Chinese move on uranium explorer

China wants new sources of uranium to help shore 
up resource security for the country. Photo / Thinkstock
China wants new sources of uranium to help shore up resource security for the country. Photo / Thinkstock

A Chinese nuclear company has moved a step closer to bidding for Australian uranium explorer Extract Resources but the target says it is still seeking alternative suitors.

State-owned China Guangdong Nuclear Power Group (CGNPC) is pursuing Extract because of its rights to the Husab uranium deposits in Namibia, reputedly the fourth-largest in the world.

Taurus Minerals - which is owned by CGNPC - has announced on the London Stock Exchange it had acceptances and pledges for 30.8 per cent of Extract's major shareholder, Kalahari Minerals.

Taurus said Kalahari Minerals had a 42.74 per cent holding in Extract Resources and that CGNPC had a relevant interest in Kalahari.

This follows Taurus' US$979 million takeover offer for Kalahari.

China wants new sources of uranium to help shore up resource security for the country.

The Australian Securities and Investments Commission (ASIC) said last month that under Australian law, CGNPC had to launch a takeover for Extract if it successfully acquired Kalahari.

A potential $2.2 billion offer would be at around $8.65 a share, according to Extract.

ASIC said that CGNPC would have to bid for Extract in less than four weeks if it acquired more than 50 per cent of Kalahari.

Extract said yesterday its board was still investigating alternatives that could maximise value for Extract shareholders.

"Extract's independent directors intend to make a recommendation in relation to the Taurus offer for Extract once such an offer is made," it said.

Rio Tinto is a possible rival as it operates the neighbouring Rossing uranium mine and owns 14 per cent of Extract, making it the second-biggest shareholder.

Separately, it also owns 11.5 per cent of Kalahari.

Rio has spoken to Extract about combining Rossing with Husab, which has 280 million tonnes of uranium reserves.

Namibia is the world's fourth-largest uranium producer.

Shares in Extract were up steady at $8.58 on yesterday compared with a flat performance by energy stocks.

- AAP

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