Political Uncertainty in Namibia

For those of you who own shares in Extract resources Limited (ASZ:EXT) or Kalahari minerals (LON:KAH) you are no doubt keeping a close on the political situation in Namibia where legislation maybe a foot to deliver some more of the countries mineral wealth back its own citizens.

This is an excerpt from Uranium Investing News by Dave brown:



Following a headline story that has been developing since last month, the world’s fourth-largest uranium producing country is consideringlegislative changes to ensure its citizens receive more benefit from the southern African nation’s mineral wealth.

In a press statement to Extract Resources Limited (ASX:EXT), The Chamber of Mines of Namibia outlines the Chamber’s position with respect to statements made by the Namibian Mines and Energy Minister, Isak Katali, on April 20, regarding the potential involvement of state-owned mining company Epangelo (Pty) Ltd in strategic minerals in Namibia. The statement provides assurance that the new policy will not apply to current licenses, exclusive prospecting licenses or current mineral deposit retention licenses.

In the release the Chamber states it “is acutely aware of the impact that such uncertainty has on the global investment community’s excellent regard for Namibia as an investment destination. Given that foreign funds are the major source of investment in exploration and mining in Namibia the Chamber pledges to work with the Minister of Mines to ensure that the mining industry continues to play its critical role in the socio-economic developments of Namibia.”

Context

The economy in Namibia is heavily dependent on the extraction and processing of minerals for export revenue. Although mining accounts for 8 percent of GDP, it provides more than 50 percent of foreign exchange earnings. As well as being a global uranium producer, rich alluvial diamond deposits make the country a primary source for gem-quality diamonds. It also produces large quantities of zinc and is a small producer of gold and other minerals like copper. Namibia has two significant uranium mines capable of providing 10 percent of world mining output with its first commercial uranium mine beginning operating in 1976.

Objectives

Extract is aiming to develop the world’s third-largest uranium mine, and is “confident” its project in Namibia will continue even as the government proposes to give all mining permits to a state-owned company. The Perth-based company released a written announcement to the Australian Stock Exchange, “Extract continues to have regular and positive consultation with the Government of Namibia.”

As 43 percent owner of Extract Resource Limited, Kalahari Minerals (LON:KAH), chairman Mark Hohnen echoed the confident sentiments of regarding the continued progress of the Husab uranium Project. Mr. Hohnen said: “Extract, together with the board of Kalahari, maintains a strong relationship with the government of the Republic of Namibia, and have kept an active and open dialogue with the appropriate ministers and officials throughout our five years of operation in the country.”

The boards of Kalahari and Extract understand the importance of progressing development of Husab for the benefit of all stakeholders, and in turn, the Government of the Republic of Namibia has maintained its support of this process, demonstrated most recently by the extension of EPL 3138, which covers the Husab project area, for a further two-year period to April 30 2013. The market has not responded well to the news as Extract Resources share prices declined over 25 percent over two days before trading was halted at $6.68 and Kalahari Minerals continues to trade down about 8.1 percent in the 225.03 pound range.

To read the article in full please click this link.



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