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« Kevin Shaw: Horizontal Drilling an Oil & Gas Game-Changer | Main | Chen Lin: Leverage Surging Oil Demand »

Extract Resources Limited Up 7.99% in early trading

EXT Chart 08 March 2011.JPG

A quick look behind the scenes and we have hot of the press the news off a Cash Offer for Kalahari Minerals as follows:

The CGNPC-URC Board and the Kalahari Board are pleased to announce that they are in discussions regarding a possible recommended cash offer by CGNPC-URC or a subsidiary undertaking of CGNPC-URC for the entire issued and to be issued share capital of Kalahari (the “Possible Offer”).

CGNPC-URC, a state-owned enterprise in the PRC, has established strong relationships with domestic and overseas manufacturers and suppliers of natural uranium.  An acquisition of Kalahari is therefore in line with its ongoing strategy to support development of important new sources of natural uranium supply.

The Possible Offer will comprise 290 pence in cash for each Kalahari Share (the “Offer Price”), valuing Kalahari's fully diluted share capital, including shares attributable to the Options and Convertible Loan Notes, at approximately £756 million.

The Possible Offer is at an attractive price and represents a premium of approximately:

11 per cent to the Closing Price of 260.25 pence per Kalahari Share on 4 March 2011, being the latest practicable Business Day prior to the commencement of the Offer Period;

21 per cent to the Closing Price of 239.75 pence per Kalahari Share on 18 February 2011, being the latest practicable Business Day prior to the announcement by Extract Resources Ltd (“Extract”) (in which Kalahari has a 42.79 per cent shareholding) that it was in discussions regarding a potential combination of Extract's Husab Uranium Project and Rio Tinto's Rössing Uranium Mine; and 38 per cent to the average Closing Price of 209.7 pence per Kalahari Share for the six months prior to and including 4 March 2011, being the latest practicable Business Day prior to the commencement of the Offer Period.

The Possible Offer is subject to a number of Pre-Conditions including certain regulatory clearances from the authorities in China and Australia as well as finalising the financing to the standards required by the City Code. CGNPC-URC reserves the right to waive any of the Pre-Conditions and, with the consent of the Panel, make any Pre-Condition set out in this announcement a condition to any formal offer. 

CGNPC-URC intends to engage with the Australian Securities and Investments Commission (“ASIC”) prior to any Rule 2.5 Announcement, to confirm that any offer under Rule 2.5 of the City Code is in compliance with the Australian Corporations Act.  CGNPC-URC will seek relief from ASIC to acquire a relevant interest in more than 20 per cent of Extract on a basis agreed between CGNPC-URC and ASIC.

The Kalahari Board has indicated to the CGNPC-URC Board that should a firm intention to make an offer under Rule 2.5 of the City Code be made on the terms of the Possible Offer, the Kalahari Board intends to recommend that Kalahari’s shareholders accept such offer. 
To demonstrate their commitment to the Possible Offer, CGNPC-URC and Kalahari have entered into the Implementation Agreement providing certain assurances and confirmations between the parties, including mutual break fees.

CGNPC-URC has received irrevocable undertakings from each member of the Kalahari Board (other than Takashi Yasuda who does not own any shares) to accept the Possible Offer upon it being made, subject to there being no Superior Proposal representing an improvement of 5.0 per cent to the value of the consideration under the Possible Offer, in respect of their entire holdings of Kalahari Shares including an offer for their Options (being, in aggregate 19,549,006 Kalahari Shares which represent approximately 7.3 per cent of the fully diluted share capital of Kalahari

Kalahari Minerals plc
Kalahari Minerals plc is an AIM and NSX listed resource company with uranium, gold, copper and other base metal interests in Namibia.
The Company’s key value drivers are its holding of approximately 40% in ASX, TSX and NSX listed Extract Resources Limited and its circa 45% interest in AIM listed North River Resources plc.

Extract Resources
Extract Resources Limited’s main asset is the Husab Uranium Project, located approximately 45km north-east of Namibia’s main port - Walvis Bay, which has a current resource of 367Mlb, establishing it as the fifth largest global uranium deposit.

Consistently high assay results have identified the Husab project as the largest in-situ and highest grade granite-hosted uranium deposit in Namibia, with a current JORC compliant Measured and Indicated Resource for Zones 1 & 2 of 257 Mlbs at a grade of 480 ppm U3O8 and an JORC compliant Inferred Resource of 110.3Mlb at a grade of 400 ppm from Zones 1,2,3 and 4.
With further drilling scheduled on newly delineated areas, the Board of Kalahari is confident that Extract’s resource base will continue to grow, providing Extract with the ground and cover to support multiple mining operations.

Guess its a case of watch this space but the news is certainly good for Extracts stock price.

Extract Resources Limited trades on the ASX and TSX under the symbol of EXT giving it exposure to both the southern and northern hemispheres.

PS: Just in case you missed it we have just closed an option play on with an average profit of 96.5% on Silver Wheaton Call Options. Click here to read more.

Many thanks to those of you who have recently signed up for options trading service, its very much appreciated. Please be patient as we have a number of new trades on the drawing board and as you are aware the timing of them is critical to their success.

We now have 65 winners out of 67 options trades, or a 97.00% success rate If you have any questions regarding these trades please address them through their site where they will be handled quickly and I hope efficiently.

sk chart 19 Feb 2011.JPG

The above progress chart is being updated constantly. However, to see exactly how it is going, please click this link.

So, the question is: Are you going to make the decision to join us today, before we decide to cap membership.

Stay on your toes and have a good one.

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Reader Comments (2)

I have repeatedly said in this column that Kalahari was a buy , although I think Management is underselling at this price if it goes through.

March 8, 2011 | Unregistered Commenteruranium bug

The ARMZ bid for Mantra values U3O8 in the ground at north of $7 a pound. With current e4xploration progress, Extract will soon declare JORC resources of over 500m lbs. That makes for a $3,500 value.

Kalahari has 42%. Therefore Kalahari is worth $1,470m. The Chinese sighting shot preliminary offer is for £756m. That's ca $1,220m. Other shareholders will not concur with the board that this is an attractive offer. Certainly I don't. If consumated it would be selling the company short.

The above approximate valuation is constructed on just the bald facts. Securing Kalahari is a neat way into Extract. The prize of securing one of the world's largest key strategic uranium deposits in a favourable jurisdiction is worth a considerable premium. And Rio Tinto for one should pay it. So should Cameco. Plus numerous governmental agencies across the nuclear-powered world.

March 8, 2011 | Unregistered CommenterRobert Wallace

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