Kalahari Minerals equity stake in Extract Resources looking better by the day

Gone are the days of questioning whether Extract Resources (TSX/ASX: EXT) it sitting on a world class uranium deposit in Namibia. Attention has now shifted to two more pertinent questions: Just how big is the deposit, and who will ultimately put it into production? Both of those questions are still the subject of considerable debate in the investment community.

Kalahari Minerals (AIM: KAH), which owns 40.44% of Extract, has watched with increasing pleasure as the company continues to pump out incredible drill results.   It isn’t just the sheer size of the project that impresses, but the grades being reported of late have been well in excess of the typical grades found in Namibia, the world’s fifth largest uranium producer.

Today Extract Resources released more bumper drill results, including 146 meters grading 663 ppm and 21 meters grading 2003 ppm in Zone 1, while in Zone 2, it reported an astonishing 129 meters grading 1415 ppm.

Kalahari’s Executive Chairman, Mark Hohnen said the results were “truly stunning” - it is hard to disagree.

Extract now has fifteen rigs drilling away at Rossing South, with more rigs on route. To date, Extract has completed 249,810 meters of drilling Rossing South, with the bulk of it targeted at Zones 1 and 2. 


 A pre-feasibility report is due to be released in June, which will certainly be one of the more interesting press releases to hit the entire uranium sector this year.   Kalahari reckons the report will consider a mine that will run at a rate of more than 15 million tonnes per annum “to support one of the world's largest uranium mines."  Kalahari has never been afraid to air its views on the potential of the project, and reiterated today that it expected the resource target of 550 million pounds of uranium to be “easily achieved”. 

Extract’s flagship project, Rossing South, as the name suggests, is situated directly south of the Rio Tinto (LSE: RIO) Rossing Mine, one of the longest running uranium mines in the world.  Rio Tinto has been watching Extract Resources progress with great interest, so much so, that it has built up a sizeable position in the company both directly (14.72% stake) and indirectly through Kalahari Minerals (13.48% stake).   Polo Resources (AIM: PRL) has also built up stakes in both companies, but this week Niger Uranium, another AIM listed uranium minnow, confirmed that it had sold a chunk of its stake in Kalahari, reducing its interest from 13.24% to 6.54%.

Who bought the stock has yet to be disclosed…