October 10, 2011 / 8:51 PM / 8 years ago

RPT-UPDATE 3-China resumes talks to buy uranium miner Kalahari

(Repeats item first published Oct 10 with no change to text)

* Offer talks restarted after UK block lifted

* CGNPC no longer restricted from changing terms of offer

* Analysts say Rio Tinto may play key role

* Kalahari shares rise 2.7 pct, Extract shares close up 10 pct

By Julie Crust

LONDON, Oct 10 (Reuters) - A top Chinese nuclear power generator is back in talks to buy Kalahari Minerals , the biggest shareholder in one of the world’s largest uranium projects, as the commodity-hungry country steps up efforts to meet its growing energy needs.

Kalahari confirmed on Monday that discussions had restarted with state-owned China Guangdong Nuclear Power Corp (CGNPC), after a deal earlier this year fell through in the aftermath of the Fukushima disaster in Japan. It gave no detail on price.

A source familiar with situation told Reuters on Friday that CGNPC was set to relaunch its 270 pence a share offer, valuing Kalahari at about $1 billion, after a temporary ban imposed by UK regulators.

Shares in Kalahari were 2.7 percent higher at 252.75 pence at 1223 GMT on Monday, adding to the 7.2 percent gain on Friday.

Several analysts said CGNPC was expected to be successful in its attempt to secure control of Kalahari and access to a world-class uranium project at a time when major economies are scrambling for alternative sources of power.

However, much will hinge on the position taken by Rio Tinto , which holds about an 11 percent stake in Kalahari and 14 percent of its major asset, Extract Resources . Rio has long considered its options over Kalahari and Extract, but analysts said it was unlikely to pursue a hostile bid against the Chinese.

Rio, in which China’s Chinalco is the largest shareholder, is instead expected to use any agreement with CGNPC to carve out a deal that will extend the life of its depleted Rossing mine and resolve its cross-shareholdings in Kalahari and Extract.

Rio Tinto officials declined to comment. Rio is one of the world’s largest producers of uranium, responsible for about 16 percent of global supply.

Kalahari holds 43-percent of Extract, owner of the Husab project in Namibia, which is potentially the second-largest uranium mine in the world. Exploration work is continuing on the project, currently the world’s fourth-largest uranium-only deposit, with an updated resource estimate due next year.

Shares in Extract surged more than 10 percent on Monday in Australia on expectations CGNPC could be forced to make a bid for Extract under local takeover rules.

URANIUM NEEDS

CGNPC was in talks in March to buy Kalahari for 290 pence a share. In the days following the earthquake and nuclear disaster in Japan, the two companies agreed CGNPC could cut the price to 270 pence, but they failed to persuade UK regulators to allow them to lower the value.

As more than three months have elapsed since CGNPC withdrew its possible offer, it is no longer restricted from making an offer on the same or better terms, Kalahari said on Monday.

“We believe that CGNPC will ultimately be successful in acquiring Kalahari,” said analysts at Killik & Co. “The purchase of the asset by a Chinese state-backed company remains highly logical, given China remains the fastest growing market for uranium in the world.”

China is building 28 reactors, representing about 40 percent of the total global number under construction, Killik said.

Husab has an estimated resource of 488 million pounds of uranium oxide, reserves of 320 million pounds, and is expected to produce about 15 million pounds a year.

Analysts have said that despite the short-term market impact of Fukushima, the long-term uranium market fundamentals are sound with growing demand for new nuclear power reactors.

Husab has an estimated resource of 488 million pounds of uranium oxide, reserves of 320 million pounds, and is expected to produce about 15 million pounds a year.

Extract said on Sept 2 that it is in advanced financing talks to develop Husab. It is waiting for the mining licence to be granted before it releases a detailed project timeline. ($1 = 0.640 British Pounds) ($1 = 1.016 Australian Dollars) (Additional reporting by Clara Ferreira-Marques; Editing by Helen Massy-Beresford and Hans-Juergen Peters)

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