CGNPC pulls of uranium deal

11 May 2011

China Guangdong Nuclear Power Company’s Uranium Resources Co. Ltd. (CGNPC-URC) is to walk away from a $1.2 billion uranium deal with Kalahari Minerals, which has a near-43% interest in the Husab project in Namibia.

Just before the Fukushima crisis on 7 March, CGNPC-URC had offered 290 pence a share for Kalahari, valuing it at GBP756 million ($1.2 billion). It later tried to lower the offer of 270 pence per share. However, the UK Panel Executive, an independent body that supervises and regulates takeovers, confirmed 11 May, that for a three-month period CGNPC-URC is not permitted to announce a firm offer for Kalahari at less than 290 pence per share, even with the agreement of the board of Kalahari.

The Panel added in a statement that the initial takeover announcement did not include a clause allowing CGNPC to lower the bid price.

The Husab uranium project, located 5km south of the existing Rossing mine is being developed by Australian company Extract Resources Ltd. Kalahari Minerals PLC owns 42.79% of Extract Resources. In August 2010 Extract Resources announced indicated resources of 141,000 tU averaging about 0.05%U, which puts Husab as the 5th largest uranium deposit in the world.

Extract Resources says that exploration at the Husab project is continuing apace, with up to 6 rigs on site during 2011. Half of drilling will focus on infill drilling to bring previously defined indicated resources to measured status. The aim is to define approximately 75 million tones of measured resources that will be available for conversion to proven reserves. This will equate to five years of production once plant reaches nameplate capacity.


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