Bid to secure uranium supply
0 
China Guangdong Nuclear Power Holding Corp has proposed a 756-million-pound (US$1.23 billion) offer for Kalahari Minerals to secure uranium supply as China expands its reactor fleet quickly.
Kalahari owns 43 percent of Australia's Extract Resources Ltd, which is developing the Husab uranium project in Namibia that Extract bills as the world's fifth-largest uranium-only deposit.
CGNPC-URC, a wholly-owned unit of China Guangdong Nuclear, made a "possible offer" of 290 pence a share, which represents a 11 percent premium to Kalahari's closing price last Friday, the London-listed company said on Monday.
But the deal could face challenges from Rio Tinto, which has stakes in both Kalahari and Extract. Rio has long been seen as a suitor for Extract as Rio's Rossing uranium mine is near the Husab project. Last month, Extract said it was discussing a potential combination of Husab and Rio's Rossing mine.
Although it is not certain that a formal offer will be made, Kalahari said it's prepared to recommend the proposal to its shareholders.
"The Kalahari board believes this represents attractive value for Kalahari shareholders," said Mark Hohnen, executive chairman of Kalahari.
CGNPC-URC is pleased with the support from Kalahari "as we believe this highlights both the attractive value of the possible offer and CGNPC-URC's status as an excellent partner for the future development of the Husab uranium project," said Yu Zhiping, managing director of the Chinese firm.
Extract, meanwhile, has also recommended its shareholders take "no action" and await advice from the board, which will consider the implications of the Chinese bid.
Construction of 40 gigawatts of new nuclear capacity will take place between 2011 and 2015 in China, whose installed nuclear capacity totaled 10.8GW in 2010 and will rise to 11.74GW by the end of this year.
