Kalahari Minerals Share Discussion Threads

[gero67] 24/3/2011 14:27

Efforts to trim Extract bid may come to nil

Australian Financial Review
PRINT EDITION: 25 Mar 2011
Street Talk
Edited by Paul Garvey and Khia Mercer

Supporters of uranium play Extract Resources have found reason to hope that a cut to the takeover bid price proposed by China Guangdong Nuclear Power may not be the lay-down misere it appears to be.

China Guangdong has indicated it could look to trim back its offer for Extract's 47 per cent shareholder Kalahari Minerals, citing the changed outlook for the uranium sector on the back of Japan's nuclear issues.

Judging by Extract's share price since the Japan disaster, the market appears to have been betting China Guangdong will follow the lead set by Russia's ARMZ, which earlier this week used the Japanese crisis and falling uranium prices to trim more than

12 per cent from its bid for uranium play Mantra Resources.

The nervousness over the China Guangdong offer has been reflected in the fact Extract has been trading at around $8.25 a share, still well short of the $10.75 see-through price indicated by the Chinese group's existing offer for Kalahari.

Despite overtures from China Guangdong that it could trim its bid, Extract supporters are believed to be taking heart from regulations in Britain - where Kalahari is listed - which are understood to prevent a reduction in an offer price, even if it is only a proposed bid.

It would appear that the only way for China Guangdong to lower its price would be to drop the takeover bid altogether, in which case it would be barred from returning with another offer for three months.

The Chinese may well be reluctant to embark on such a course of action, given any such move would leave the door open for Rio Tinto to finally consummate its long-awaited deal to incorporate Extract's Namibian deposit into Rio's neighbouring Rossing mine.

Given the advanced stage discussions between Extract and Rio had already reached prior to the China Guangdong offer, a three-month delay could be more than enough for Rio Tinto to move in and lock Extract Resources away for itself.

[gero67] 24/3/2011 07:15

Hi All

Globalxfund Uranium EFT has continued to increased its holdings in both EXT an KAH by another ~16% since Friday 18th March.



On the 18/03 their Uranium EFT held 1,368,748 and 2,257,963 in EXT and KAH respectively.

As of the 23/03 their holdings had increased to 1,593,148 and 2,627,563 respectively.

This makes a total increase of ~44% in both EXT and KAH since Friday 11th March.

The combined EXT and KAH holdings represent ~9.5% of the funds net asset value.

This is the funds 3rd largest holding behind Cameco (19.74%) and Uranium One (14.47%).

Regards

Steve

[gnevans] 23/3/2011 20:44

U308 price $60 and rising..

[extrader] 23/3/2011 16:28

Hi all,

In the bigger scheme of things, if the Chinese stick with gbp 2-90, they've got :
- no breakage fee issues (see above);
- the BoD still on the hook;
- quite a lot of grateful PI's/institutions;
- an asset that hasn't got round to issuing a substantial resource upgrade that is widely understood to be on the way.

I reckon they'll talk a lot about the need to review blah blah and then leave everyone to take up the existing offer....knowing that counterbidders (? French ? Japanese ? Russian ? South Korean ?) all have either electorates or alternatives that make a material improvement inadvisable or unnecessary.

Let's see what happens....

ATB

[gero67] 23/3/2011 15:34

Tigers Realm goes on the prowl

Australian Financial Review
Street Talk
PRINT EDITION: 24 Mar 2011

Quote

"Rio has promised to lift its offer for Riversdale from $16 to $16.50 a share if it holds more than 50 per cent of the company by next Monday. Rio currently holds a 35.9 per cent interest. Beyond Riversdale, Rio is keeping an eye on the situation at uranium play Extract Resources."

[gnevans] 23/3/2011 13:36

To reiterate my post of this morning. Granted the info is from a third party however my source trusts him.

The Chinese would not walk away because of the break fee. I know it's only £7.5m but it would be a huge loss of face ( as well as no doubt jobs).

They will no doubt try to renegotiate, however if they do push this and Kah say no, Kah can restart talks with the shadowy third party and keep the fee( probably Rio).

I think the dfs update at teh end of q1 might help!

I personally will buy more at 220p (the only issue is my other major share is BAO)

[tebbin] 23/3/2011 13:17

I trust the KAH BOD tell them where to take their reassessment...We have been informed in the past that the world is queueing to be a part of EXT's future mine...

[kinbasket] 23/3/2011 13:04

So, some guy from China inc who isn't authorised to speak on behalf of the company has said they are reassessing the bid. There's a surprise. Of course they are reassessing the bid, who wouldn't be in light of recent events. After their reassessment they'll probably decide it's a good idea to proceed as planned.

I would be more surprised if they weren't reassessing their options. However, I don't think they have very many. It's a risky game of brinkmanship to lower the offer. RIO and anyone else interested (and apparently their are plenty of interested parties) now know that 290p is enough for Kalahari's board. If China lowers the bid the others know they can step in and bid at 290p. The Chinese also know if they do go lower and get outbid they will be missing out on a big opportunity to buy future supply essentially on the cheap. Because 290p is cheap. So if they really want it and try to go lower and get outbid they will have to come back higher and pay more then 290p. In that environment, will they want to risk lowering the bid? I think that may be a chance they aren't willing to take. If they really want Husab, they can't afford to risk it.

[martylangan] 23/3/2011 11:31

Likelyhood is they wont walk away from a bid. Nuclear is still, and will be an integral part of the energy future for China.
The Russians reduced their bid in the midst of the panic. Things have calmed down a lot since then...

[gnevans] 23/3/2011 11:22

yes I believe they do.. see my previuos post as to why they won't walk. They will try to renegotiate, and are unlikelly to get very far, see U308's recovery. add in the resource update...

[zangdook] 23/3/2011 11:10

Do the Chinese have to pay the break fee if they make an offer lower than 290p? I would guess so, as otherwise they could just offer 1p and walk away if they changed their minds.

[gnevans] 23/3/2011 11:08

surely the resource upgrade will avoid any renegotiation, remember there was a third party in discussions that were terminated as a result of this offer?

[bene449] 23/3/2011 10:56

The Chinese may try their luck and drop the price by 10p to 20p. It is still well above the current price, and should give a spike when it is announced.

[martylangan] 23/3/2011 10:04

If they renegotiate the deal, i think id rather merge with EXT, list on the FTSE then have a joint venture with Rio.

[nielsc] 23/3/2011 09:56

CGNPC trying to get a even better bargain. I hope KAH board tell them to pay up or move on.

Cheers,
Niels

[bene449] 23/3/2011 09:43

there it goes again. Big fall and lots of small buyers come in. Obviously, someone is selling ata low price.

[krakow] 23/3/2011 09:43

Smacks of manipulation, this.

[nielsc] 23/3/2011 09:43

Got some at -15p this time on IG index. Looks like a bit of shaking going on.

Cheers,
Niels

[pete_bain] 23/3/2011 09:41

doooo dooo dooo the Kalahari shake dooo dooo dooo the kalahari shake

definitely MM activity here just ignore it guys

[bene449] 23/3/2011 09:31

Hi Niels,

Seems easy money. Maybe the MMs dropped the price to trigger off some sells. Seems to have almost recovered now.

[nielsc] 23/3/2011 09:22

Desperately trying to buy at that 14p drop on IG, but only got them -4p down. Wonder what caused that?

Bit bemused as to why KAH aren't up around 290p. Does the market really think the nuclear incident in Japan is going to scupper the deal or a lower offer being made. 290p is cheap.

Cheers,
Niels

[bene449] 23/3/2011 09:20

strange price action last few minutes. Price took a dive but now recovering.

[tebbin] 23/3/2011 09:04

gnevans....

The differculty of walking away from the deal for CGNPC is, they would be out in the cold when the the off take deals are made......

The situation in Japan should be a trigger for a greater renaissance than has taken place so far...

This week in The Guardian..A reporter (who had occupied the Green Lobby previous) stated (my words)....."In Japan a clapped out Nuclear Power Station badly sited...had withstood a 9.0 earthquake and a one of the largest tsunami waves without any loss of life or major leak of radiation. No other power source would have done this....What would be the fate of the land or sea sited wind machines or tidal equipment in this situation ? or other types of power resources?"

The Chinese and other governments will be pushing on with their nuclear power programmes and be on the outlook for uranium supplies......