{"id":227,"date":"2009-10-16T14:26:46","date_gmt":"2009-10-16T03:26:46","guid":{"rendered":"http:\/\/www.australianuranium.com.au\/blog\/?p=227"},"modified":"2009-10-16T14:26:46","modified_gmt":"2009-10-16T03:26:46","slug":"extract-inundated-by-potential-uranium","status":"publish","type":"post","link":"https:\/\/www.australianuranium.com.au\/blog\/extract-inundated-by-potential-uranium\/","title":{"rendered":"Extract \u2018Inundated\u2019 by Potential Uranium Partners 15m pounds per annum potential"},"content":{"rendered":"

Extract \u2018Inundated\u2019 by Potential Uranium<\/b> Partners (Update1)<\/p>\n

By James Paton<\/p>\n

Oct. 16 (Bloomberg) — Extract Resources Ltd., a uranium explorer whose shares have surged almost eightfold in Australia this year, said it has been \u201cinundated with requests\u201d from companies proposing to join or take over its Namibian project.<\/p>\n

\u201cWe\u2019re looking at options to see whether one of the big players would want to come in on a strategic partnership level,\u201d Chairman Steve Galloway said in an Oct. 13 telephone interview from Namibia. Extract is being advised by Rothschild, the largest family owned bank, and may ask shareholders in November to consider proposals to bring its Rossing South mine to production, he said. He didn\u2019t name any potential partners.<\/p>\n

Extract, 15 percent owned by Rio Tinto Group, has gained more this year than any other stock in Australia\u2019s S&P\/ASX 200 Energy Index as investors bet countries will turn increasingly to nuclear power, using fuel derived from uranium, in response to climate change. Drilling at Rossing South suggests it could become one of the world\u2019s largest uranium mines, Galloway said.<\/p>\n

Investors \u201care jostling for a piece of the action,\u201d said Gavin Wendt<\/strong>, an independent resources analyst who has followed Extract for three years and met with executives from the explorer in the southwest African country about two months ago. A joint venture, possibly with Rio, may be the most likely scenario, he said, adding that the stock\u2019s \u201cremarkable ride\u201d has driven up the potential acquisition cost.<\/p>\n

Extract Resources has told suitors \u201cwe\u2019re not for sale,\u201d Galloway said. Rio Tinto doesn\u2019t comment \u201con market rumors or speculation,\u201d Tony Shaffer, a spokesman for the company, said by phone from Melbourne yesterday.<\/p>\n

Shares Rise<\/strong><\/p>\n

The stock gained 0.6 percent to A$10.06 at 12:50 p.m. in Sydney, valuing the company at almost A$2.4 billion ($2.2 billion), compared with about A$311 million at the end of 2008.<\/p>\n

Extract said Oct. 9 it found new high-grade mineralization at Rossing South and estimated the total uranium resource could reach 500 million pounds. The deposit is about 7 kilometers (4.4 miles) from Rio Tinto\u2019s Rossing mine and approximately 30 kilometers from Paladin Energy Ltd.\u2019s Langer Heinrich project.<\/p>\n

\u201cWe keep finding better and better resources,\u201d <\/strong>said Galloway, a former mineral economist with the Namibian government. \u201cWe haven\u2019t seen bad news yet.\u201d<\/p>\n

Gavin van der Wath, an analyst BBY Ltd. in Sydney who has a \u201chold\u201d rating on Extract, said A$10 is a fair value for the stock.<\/p>\n

Economies of Scale<\/p>\n

\u201cA larger resource would enable them to increase their yearly production, which would have economies of scale, and would in turn increase the valuation,\u201d Van der Wath said by telephone today. \u201cBut at this point in time, no.\u201d<\/p>\n

Extract today named Norman Green head of the unit that will develop Rossing South, a statement to the Australian stock exchange shows. Extract expects to replace Managing Director Peter McIntyre, who stepped down in September, by early next year, Galloway said.<\/p>\n

The Perth-based explorer may sell more than $700 million in shares and debt in 2011 to bring the mine into production, Galloway said. That\u2019s in addition to A$91 million raised this year by selling equity.<\/p>\n

London-based Kalahari Minerals Plc, which owns about 41 percent of Extract, said Oct. 9 the project potentially could rival the world\u2019s biggest known uranium deposit at BHP Billiton Ltd.\u2019s Olympic Dam.<\/p>\n

Potential Risk<\/p>\n

While the target of 500 million pounds is \u201cachievable\u201d and would make the mine one of the world\u2019s biggest, the idea of the resource rivaling Olympic Dam isn\u2019t realistic, BBY\u2019s Van der Wath said. He estimates the size of the Olympic Dam deposit at more than 16 billion pounds.<\/p>\n

Rossing South may be able to produce more than 15 million pounds of uranium oxide a year, \u201ca huge amount,\u201d Galloway said.<\/b><\/p>\n

Galloway said a possible risk is that \u201ca lot of other uranium comes on stream,\u201d curbing gains in the price of the nuclear fuel. \u201cBut I think, over the long run, uranium will be a very profitable business.\u201d<\/p>\n

The uranium market will have a surplus next year for the first time in at least three years as producers increase output faster than demand rises, the London-based World Nuclear Association said Sept. 10.<\/p>\n

Uranium prices, which peaked at $136 a pound in 2007, rose 5.7 percent in a week to $46 a pound on Oct. 12, Ux Consulting Co. said Oct. 13.<\/p>\n

Extract expects favorable supply and demand conditions when Rossing South is projected to begin production in 2013, Galloway said. \u201cBy 2013, 2014 there will be a space for new uranium on the market.\u201d<\/p>\n

Some 440 commercial nuclear power reactors operate in 30 countries, with a further 30 under construction and another 90 planned, the World Nuclear Association said on its Web site.<\/p>\n

Galloway said Extract \u201cis at a crossroads\u201d as it explores partnership options and considers whether to expand beyond a single project in a single country. For now \u201cwe\u2019re trying to get on with developing the resource as fast as we can,\u201d he said.<\/p>\n

<\/p>\n

\"ext-rossing-ida\"<\/p>\n

To contact the reporter on this story: James Paton in Sydney jpaton4@bloomberg.net.<\/p>\n

http:\/\/www.bloomberg.com\/apps\/news?pid=20601085&sid=aM4_PpnX.gFE<\/a><\/p>\n

\"ext-pdn-rio1\"<\/p>\n","protected":false},"excerpt":{"rendered":"

Extract \u2018Inundated\u2019 by Potential Uranium Partners (Update1) By James Paton Oct. 16 (Bloomberg) — Extract Resources Ltd., a uranium explorer whose shares have surged almost eightfold in Australia this year, said it has been \u201cinundated with requests\u201d from companies proposing to join or take over its Namibian project. \u201cWe\u2019re looking at options to see whether … Continue reading “Extract \u2018Inundated\u2019 by Potential Uranium Partners 15m pounds per annum potential”<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[],"class_list":["post-227","post","type-post","status-publish","format-standard","hentry","category-uncategorized"],"_links":{"self":[{"href":"https:\/\/www.australianuranium.com.au\/blog\/wp-json\/wp\/v2\/posts\/227","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.australianuranium.com.au\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.australianuranium.com.au\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.australianuranium.com.au\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.australianuranium.com.au\/blog\/wp-json\/wp\/v2\/comments?post=227"}],"version-history":[{"count":0,"href":"https:\/\/www.australianuranium.com.au\/blog\/wp-json\/wp\/v2\/posts\/227\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.australianuranium.com.au\/blog\/wp-json\/wp\/v2\/media?parent=227"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.australianuranium.com.au\/blog\/wp-json\/wp\/v2\/categories?post=227"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.australianuranium.com.au\/blog\/wp-json\/wp\/v2\/tags?post=227"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}