools
e-mail this story print this story digg this save to del.icio.us add to Business Exchange (Adds Korea Electrics comment in eighth paragraph.)

By Shinhye Kang

March 19 (Bloomberg) -- Korea Electric Power Corp. and state-run Korea Resources Corp. may make a joint bid for a stake in Extract Resources Ltd., an Australian explorer that owns a uranium mine in Namibia, to obtain supplies of the nuclear fuel.

Were interested in the Rossing South mine in Namibia owned by Extract, Chang Joo Ok, vice president of Korea Electric Power and head of its overseas energy development team, said in an interview in Seoul yesterday. But pricing is the most important factor.

Extract Resources rose 14 percent in Sydney today after surging more than six-fold last year as investors bet more countries will embrace nuclear power. South Korea plans to add eight atomic plants by 2016 and export 80 reactors by 2030. Korea Electric emerged as a rival to General Electric Co. and Areva SA after beating them in December to a $20 billion order to build reactors in the United Arab Emirates.

Namibia is politically stable and would be a good target, said Park Young Ho, head of Africa and Middle East research at Korea Institute for International Economic Policy, a government think tank. Most attractive mines in Africa are already owned by major global companies, and it would be risky for a South Korean company to enter the market by itself. The stake purchase would be one of the safe options.

Extract Resources, 15 percent-owned by Rio Tinto Group, continues to evaluate potential partners to join its Namibian project, Chairman Steve Galloway said in an e-mail today, when asked to comment on the possible joint bid.

The South Korean group hasnt decided whether to bid for a stake in the Rossing South mine or Extract Resources itself, a Korea Resources official familiar with the plan said, declining to be named because internal discussions are still ongoing. Cho Hye Won, a spokeswoman at Korea Resources, declined to comment.



Stakes in Mines

Perth-based Extract Resources advanced the most since Dec. 23, 2008, to close at A$8.35. Korea Electric fell 0.3 percent to 38,550 won in Seoul, compared with the 0.7 percent gain in the benchmark Kospi index.

Korea Electric was chosen by Extract Resources as one of its preferred bidders last month after the utility made a non- binding offer for a stake in the uranium explorer, Chang said.

The South Korean companies will make a binding offer after conducting due diligence on the Rossing South deposit and getting approval at the end of this month from an internal investment review committee, according to Chang.

Drilling at Rossing South suggests it could become one of the worlds largest uranium mines, Galloway said in October. The nearby Rossing deposit mined by a Rio Tinto unit is the third- biggest, according to the World Nuclear Association.

Overseas Acquisitions

Korea Electric is also keen to buy stakes in uranium mines in Africa, Mongolia, Australia and Europe, Chang said. The utility wants the investments to supply 3,800 metric tons of the fuel annually by 2020, equivalent to 50 percent of South Koreas requirements, Chang said.

South Korea currently operates 20 nuclear power plants and had imported its uranium mainly from Canada, Australia and Kazakhstan until Korea Electric invested in overseas mines last year. The nations annual uranium consumption may rise to 7,600 tons from about 4,000 tons currently, Chang said.

Korea Electric and its unit Korea Hydro & Nuclear Power Co. jointly acquired a 10 percent stake in a uranium mine in Niger for 170 million euros ($232 million) from Areva in December. Denison Mines Corp., a Canadian uranium producer, agreed in April last year to sell a 19.9 percent share in the company to Korea Electric for C$75.4 million ($74.3 million) and supply the utility with uranium until 2015.

Korea Electric will also provide uranium for the four planned reactors in the U.A.E for a period of almost five years, Chang said.

The company also plans to purchase a stake in a coal mine in the U.S. by as early as June and wants to invest in coal producers in Australia and Indonesia, he said. Chang declined to give details of the U.S. asset.

--With additional reporting by James Paton in Brisbane and Ben Sharples in Melbourne. Editors: Ryan Woo, Clyde Russell.

cyril

Australian Financial Review - March 23 - Page 27

Uranium Play Extracting Some Gains

By David Ciampa

Investors in small uranium play Extract Resources may not be too deterred by the Indian central banks decision late last week to raise interest rates, which accordingly caught the commodities markets off-guard. While the move may have clouded the global growth picture, Extract investors will be concentrating on the long-term demand for energy increasing especially from countries like India and the viability of the energy sources technology.

The stock was the standout performer in the S&P/ASX200 Resources index last week rising as much as 15 per cent, boosted by a 14 per cent jump on Friday amid reports that two Korean groups may make a joint bid for the Australian explorer. Extract owns the Rossing South deposit considered on of the world�s most promising uranium projects adjacent to Rio Tintos Rossing mine in Namibia, which both Korea Electric Power Corp and state-run Korea Resources Corp may make a joint bid for, or even extract itself.

As part of a soon-to-be completed strategic review, Extract has been talking to miners and uranium buyers about deals ranging from a stake in the project and an offtake agreement to a full takeover.

Extract, which is 16 per cent owned by Rio, was one of the best performers on the S&P/ASX200 index last financial year, surging more than six-fold.

But it has run out of puff in recent months and last weeks gain had the stock at its best level in about two months. Among other fast-growing economies, South Korea is one of a group of Asian countries with soaring energy needs and plans to add eight atomic plants by 2016 and export 80 reactors by 2030.

Korea Electric Power vice president Chang Joe Ok said the company was interested in the Rossing South mine in Namibia owned by Extract, but added that �pricing is the most important factor. The South Korean group is reported to be undecided whether to bid for a stake in the Rossing South mine or Extract Resources itself.

Canadian broker Haywood Securities has placed a $10.10 price target on the company.

Rio Tinto-controlled uranium producer Energy Resources of Australia also rose last week after noting that the global financial crisis had created a slump in new mine development that may lead to improved prices for the nuclear fuel.


I assume the Haywood Price Targget is in C$?

If so would be ~A$10.80.

cyril

OffiNippon Uranium Resources (Australia) Pty Ltd, a wholly owned subsidiary of ITOCHU Corporation ("ITOCHU") is pleased to announce that it has agreed to acquire shares in Kalahari Minerals plc ("Kalahari"), representing a 15% equity ownership.



Research note 24th March re EXT

http://www.minesite.com/fileadmin/content/pdfs/Brokers_Notes_Jan_10/Brokers_Notes_feb10/Whireland%20-%20extract%20resources%2024.3.pdf

cyril

Broker snap: Impressive assay results from KalahariDate: Tuesday 06 Apr 2010

LONDON (ShareCast) - Ambrian Capital, the house broker of uranium and copper mine developer Kalahari Minerals, has seized on the release of further exceptional chemical assay results from the miners Rsing South mineralised system to talk up the shares.

These results continue to impress, but perhaps most material to the ultimate resource target is the encouraging spectrometer results from the Western Limb. This area of the deposit (in addition to the Zone 2 southern extension) remains outside the existing resource, and thus has the highest potential to increase the headline total resource figure to be released in 3Q10 [third quarter 2010] the primary short-term price driver, the broker states.

Outside resource increases and windfall potential for M&A, the subsidiary price driver will be the DFS [definitive feasibility study], scheduled for completion in 4Q10, and associated inputs (e.g, metallurgical work, mine plans and cost estimates), which may be released on a staggered basis ahead of the DFS, Ambrian analyst Brock Salier added.

Ambrian recommends buying the shares and has a price target of 232p, though it expects progress towards the price target to be slow as the register matures from quick-return small-cap holders to larger, longer timeframe holders, as exemplified by the recent Itochu acquisition.

.
cyril

Cyril: I'm surprised the price has slipped, especially when one looks at the results they are getting.

Kalahari benefits from Extract success
Business Financial Newswire
Kalahari Minerals says that Extract Resources - in which it holds a 40.41% stake - has produced further exceptional chemical assay results from the Rsing South mineralised system in Namibia.

Chairman Mark Hohnen states: "These are again truly fantastic results. Both Zones 1 and 2 of Rsing South continue to deliver exceptionally wide uranium intercepts in excess of 1,000ppm, with highlights of 22m @ 1,410ppm from Zone 1, and 41m @ 1,222ppm from Zone 2, further confirming the global significance of the Husab Uranium Project.

"Importantly, the results continue to support the view that these zones are continuous at depth, and open, which should be significant with respect to the resource update scheduled for Q3 2010.

"Significantly, the resumption of exploration drilling has met with immediate success on the Western Limb of the Rsing South anticline, which is believed to have the potential for yet more zones of mineralisation, further increasing the scale of the project area.

"The proximity of the Western Limb to the existing zones 1, 2 and 3 should allow for any resources and reserves defined at these new prospects to be included in any future mine development."

Preliminary cost estimates have already indicated Rsing South can support production of at least 14.8Mlbs U3O8 per year.

Hohnen adds: "With 17 rigs currently operating and more rigs due to join the programme soon, we believe Rsing South is one of the largest drilling programmes currently being undertaken anywhere in Africa and is testimony to the magnitude and importance of the Husab Uranium Project as a whole."

Story provided by Business Financial Newswire

Business Financial Newswire - Kalahari Minerals says that its new CEO Jonathan Leslie has been appointed as an Executive Director of Extract Resources, in which it has a 40.37% interest.

A marriage of two Rsings on the cards?
By: JO-MARDUDDY

THE top brass of Extract Resources, owners of Rsing South, is meeting with President Hifikepunye Pohamba this afternoon to brief him on plans to develop the uranium deposit into one of the biggest uranium mines in the world.

Mark Hohnen, Executive Chairman of Kalahari Minerals, which has 40 per cent shares in Extract, confirmed the meeting yesterday.
They will use the opportunity to introduce Extract's new Executive Director, Jonathan Leslie, and "to provide a progress report on the Rsing South project, as it enters this transformational period in its development transforming from a pure exploration company to a one tier uranium production company," Hohnen said in statement on the Kalahari website.

Leslie's appointment adds fuel to persistent rumours of a marriage between Rio Tinto's Rsing Uranium and Extract's Rsing South. Leslie was a former managing director at Rsing Uranium.

Last week Rsing Uranium spokesperson Jerome Mutumba said his company has suggested a joint venture with Rsing South.
Mutumba said Rsing Uranium has proposed to transport ore from Rsing South to Rsing Uranium to be processed.
"Rsing South is only seven kilometres from the Rsing pit, and the mines could share significant infrastructure.
We see potential for Rsing South and Rsing working together on a joint development, as this will provide value to both Rsing and Extract Resources," he said.

Rio Tinto already has 15 per cent shares in Rsing South. However, it also holds 14 per cent of the shares in Kalahari Minerals, and therefore effectively owns 21 per cent in Rsing South.

A Consortium of Korean companies led by Korea Electric Power Corp (Kepco) is also keen to get their hands on shares in Rsing South. State-run utility Kepco, Korea Hydro and Nuclear Power Co, and Korea Resources Corp are looking to take a stake of around 15 per cent in Rsing South, Dow Jones Newswires recently reported.

Extract's wholly-owned subsidiary Swakop Uranium plans to have Rsing South in production by the end of 2013.
It can be ramped up to full production within 18 months after that, Swakop Uranium Chief Executive Officer Norman Green said.
The mine has the potential to produce 15 million pounds of uranium oxide a year, making it one of the three biggest uranium mines in the world.

Additional reporting by Nampa

http://www.namibian.com.na/news/marketplace/full-story/archive/2010/april/article/a-marriage-of-two-roessings-on-the-cards/

Taken from another board, "looks to be when not if"

A marriage of two Rsings on the cards?
By: JO-MARDUDDY

THE top brass of Extract Resources, owners of Rsing South, is meeting with President Hifikepunye Pohamba this afternoon to brief him on plans to develop the uranium deposit into one of the biggest uranium mines in the world.

Mark Hohnen, Executive Chairman of Kalahari Minerals, which has 40 per cent shares in Extract, confirmed the meeting yesterday.
They will use the opportunity to introduce Extract's new Executive Director, Jonathan Leslie, and "to provide a progress report on the Rsing South project, as it enters this transformational period in its development transforming from a pure exploration company to a one tier uranium production company," Hohnen said in statement on the Kalahari website.

Leslie's appointment adds fuel to persistent rumours of a marriage between Rio Tinto's Rsing Uranium and Extract's Rsing South. Leslie was a former managing director at Rsing Uranium.

Last week Rsing Uranium spokesperson Jerome Mutumba said his company has suggested a joint venture with Rsing South.
Mutumba said Rsing Uranium has proposed to transport ore from Rsing South to Rsing Uranium to be processed.
"Rsing South is only seven kilometres from the Rsing pit, and the mines could share significant infrastructure.
We see potential for Rsing South and Rsing working together on a joint development, as this will provide value to both Rsing and Extract Resources," he said.

Rio Tinto already has 15 per cent shares in Rsing South. However, it also holds 14 per cent of the shares in Kalahari Minerals, and therefore effectively owns 21 per cent in Rsing South.

A Consortium of Korean companies led by Korea Electric Power Corp (Kepco) is also keen to get their hands on shares in Rsing South. State-run utility Kepco, Korea Hydro and Nuclear Power Co, and Korea Resources Corp are looking to take a stake of around 15 per cent in Rsing South, Dow Jones Newswires recently reported.

Extract's wholly-owned subsidiary Swakop Uranium plans to have Rsing South in production by the end of 2013.
It can be ramped up to full production within 18 months after that, Swakop Uranium Chief Executive Officer Norman Green said.
The mine has the potential to produce 15 million pounds of uranium oxide a year, making it one of the three biggest uranium mines in the world.

Additional reporting by Nampa

http://www.namibian.com.na/news/marketplace/full-story/archive/2010/april/article/a-marriage-of-two-roessings-on-the-cards/
cyril

guess what .... someone did not look at the previous post!

Let's hope this will remove the drag on Kalahari's share price:

For immediate release: 16 April 2010

EMERGING METALS LIMITED

("EML" or the "Company")

Result of Meeting and Dividend Declaration

The Company is pleased to announce that at the Meeting of Shareholders held
earlier today both resolutions were duly passed on a show of hands. Completion
of the sale of the Company's remaining 8,917,647 Kalahari Shares at 185p per
share is expected to occur within six business days. The Board is accordingly
declaring a Special Dividend of 7.13 pence per share which will be paid on 18
May 2010 to shareholders on the register at the close of business on 30 April
2010.

Buyers are suddenly flooding in!

at least 10x normal volume today, but order book now looks pretty light and evenly balanced

do you need to hold EML or KAH shares to get the special divi?

April 19, 2010

Kalahari Minerals Trumps Rio Tinto At Rossing South By Bringing In Japanese Sovereign Interests
By Charles Wyatt



Companies that own a major shareholding in another company often struggle to get the value of that investment fully recognised in their own share prices. One example fresh in the mind following its presentation at the recent Minesite Forum is Anglesey Mining. Anglesey has a 41 per cent holding in Labrador Iron Mines, currently worth 52p per Anglesey share. The share price of Anglesey, however, is only 40p, which takes no account of the fact that Anglesey also has a 100 per cent interest in the Parys Mountain mine, a partially developed copper-zinc-lead mine in North Wales. The same goes for Kalahari Minerals which has a 40.3 per cent holding in Extract Resources, currently worth 460 million. Kalahari itself is only capitalised at 357 million. In the cases of both Anglesey and Kalahari the discount will narrow sharply as production looms.
Extract is developing the Husab uranium project, directly to the south and only five kilometres away from Rio Tintos Rossing Mine, which is already in production. Work is focussing on three main prospects at Husab, Rossing South, Ida Dome and Hildenhof, and results continue to underpin the prospectivity of the region, particularly following the world class Rossing South discovery. Extract has reported a JORC compliant combined resource at Husab in excess of 292 million pounds U3O8 at a grade of 439 parts per million (ppm). Of that total, 267 million lbs U3O8 at a grade of 487 ppm is from two zones at Rossing South that run at a cut off of 100 ppm U3O8. These are both open ended at depth, and along strike. Mark Hohnen, executive chairman of Kalahari, believes Extract has the ground and potential to deliver a total resource of around 550 million lbs U3O8, which would make it the biggest uranium-only deposit in the world, and with excellent grades too. Rossing South alone has the potential to produce 15 million lbs U3O8 per year, and that would make Extract a Top Five global producer.

For a long time the betting has been that Rio Tinto, which has modest shareholdings in each company, making a bid for one or both of them. Rios recent quarterly results demonstrate that the pressure on Rio to make a move is rising. Lower grades hit production during the first quarter of this year at both ERA and Rossing, which resulted in a 20 per cent fall in production compared with the same period last year. At the same time, good exploration progress was reported at the Z20 prospect which is a strike extension from Rossing South.

At the beginning of 2009 we gave an insight into the politics being played by Rio Tinto in an effort to get its way on the cheap, but Mark played a blinder, and Rio Tinto had to ditch the devious tactics. In fact they were a waste of time and, crucially, did nothing to improve relations between the companies.

Unfortunately for Rio Tinto, things have changed significantly as far as its two targets are concerned and it no longer has the stage to itself. For a start Jonathan Leslie has been appointed chief executive of Extract and Chris McFadden, a nominee of Rio Tinto, has resigned. This is in line with an agreement reached at the Extract AGM last November that he would go when a new chief executive was appointed. As Mark Hohnen points out, Jonathan has an exceptional level of experience in the uranium sector, particularly in Namibia, where he was managing director of Rossing Uranium, Rio Tintos subsidiary, which operates the producing Rossing Mine. He is an international expert in the uranium industry and a well-respected figure in Namibia, with outstanding relationships with the Namibian government and mining agencies. He joins at a crucial time, as the Rossing South project is in course of transforming itself from a pure exploration play to a tier one uranium production company.

Reiterating this plan to become an independent producer must get right up the corporate nose of Rio Tinto, but independent production has always been the intention of Kalahari and Extract, and a target date of end 2013 has been set. The project benefits from a prevalence of infrastructure and its proximity to the coast, as its only 45 kilometres from Walvis Bay, Namibias main port.

In the meantime Kalahari has played another trump card, by bringing ITOCHU Corporation onto its list of shareholders with a 15 per cent stake. ITOCHU has a history going back to1858 when it was founded as a linen trader by Chubei Itoh. It now has 150 operations in 75 countries involved in trading a wide range of products, but particularly commodities. It is a powerful company, no doubt about that, and Rio Tinto no longer has the game to itself as ITOCHU will not have bought these shares on a whim. It has been involved in uranium since 1998 as one of the worlds biggest traders and delivered 4,000 tonnes to the market last year.

ITOCHU knows Namibia well, too, as it is involved in the offshore Kudu gas field, and this has also given it contacts with the Namibian government which could be useful. Mark Hohnen makes the point that ITOCHU has a strong relationship with the Japanese government, which will also provide vital financial support. This is being done through the Japanese state nuclear enterprise Japanese Oil, Gas & Metals National Corporation, or JOGMEC, the main aim of which is to ensure a stable supply of natural resources for Japan. At the moment Japans nuclear power industry supplies 30 per cent of the countrys electricity, but this is expected to rise to 40 per cent by 2017.

Poor old Rio Tinto. How it must wish it had made a move earlier, when it might have been able to acquire both Extract and Kalahari for pocket money. Now a big beast has entered the ring and corporate bullying is off the menu. Looks like Rio is going to have to watch Rossing South being developed as an independent producer, using funding from Japan, based around an offtake agreement negotiated by ITOCHU. Extract is hardly going to accept a bid from Rio Tinto with such a prize ahead of it and, anyway, it has Kalahari and its powerful friends to consult before any decision could be made. A fascinating situation and one that will enthral investors for some time to come.

http://www.minesite.com/nc/minews/singlenews/article/kalahari-minerals-trumps-rio-tinto-at-rossing-south-by-bringing-in-japanese-sovereign-interests/1.html

We seem to have lift off today!

From UK-Analyst.com: Friday 9th July 2010

Ambrian Capital maintained its "BUY" recommendation and 232p target price for Kalahari Minerals (KAH). The research house said that, for the mining and exploration company, upcoming share drivers fall into two broad categories. The first category is fundamental progress on Rossing South, which has been confirmed as the highest grade granite-hosted uranium deposit in Namibia. The second category is potential "game changers" through development, such as a joint venture with Rio Tinto, or a merger & acquisition. In both cases, Ambrian sees significant shareholder uplift; and thus remains very positive on the group's shares, which is currently at an 8% discount to its investment in Extract Resources. The shares moved up by 1.5p to 165p.