Extract Resources Steps Up Talks With Prospective Partners

Extract Resources Ltd. (EXT.AU) said Monday it has stepped up discussions with potential investors and partners as the uranium prospector's directors search for superior proposals to a likely Chinese takeover bid.

The Australian company, which is developing a promising uranium deposit in Namibia that neighbors Rio Tinto PLC's (RIO) Rossing mine, said it also plans to continue discussions regarding debt financing for its Husab project and possible sales arrangements to underpin the development of a mine at the site.

A bid valuing Extract at about A$2.2 billion (US$2.3 billion) would be triggered if China Guangdong Nuclear Power Corp. and China-Africa Development Fund are successful in their planned takeover of Extract's largest shareholder, Kalahari Minerals PLC (KAH.LN). Kalahari's primary asset is its nearly 43% stake in Extract.

"Extract's independent directors are continuing to review all available opportunities to maximize shareholder value," the company said in a statement to the Australian securities exchange, adding it has received interest in its Husab project from a range of potential strategic investors.

It said in light of the proposed offer from the Chinese companies, discussions with other interested parties have accelerated in order to assess whether an alternative may be available.

Extract said it expects to update the resource estimate for Husab by the end of the second quarter. The project is set to be one of the world's largest uranium mines.

-By Robb M. Stewart, Dow Jones Newswires; [phone]; [e-mail]