Reuters reported that a top Chinese nuclear power generator is back in talks to buy Kalahari Minerals, the biggest shareholder in one of the world's largest uranium projects as the commodity hungry country steps up efforts to meet its growing energy needs.
Kalahari confirmed that discussions had restarted with state owned China Guangdong Nuclear Power Corporation after a deal earlier this year fell through in the aftermath of the Fukushima disaster in Japan. It gave no detail on price.
A source familiar with situation said that CGNPC was set to relaunch its 270 pence a share offer, valuing Kalahari at about USD 1 billion after a temporary ban imposed by UK regulators.
Several analysts said that CGNPC was expected to be successful in its attempt to secure control of Kalahari and access to a world class uranium project at a time when major economies are scrambling for alternative sources of power.
However, much will hinge on the position taken by Rio Tinto which holds about an 11% stake in Kalahari and 14% of its major asset, Extract Resources. Rio has long considered its options over Kalahari and Extract but analysts said it was unlikely to pursue a hostile bid against the Chinese.
Rio, in which China's Chinalco is the largest shareholder is instead expected to use any agreement with CGNPC to carve out a deal that will extend the life of its depleted Rossing mine and resolve its cross shareholdings in Kalahari and Extract.
Kalahari holds 43% of Extract, owner of the Husab project in Namibia which is potentially the second-largest uranium mine in the world. Exploration work is continuing on the project, currently the world's fourth largest uranium only deposit with an updated resource estimate due next year.
CGNPC was in talks in March to buy Kalahari for 290 pence a share. In the days following the earthquake and nuclear disaster in Japan, the two companies agreed CGNPC could cut the price to 270 pence but they failed to persuade UK regulators to allow them to lower the value.
Kalahari said that as more than three months have elapsed since CGNPC withdrew its possible offer, it is no longer restricted from making an offer on the same or better terms.
Analysts at Killik & Company said that we believe that CGNPC will ultimately be successful in acquiring Kalahari. The purchase of the asset by a Chinese state backed company remains highly logical, given China remains the fastest growing market for uranium in the world.
Analysts have said that despite the short-term market impact of Fukushima, the long term uranium market fundamentals are sound with growing demand for new nuclear power reactors. Husab has an estimated resource of 488 million pounds of uranium oxide, reserves of 320 million pounds and is expected to produce about 15 million pounds a year.
(Sourced from Reuters)
