UPDATE: Japanese Companies Eye Namibian Uranium Deposit

Extract Resources Ltd. (EXT.AU) said Thursday that a recent investment in the company by Itochu Corp. (ITOCY) has spurred significant interest from other Japanese entities in its Husab uranium prospect in Namibia.

One of the world's largest undeveloped uranium deposits, Husab is just six kilometers away from the massive Rio Tinto Ltd.-operated (RTP) Rossing uranium mine. It was originally called Rossing South but Extract has changed its name to Husab to avoid confusion.

Japan generates about a third of its electricity from nuclear power and other countries including the U.S. are turning to the energy source to reduce fossil fuel consumption.

China is undertaking a massive expansion in nuclear power, expanding its current nine gigawatts of nuclear capacity from 11 reactors to 70-80 GW by 2020 and 200 GW by 2030.

Extract, which counts Rio Tinto as a 15% shareholder, last year hired Rothschild to conduct a strategic review of its business. Options include building a stand-alone mine, forming a joint venture with the Rossing mine or bringing in more strategic investors.

The Perth-based company said Thursday that its base-case remains to develop Rossing South as a stand-alone project.

Still, it said it continues to hold discussions with external parties, with a number of groups continuing to show interest in the project.

A 10.3% investment in Extract by Itochu has led to "significant interest from other Japanese institutions" and some have visited the project, Extract Chief Executive Jonathan Leslie said in speech notes prepared for the company's annual shareholder meeting.

Japan's Foreign Affairs Secretary Osamu Fujimora has also visited the southern African nation and met Namibia's prime minister, Leslie said. "Good relationships are in place and we continue to enjoy the government's support for this project," he added.

Concerns the Namibian government could wrest control of the project from Extract have weighed on its share price but the company has consistently played down those fears.

It said a project feasibility study for a stand-alone development is now due in the first quarter of 2011, back from its previous guidance of the end of 2010. "Our target for plant commissioning is the first quarter of 2014," Leslie said.

-By Ross Kelly, Dow Jones Newswires; 61-2-8272-4692; [e-mail]