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URU hold 27.68 million shares(16.6%) in Kalahari Minerals(KAH) which hold a large stake in the Aussie company Extract(EXT) the holder of the licence to work the Rossing
South, which have turned out to be one of the largest uranium deposits in the world.
RIO who have the site are investing heavely in both companys and it seems will
make a take over bid in th not to distant future? A couple of posts which give an idea whats what,

Excerpts from the Hanson research note on Jan 29th 2009 relating to company valuation:


For the purpose of our valuation we have used the long term $80/lb price and the current $/� exchange rate of $1.40/�1.00. Other assumptions include:
� Cash � URU currently has �1.4m in cash (1.3p per share) and no debt. We believe that this is enough to fund the company�s activities until July/ Aug 2009

� Kalahari Minerals � The total market capitalisation of Kalahari Minerals is �77.83m. At the current share price of 43.5p, this makes Niger Uranium�s 27.68m shares worth �12.04m or 10.64p per share.

� Henkries project - Niger Uranium has an NPV15% for the project of US$150m before tax. Our own valuation based on the original 3.72Mlbs estimate is US$17.43m after tax. As no resource has been defined we apply a x0.6 discount to NPV, which equates to 4.89p per share for their 74% stake.

o If Niger Uranium can define an 11 Mlbs resource we calculate an NPV of $102.87m after tax or 28.83p per share again at a x0.6 discount for risk. Neither valuation includes any upside for the unsampled Henkries South.

� Niger project - We don�t believe that this is economic as a standalone project at this grade and tonnage. The grades are low but are typical for the region being similar to those at Imouraren and Arlit. However, with Niger Uranium continuing its exploration drilling with two rigs currently on site, the company could increase the tonnage significantly.

o With existing operations in the area including those of Areva and China Nuclear International Uranium Corp., we believe that the most likely scenario is that URU�s Niger project assets will be acquired by an existing producer. The Paladin (ASX:PDN) and Fusion Resources (ASX:FSN) deal in late December 2008 provided an indicated value to resources of US$1.97/resource lb. On this basis and factoring in assumed recoveries and a x0.5 discount due to the perceived risks in Niger, we arrive at a value of �2.35m or 2.1p per share for the Niger project.

� Argentina UrAmerica � This is more difficult to value as it is a private company. However, Niger paid $2.5m and 4,664,306 new shares for its interest which would value the stake at �2.3m or 2.06p per share.
Conclusion

Our total sum of parts value is 20.90p, which does not include any share holder dilution caused by any subsequent fund raisings. It also does not include any upside for Henkries North and South, the Niger exploration or expected upside in the value of the company�s Kalahari minerals stake when the full resource is announced by Extract Resources.

Given KAH's sp increase, the 27.68mln shares is currently worth 17.7p per share (at KAH = 72.5p), which would increase the valuation to 28.02p per share.

And - If they can get the 11 Mlbs resource from Hankries, then this would increase the sp to 51.96p per share.

So currently they are trading at a discount of 12p (or 75%) to the current mid price.


if RIO pay �5/lb of U based on the forsys/forrest deal then KAH holding in EXT would be worth around �300M. URU holding is worth around �45M at this price. by all accounts the grade at Rossing South is high grade and superior to the forsys/forrest U grade so a price equivalent to this deal is not pie in the sky in the slightest. In fact you could argue EXT should be asking more for its Rossing South asset


Right, here's what I reckon is going on.

EML is Dattels & Mellon's vehicle, aligned with URU (which they also have interests in).

There is a big battle on at EXT right now, to determine the Board composition. Whoever gains contol of EXT's Board will do the final negotiating with RIO (or a.n.other, e.g. Areva, Chinese, Russians - all may be interested, I understand) concerning either a sale or a JV to exploit Rossing South.

With over 40% of EXT's votes, KAH's votes are crucial in determining the outcome of that battle... so, whoever controls KAH effectively controls EXT. At present, IMV Dattels, Mellon & co control KAH via URU and EML. ISTM, from his statements and past actions, that Hohnen has aligned himself with them. When he said on Tuesday "Clearly certain Kalahari shareholders voiced the same concerns when they refused to endorse the potential merger between Extract and Kalahari over concerns that Rio Tinto could emerge with a controlling interest.", that's who the "certain shareholders" are. RIO are trying to dilute that control by buying KAH shares themselves. EML's move is a fightback to retain/strengthen Dattels, Mellon & co's position.

From RIO & Dattels' POV (and mine :0)) these shares are still cheap, so they don't mind paying up now to reinforce their positions for the endgame.

The last posts were c&p, from very capable investors.

A quick way to value URU's holdings in KAH is multiply its SP by 24.4%

http://www.freesharedata.com/eml


cyril

Clive in answer to your question,normally i would agree,however the management have seen fit to take the opportunity to get out.They must believe that Niger abd URA offer better prospects and will benifit to the tune of 3m or even 4m from doing so.
As regards to value and timing,we still own 27.68m KAH shares so that more than looks after the SP(check the lead post for sharedata which will give discounts), to which you can add 3m cash min + the 2 projects mentioned.
cyril

Cyril,
It all makes sense despite the stinker of the cold you mention - just one question.
How is the URU discount to the KAH holding calculated..??
Is the the current value of their KAH holding (at KAH's last price) somehow compared against the current URU share price..??
Clive

Clive,take the KAH#s SP times the 27.68m/by URU's shsres in issue
(a rule of thumb,KAH times 0.235,so 2 = 47p)117.5m. Also the discount
for KAH against EXT was(sligjtly higjer now) 40% of the M/Cap, again/
by the number of their shares.
I will check out EXT's SP on the ASX.COM.AU in the morning prior to market opening here, before making any decision?

Here is a post by a Proactiveinvestor.co.uk Author with indepth knowledge
of the mining industry, regarding the KAH story??

Russians
Chinese
Indians...

...Rio
Areva
BHP
Cameco

Take your pick. All keen to secure future U supplies. All would love to own Rossing South or a stake in it. A little healthy competition should work wonders for the eventual outcome.

Areva & the Russians are talking in Namibia this month: http://www.miningweekly.com/article/russian-uranium-miner-armz-eyes-projects-with-cameco-2009-10-01

"ARMZ plans this month to hold talks in Namibia with French state-controlled nuclear reactor maker Areva on uranium projects in Africa, the Russian company's general director, Vadim Zhivov, said last month."


"Rossing major" is now THE prize U asset of the last 20 years:

- Enormous scale
- Good grades
- Easy to mine, opencast
- Mining-friendly jurisdiction

What more could anyone after U ask for? :0)))))))

Looking forward to next week,

Mark

cyril

EXT Trading at A$10.15 up over 9% on high volume.
cyril

EXT has dropped from a high of A$10.2 back to 9.8 with heavy volume,still
over 5% up on the day when the ASX is down.
cyril

Cyril,
I also hold PRL (Polo) who have 21.4m EXT shares (not far short of the URU holding) so I am hoping this goes up today.
Thanks for explaining the discount calculation of URU's EXT holding which on my cal's amount to nearly 50p per URU share (KAH207p x 27.7m shares held = 57.3m / 117.5m URU shares). This being so it seems most odd to me that URU are only priced at 38p which apart from the discount seems to totally ignore the other aspects of the URU business..??
I see today a Polo RNS about thier EXT holding which you no doubt already know of but just in case I copy a part below:
Monday 12 October 2009




Polo Resources Limited

("Polo" or "the Company")

Extract Resources announces a new zone of mineralisation at Rossing South

Polo Resources (PRL), the AIM listed mining company with uranium and coal interests in Africa, Australia, Europe and Asia, is pleased to report that Extract Resources Limited ('Extract'), in which Polo holds 21.4 million shares (ASX:EXT A$9.29/share*), has announced confirmation of a new zone of uranium at Rossing South.

Highlights:

*
A new zone of uranium mineralisation has been discovered on the western limb of the Rossing South antiform.
*
Zones 1 and 2 - Infill drilling continues to return high grade intersections.

Significant mineralisation has been encountered in 2 adjacent RC holes drilled on the western side of the dome structure of Zone 2. It is interpreted to dip shallowly to the west. A diamond drill hole (RDD082) is being drilled to confirm this orientation.


The core recovered so far shows that the banding and boundaries are at low angles to the core axis consistent with a shallow westerly dip; further, the hole has already intersected alaskite containing uranium mineralisation.

The mineralisation discovered to date at Zones 1 and 2 lies predominantly on the eastern limb of the Rossing South antiform.

Chemical assay results not previously reported from recent drilling at Rossing South include:


Neil Herbert, Managing Director of Polo Resources, said:

"Infill drilling on Zone 1 continues as Extract seeks to progress the resource base into the measured and indicated category. We believe a total resource base of 500 mlbs is achievable from targets already defined.


"Meanwhile, the Rossing South exploration programme has further extended the known mineralisation at the project and Extract has now confirmed the discovery of a new high grade zone. These results are very exciting and should add significant further value to the project which is already expected to become one of the world's largest uranium mines."

Happy days,
Clive

Good morning Clive, yes i also own PRL and have posted this am of their thread.Concerning URU,it seems that these type(nursery)accoubts are at a discount,although this is excessive.
If KAH is primed for a buy out, then URU 27.7m shares make it a possible target as a cheap way in?
cyril

Hi Cyril,
I have been trying to but some URU shares but the online broker that I use (Computershare) are unable to provide a firm quote and I never feel comfortable in leaving an order on a queuing basis - I sometimes feel that their commission price of 20 is a bit steep but against that I find their site ivery user friendly and they do upto T20 trades..??
First thing this morning they were offering at a bid price just below that currently on offer (38.5p) - in your experience is this share sometimes hard to trade or is it just the broker I use..??
Off topic I have been checking out AGLD (for my isa) and noticed your Feb comment on that board which has been very quiet since - are you no longer following this and what do you have views on their takeover bid for Solomons.
Clive.

Clive i use 2 brokers, Selftrade for a nominee12.5 +37.5/yearly charge which inckides an ISA and Jarvis for certicated nd trading at 19.5 as they do a T25 which i find very handy.Don't get yo much trouble with either.
I lost interest in AGLD don't know why(proably to many positions)so i cann't comment,will say my gold stock Is CEY which is ISABLE.
cyril

I use the halifax..11.95/trade

hsbc invest direct is 6.95 irrecpective of size of trade provided there is a minimum of i think 3 or 4 trades in a quater if fullfiled then each trade is 6.95 .find it good so far .
at one time they did not buy at the limit price they caught up with the mistake and gave me aprox 400 .
never thad that happen with anyone else .genuinely good recommend them .till now i buy and sell minimum 3-4 trades a day .

Thanks Cyril, BB and Chakli for advice on brokers.
I managed at last to place my URU buy (39p) so just hope that it proves successful (win some, lose some but don't lose sleep is my motto). Best wishes.

Clive no loss of sleep needed,at present Rossing 1 & 2 +Ida have 292mlbs
of high grade U. This works out less than US$7/lb,it's not unreasonable to expect almost a doubling of this figure(CEO has stated 500mlbs),so cheap
as chips imho as the take out $/lb expected at $10 which "could" mean upto 150p value(via EXT)to URU.Come year end we should have a far better picture of the resouce,which is less than 3 months away.
cyril

Some may see my last post as a ramp,for me it's more projected figures which are possible? Lets compare some conservative projects to add balence.

1 At present their 235m EXT shares after the recent placings.
2 The SP is A$9.65 which gives us a M/Cap of A$2267.75m
3 Convert to US$ for ease of calcs times 0.9044 = US$2050.95m
4 $2050.95/292 =$7.02/lb
5 7.02*500m=US$3511m
6 3511*0.4088 (KAH's share) =$1435.67m
7 1435.67*0.6345 =910.93m M/Cap of KAH
8 910.93/209 =4/36p
9 4.37*27,68m =120.m
0 120.4/117.5 = 1.025p
So i make 1.025 the projected figure at the present rate.
A little long winded i know,but it's how i work.
cyril
ps. They also have URA and Niger projects for extra value.

Hi Cyril, still holding, lurking in the background, keep your very informative posts coming please, Thanks.

Clive, I've been with the Share Center since 2005 with no real problems. can't comment on T20's and T25's etc. but can say this is a very undervalued stock and your purchase at 39p looks very safe to me, good luck.

An interesting article,

12 October 2009
The West Australian
TWAU
First
33
English
(c) 2009, West Australian Newspapers Limited

Good staff are hard to find at the best of times.

Spare a thought for Extract Resources, which has been on the hunt for a Namibian-based chief executive and a Perth-based managing director since June, when a long-running squabble with its biggest shareholder, Kalahari Minerals, cost Peter McIntyre the top job. Extract is understood to have tapped someone for the Namibian role an appointment is expected as early as this week.

The question of who will take on the Perth-based role remains unanswered, a month after Mr McIntyre officially stepped down and nearly four months since he flagged his intention to do so.

The task facing incoming management is not an easy one.

Extract has become something of a market darling over the past year, since Rio Tinto swooped to pick up a cornerstone stake. The subsequent corporate wrangling may have overshadowed the groups success in Namibia but its flagship Rossing South deposit is widely regarded as one of the best uranium deposits in the world.

Those credentials were reinforced on Friday when the company said it had discovered a zone of mineralisation on the projects western limb (previous mineralisation discovered at zones one and two is predominantly on the eastern limb of Rossing South). Extract is talking about a 500 million pounds resource, which would support a 15 million pounds of uranium a year operation.

But getting a new mine up and running is one thing, dealing with corporate politics quite another.

Not only will the groups new boss have to juggle the interests of Rio, Kalahari and Stephen Dattels Polo Resources, which between them control 65 per cent of the company, but they will almost certainly be faced with a takeover bid within the next 12 to 18 months

Rio is widely expected to make a bid, given its Rossing mine borders Extracts Rossing South deposit, but there has also been speculation it could face an approach from a third party.

Interested bidders are likely to want to move sooner rather than later. Extract shares are up 606 per cent this year alone, valuing the group at $2.2 billion.

A S Dattels choice no doubt?
cyril

Should hopefully see some movement today,EXT uo at A$10.01 on good volume highest this week.
cyril

Good morning Cyril, I have been trying to fully understand the whole ext-kah-uru-eml financial situation and politics and although I feel that I basically understand what is going on I still have a few things that I am not clear on and wonder if with your greater knowledge you can enlighten me:
1. In you posting of 20 feb you mention that "URU hold 27.68 million shares (16.6%) in Kalahari Minerals(KAH)" but I note that on the freesharedata site link that you give that UHL now shows as holding 13.2% of KAH..??
2. I note that Dattels is co exc chmn of EML and also on the EXT board but how does effect his control of the URU stake in KAH (thus EXT) as you mention - he is not shown as a URU board member..??
3. Why does URU only have an acting ceo and no chairman..??
4. On the freesharedata link EML shows a larger discount (42.5%) to "effective EXT hldg" than both URU (35.8%) and KAH (18.3%) - is there any reason for this difference especially that to KAH which is well under half..??
Regards, Clive

Hi Clive,
Q1 KAH has rasied funds via placings,so their 190k to 209k,hence the 27.68 is a smaller percentage.
Q2 SD is a major Canadian miner investor part of a group of who have cleaverly worked around the rules. Each a part of a larger picture,the RNS stated SD interest was via PRL.
Q3 I think if my memory serves me correct,he bridged a gap?
Q4 NoT so easy to explain, KAH is rhe main player by it's 40.88% holding,
URU is a secobdary holding(nursery)and will always trail KAH in value while the present sitution exists,buT at the end game the discounts should disappear? Sentiment is one reason for the difference in calues and can
giVe a buying opportunity on times.
cyril
PS for more info on SD and thr other CEO;s try goggle and another
site i use to check on news(old and new) is investegate.co.uk (note the "e")
cyril

Hi Cyril,
Thanks for info/explanations and I have checked out the 'investegate.co.uk' site that you mention (very useful) and see the RNS for the PRL holding in EXT (that you mention in Q2 above) which it gives it at 9.06%
This PRL holding when added to the KAH holding of 40.88% amounts to 49.94% and as such then the EML holding of EXT at 0.17% is crucial as it takes the total over 50% (50.11%) - I must admit that I found the small EML holding hard to comprehend but if my calculations are correct then it could be pivotal..??
What do you think..??
Regards, Clive.