Extract Resources Awaits Bid From Chinese Suitors

Trading in Australia's Extract Resources Ltd. (EXT.AU) has been halted Friday while the company, which owns one of the world's biggest deposits of uranium, awaits a likely bid from China Guangdong Nuclear Power Corp. that would value it at almost A$2.2 billion (US$2.4 billion).

The Australian bourse said trading will be suspended until either Tuesday or an announcement is released to the market.

The halt was requested by Extract "in anticipation of an announcement from Taurus," the bid vehicle of China Guangdong and China-Africa Development Fund, the mining company said.

The Chinese nuclear fuels supplier and its partner have bid GBP632 million (US$999 million) for London-listed Kalahari Minerals PLC (KAH.LN), whose main asset is a nearly 43% interest in Extract. The Chinese companies have said they would abide by Australian takeover rules, which require the bid to be extended to Extract's shareholders within four weeks of them securing more than 50% of parent Kalahari.

At stake is Extract's Husab uranium project in Namibia, which promises to become one the world's largest uranium mines and neighbors Rio Tinto PLC's (RIO) operating Rossing uranium mine. Mining and power companies are seeking out uranium supplies to meet an expected rise in demand from China, India and other countries with plans to build fleets of nuclear power stations.

China Guangdong's and CAD Fund's offer for Kalahari of 243.55 pence in cash was due to close Thursday. Rio earlier this week said it would sell its roughly 11.1% stake in Kalahari to the Chinese companies, and would in time consider what to do with an about 14.2% stake in Extract.

Rio and Extract a year ago said they had discussed a possible combination of Rossing mine and Husab project. Extract more recently said its board would only give its recommendation on the pending takeover offer after the bid is made, and in the meantime was continuing to look for alternatives and was negotiating with potential investors in Husab.

China Guangdong and CAD Fund have said they plan to offer A$8.65 a share for Extract, dependent on their acquiring a more than 50% stake in Kalahari.

Extract's shares last traded at A$8.57, giving it a market capitalization of A$2.15 billion.

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