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.

it will be nice if there's some truth behind this as KAH really hasn't performed very well of late

you guys must have been sleeping ..... sp has been pretty whizzy and is strong yet again today

sleeping lion.......been in and watching.....kerching as gibby say's

Making good headway today.,.

glad i topped up a week or two ago even if it means being a bit o'weight in a twitchy market

Takeover bid !.

i know that's on the cards (allegedly!), but just smoke for now unless you know more than me

aha ......

Statement Re Possible Offer

The Board of the Company notes the recent rise in the Company's share price.

On 21 February 2011 the Company announced it was holding discussions with
Extract Resources Ltd (`Extract'), in which Kalahari holds an approximate 43%
interest, to explore various different options that might simplify the Extract/
Kalahari shareholding structure to facilitate a combination of Extract's Husab
Uranium Project with the neighbouring Rsing Uranium Mine owned by Rio Tinto
plc. These discussions remain ongoing and there is no certainty that the
parties will reach any agreement.

The Company further confirms that it is in talks with a third party, which may
or may not lead to an offer being made for the entire issued share capital of
the Company. Discussions are continuing and a further announcement will be made
when appropriate.

Has to be at least 400p I would like to think......those not in, time to buy quicko....topped up myself....surprised this has not jumped up by more yet....

I don't know about 4, but there was talk of 3.50. Nice whatever the result. Could RTZ be about to pounce? It would make sense as it would give them the leverage they would need to force an agreement on Extract.

RNS: 17:07 "GNPC Uranium Resrc" Possible Recommended Cash Offer of 290p!!!!

hope they tell them where to go......want a lot more than that.,.

EXT.AX
Australia's Extract Resources shares surge on prospects of bid
19 minutes ago at Reuters

Tue Mar 8, 2011 3:53am EST

* Rio seen as potential suitor due to Namibian mine proximity

* Rio owns 14 pct stake in Extract and its parent Kalahari

* Extract tells shareholders studying Chinese bid approach for parent

*

MELBOURNE, March 8 (Reuters) - Shares of Extract Resources jumped 7.3 percent on Tuesday on expectations it could become a target for global miner Rio Tinto after a Chinese bid approach for the uranium miner's top shareholder.

Namibia-focused Extract is 43 percent owned by Kalahari Minerals , which said on Monday it was in talks about a possible $1.23 billion takeover offer from a unit of state-owned China Guangdong Nuclear Power Holding Corporation (CGNPC).

Rio Tinto owns 14 percent of Kalahari and is also a 14.2 percent shareholder in Extract and has long been seen as a suitor for Extract as the two companies have neighbouring uranium projects in Namibia.

Rio Tinto declined to comment on Kalahari's announcement that it had been approached with an offer of 290 pence per share and would recommend the offer to shareholders if a formal bid was made on the proposed terms.

Extract shares soared 7.3 percent on Tuesday to close at A$9.94, valuing the company at A$2.9 billion.

Extract said last month it was holding talks with Rio Tinto on jointly developing its Husab uranium project and Rio's Rossing uranium mine, but that did not involve a takeover.

The Chinese move on Kalahari could spur Rio Tinto to find a way to disentangle the cross shareholdings between Extract and Kalahari, analysts said.

"Rio has flagged a willingness to undertake those sort of small-to mid-tier transactions," said Ben Lyons, an analyst at ATI Asset Management, which owns Rio Tinto shares.

"Rio's certainly got the balance sheet capacity to undertake these sorts of transactions."

Rio Tinto has said it is looking at acquisitions worth $5 billion or less.

It has already made a $3.9 billion takeover offer for Mozambique-focused coal miner Riversdale Mining , which is likely to be extended for a third time later this week.

Extract told shareholders to take no action while it considered what Kalahari's announcement meant for it. (Reporting by Sonali Paul; Editing by Rob Taylor and Muralikumar Anantharaman)

290p....you have to be kidding !.....nothing less than 350p....minimum....perhaps 400p to me....

Well we are now heading into new territory. The market does not seem to believe that the party is over.

Cracking day!!

Kalahari takeover offer must inevitably lead to move on local miner

Bryan Frith From: The Australian
March 09, 2011 12:00AM

URANIUM hopeful Extract Resources yesterday advised shareholders it was reviewing the implications of a pound stg. 756 million ($1.2 billion) bid for its major shareholder Kalahari Minerals. One of those implications may be that, under the Takeovers Code, Extract also ends up receiving a bid. It's all to do with downstream bid provisions of the Corporations Act.
Kalahari is a British incorporated company listed on the London Stock Exchange's secondary market AIM and also on the Namibian Stock Exchange (NSX).

Kalahari's major assets are a 43 per cent interest in Extract and a 45 per cent stake in North River Resources, which is also listed on AIM.

Under the Corporations Act, if a party acquires more than 20 per cent, then it is deemed to have the same relevant interest as Kalahari has in other shares.

CGNPC Uranium Resources, which is wholly owned by China Guandong Nuclear Power, a state-owned nuclear power producer, is discussing a possible recommended cash bid for Kalahari of pound stg. 2.90 a share, a premium of 11 per cent to the previous share price and 38 per net to the six month VWAP.

But if CGNPC were to acquire more than 20 per cent of Kalahari it would also acquire a deemed relevant interest in 43 per cent of Extract, and that would fall foul of section 606, which prohibits a party acquiring more than 20 per cent of a company without first making a takeover offer to all shareholders.

Section 611 (14) provides an exemption from the need for an upstream bidder to also bid for the downstream company. It applies if the upstream company is listed on the ASX or a foreign exchange approved in writing by the corporate regulator ASIC.

This issue arose recently with the bid for Germany's Hochtief by the Spanish group ACS. Hochtief owns 54.48 per cent of Leighton, but as Hochtief is listed on Deutsche Borse and it is an ASIC-approved foreign exchange, no downstream bid for Leighton was required.

But AIM and NSX, on which Kalahari is listed, are not on ASIC's approved list. On the face of it, a bid by CGNPC for Kalahari will also require a takeover bid for Extract.

CGNPC can apply for relief to exempt it from the requirement to bid for Extract -- in fact, it will need to apply for relief to enable it to acquire more than 20 per cent of Kalahari.

But it's unlikely the Chinese group would receive unrestricted relief. More likely is that it would obtain restricted relief and, going by ASIC's policy, that would be likely to include a requirement for a full bid for Extract.

ASIC will normally require a bid for the downstream company if the holding in the downstream company comprises more than 50 per cent of the upstream company's assets and control of the downstream company is a main purpose of the downstream acquisition. The stake in Extract is Kalahari's only significant asset. Its stake in North River has a market value of only pound stg. 11m while the company also has between pound stg. 20m and pound stg. 25m.

Extract shares were selling at $9.26 before the possible bid for Kalahari was disclosed and at that price Kalahari's stake was valued at $850m. The stake accounts for more than 90 per cent of Kalahari's assets and that is reflected in Kalahari's market capitalisation, which stood at $1bn before news of the possible bid. It's crystal clear that the main purpose of a bid by CGNPC would be to secure Kalahari's stake in Extract.

The Chinese group admits as much. It says that, given China's emphasis on diversifying energy sources, and its intended increase in nuclear generating capacity to lessen reliance on fossil fuel sources, it is committed to supporting development of new supply capacity in the natural uranium market.

Extract is developing the Husab project in Namibia, which is one of the world's best high-grade uranium deposits.

Where ASIC requires a follow-on downstream bid the offer price is set by an expert at the "see through" value implied by the upstream bid. ASIC also requires a cash bid, or a scrip offer with a cash alternative.

Based on the value of the proposed bid for Kalahari the value of the remaining 57 per cent of Extract would be $1.59bn, or about $10.75 an Extract share. That would put a total value on a bid for both Kalahari and Extract at about $2.79bn. Extract's share price jumped 68c, or 7.3 per cent yesterday, to $9.94, reflecting speculation on the likelihood of a downstream bid.

In the joint announcement to AIM, CGNPC says it will seek relief from ASIC to acquire more than 20 per cent of Kalahari and if, after discussions with ASIC, it proposes to make a downstream offer to Extract shareholders it would only be likely to be made if the possible offer proceeded and became unconditional.

Moreover, any bid would be likely to be subject to the Kalahari bid becoming unconditional and subject to usual defeating conditions, including no prescribed occurrences. The Chinese group would also require foreign investment approval for both the Kalahari offer and any offer for Extract.

It would also be made with substantially equivalent effective benefits to those that are offered to Kalahari shareholders -- that is, the see-through price.

While CGNP and Kalahari are still in discussions about a firm offer, the Kalahari board has indicated that if a firm bid is made at the suggested offer price the directors will recommend acceptance. Those Kalahari directors who own 7 per cent of the company have given irrevocable undertakings they will accept for their holdings, subject to there being no superior proposal, representing an improvement of 5 per cent to value of the possible offer.

Kalahari and CGNPC have also entered into an implementation agreement that includes provisions for Kalahari and CGNPC to pay the other a break fee of pound stg. 7.5m in certain circumstances. That would suggest a high degree of confidence that a firm bid will be made.

CGNPC's statement that it intends to be a partner in the development of the Husab project has possible implications for Rio Tinto. Late last month Extract announce that it was holding discussions with Rio about a possible combination of the Husab project with Rio's neighbouring Rossing uranium mine and was also holding discussions with Kalahari to explore options that may simplify the Extract/Kalahari shareholding structure.

The talks with Rio are still under way, but the arrival of CGNPC on the scene may complicate matters. Rio owns 10.8 per cent of Kalahari and 14.2 per cent of Extract, so it could prevent compulsory acquisition of both companies.

The Japanese group Itochu also has cross-shareholdings -- 13 per cent of Kalahari and 10 per cent of Extract.

Rio is already facing uncertainty over another corporate move, it's $3.9bn takeover bid for Riversdale Mining, which owns major coking coal deposits in Mozambique. Rio began with its foot on 14.9 per cent but to date has been stymied by Riversdale's two major shareholders, the Indian steelmaker Tata and the Brazilian steelmaker CSN.

http://www.theaustralian.com.au/business/kalahari-takeover-offer-must-inevitably-lead-to-move-on-local-miner/story-e6frg8zx-1226017999456

On Wednesday 9 March 2011, 10:22 EST

MELBOURNE, March 9 (Reuters)
Extract Resources shares jumped another 6.1 percent to A$10.55 as investors hoped it could become a target for Rio Tinto after a Chinese bid approach for the uranium miner's 43 percent shareholder Kalahari Minerals . Extract rose 7 percent on Tuesday.

Closing price: EXT.AX 10.73 +0.79 +7.95%

Rio must be irked by the Chinese muscling in on their discussions with EXT. A bid of 350p should see them off. Interesting times!