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.

rustling or muscling? .... surely not another MRSI (may he rest in peace!) in the making? .... anyway, it is clear the market does not believe this is the end of the game

Thanks cynic. Nice word though!

aldo and others - of course the huge loss of life in japan is more than tragic and should not be dismissed lightly, nor the potential impact of this massive disaster on the fragile japanese economy ......

however, peoples' resilience in the aftermath of such cataclysmic events should not be underestimated ...... it is also very encouraging to note that though there is some very minor radioactive leakage, it would seem that these reactors have been exceptionally well designed, albeit 20/30 years ago, and that meltdown is now looking increasingly unlikely - hence an exclusion zone of only 20km.

thus, the pro nuclear lobby will almost certainly be strengthened rather than the opposite as suggested by "friend aldo" elsewhere

Not over yet it seems with another station now on alert plus No.1 and 3 at Fug*** what ever the name is.,.

fortuitously brought myself back from o'weight to normal the other day, and if i had some spare funds, i'ld think about re-buying this morning at 280 or less - it was quite a bit less briefly - as, as posted above, i think the nuclear lobby will have been enhanced by the way these japanese reactors look to have withstood that huge earthquake

sure glad i wasn't tempted! ...... wonder where greed will overcome the fear factor - 260 perhaps

Kalahari Mineral's shares soared to new heights last week after Chinese resources group CGNPC made a 290p-a-share cash offer. Talks between CGNPC and Kalahari are continuing but the Kalahari board is minded to recommend the bid, unless a higher offer appears. Kalahari shares are trading at 298p, suggesting the market hopes a third party will trump CGNPC's bid. Sit tight says the Mail on Sunday.

Well, I've been doing the opposite of everybody else and piling into all sorts of stuff including a small top up in KAH...

So have I but I'm not sure if my brains need scrambled or not. Saw a gap in chart around 290 which apparently " has to be filled" fingers crossed!

What on earth is happening here ?.....damn.....!.....got this wrong 100% by the look of it...

Am a lucky sod, nearly bought somemore last night @234p but didn't. Topped up this am @196p

There is a takeover bid and the stock crashes ?...what ?....problem in Japan affects this ?....

doh! ... of course it does as it throws the open the whole question of the safety of nuclear power

Won't make any difference in a few days, still a take over target.

Australian Financial Review
Street Talk
PRINT EDITION: 24 Mar 2011

Quote

"Rio has promised to lift its offer for Riversdale from $16 to $16.50 a share if it holds more than 50 per cent of the company by next Monday. Rio currently holds a 35.9 per cent interest. Beyond Riversdale, Rio is keeping an eye on the situation at uranium play Extract Resources."

http://www.afr.com/p/opinion/tigers_realm_goes_on_the_prowl_ReNkfpUWHSI27sy30UQe0N?hl

Efforts to trim Extract bid may come to nil

Australian Financial Review
PRINT EDITION: 25 Mar 2011
Street Talk
Edited by Paul Garvey and Khia Mercer

Supporters of uranium play Extract Resources have found reason to hope that a cut to the takeover bid price proposed by China Guangdong Nuclear Power may not be the lay-down misere it appears to be.

China Guangdong has indicated it could look to trim back its offer for Extract's 47 per cent shareholder Kalahari Minerals, citing the changed outlook for the uranium sector on the back of Japan's nuclear issues.

Judging by Extract's share price since the Japan disaster, the market appears to have been betting China Guangdong will follow the lead set by Russia's ARMZ, which earlier this week used the Japanese crisis and falling uranium prices to trim more than

12 per cent from its bid for uranium play Mantra Resources.

The nervousness over the China Guangdong offer has been reflected in the fact Extract has been trading at around $8.25 a share, still well short of the $10.75 see-through price indicated by the Chinese group's existing offer for Kalahari.

Despite overtures from China Guangdong that it could trim its bid, Extract supporters are believed to be taking heart from regulations in Britain - where Kalahari is listed - which are understood to prevent a reduction in an offer price, even if it is only a proposed bid.

It would appear that the only way for China Guangdong to lower its price would be to drop the takeover bid altogether, in which case it would be barred from returning with another offer for three months.

The Chinese may well be reluctant to embark on such a course of action, given any such move would leave the door open for Rio Tinto to finally consummate its long-awaited deal to incorporate Extract's Namibian deposit into Rio's neighbouring Rossing mine.

Given the advanced stage discussions between Extract and Rio had already reached prior to the China Guangdong offer, a three-month delay could be more than enough for Rio Tinto to move in and lock Extract Resources away for itself.

http://www.afr.com/p/opinion/efforts_to_trim_extract_bid_may_LVkBuPl8RBwRUDEgbAKorM?hl

and of course one can offer as much or as little as one chooses, but there is no compulsion to accept ..... i suspect that the initial offer was already on the low side, and though it is certain that nuclear plant development will be put back by say 1-2 years, the long-term demand will remain as fossil fuels diminish ...... indeed, the fact that the japanese reactors seem to have withstood this massive earthquake and tsunami remarkably well, says plenty about the safety precautions already incorporated into this 20/30 year-old design

dont get too excited - buttons i hink but gl

sorry i think and know - lol

Extract holds firm on Kalahari deal

Australian Financial Review
PRINT EDITION: 25 Mar 2011
Angela Macdonald-Smith

Extract Resources chief executive Jonathan Leslie is confident about uranium demand growth in China and sees little risk of China Guangdong Nuclear Power backing away from its $1.2 billion move on Extract's biggest shareholder.

The nuclear crisis in Japan may well slow reactor building plans in Europe but China, the main growth market, would probably still rely heavily on nuclear power, Mr Leslie told The Australian Financial Review .

That meant Extract's huge Husab uranium deposit in Namibia was as strategically important as ever, he said. "I would be very surprised if nuclear was not a large part of China's energy mix going forward, which translates into the need for a huge amount of uranium."

China Guangdong's bid for Kalahari Minerals, which owns 42.8 per cent of Extract, was "very hard evidence" of the attractiveness of the Husab deposit, he said.

Mr Leslie's comments came amid speculation that China Guangdong would use the Japanese nuclear crisis to cut the price of its proposed offer for Kalahari, just as Russia's ARMZ this week shaved at least 12 per cent off its takeover bid for fellow African uranium explorer Mantra Resources.

Both Kalahari's and Extract's shares have crashed since the Japan quake, although Perth-based Extract has recovered almost half its lost ground, closing yesterday at $8.23.

But Extract's shares are well short of the circa $10.75 see-through value from China Guangdong's 290 pence ($4.65) per share proposed offer for London-listed Kalahari.

But Mr Leslie said he did not see many parallels between the ARMZ bid to China's move on Kalahari.

"This is a strategic move, it's not a trading opportunity," he said, noting that the cut in the price for Mantra was in any case a "pretty modest reduction", far from the "armageddon event" some had depicted.

Prior to the Chinese approach to Kalahari, Extract had been negotiating with another of its major shareholders, Rio Tinto, on the joint development of Husab, using Rio's adjacent Rossing mine in Namibia.

Rio is keen to get access to Husab, a deposit formerly known as Rossing South, and any backing away by China Guangdong from its proposed bid runs the risk of Rio elbowing out the Chinese.

"I would think it would be a dangerous move for the Chinese to try to renegotiate because it just opens the door for Rio to come in," said Warwick Grigor at BGF Equities.

"People are chasing quality assets just as they were before and Rossing South is one of those assets," he said.

China Guangdong is understood to be focusing on securing regulatory clearances for its bid so it can proceed with a firm offer for Kalahari. That would then most likely be followed up with a bid for Extract.

Meanwhile, Extract is proceeding "full steam" on its feasibility study for a stand-alone development of Husab, due to be released by the end of the month, Mr Leslie said.

He acknowledged that the drop in Extract's share price could make the stand-alone option more difficult for Husab, which some analysts estimate will cost more than $1.5 billion.

But the talks with Rio, the Chinese bid for Kalahari and the presence of Japan's Itochu as a shareholder in both Kalahari and Extract mean Extract has a range of other options for financing the mine, he said.

"We're lucky because we have more options than most," Mr Leslie said. "It goes back to the strategic importance of the project."

http://www.afr.com/p/business/companies/extract_holds_firm_on_kalahari_deal_MTnmQHplOct90NWjivSIUJ?hl