Kalahari Minerals reveals upgrade at Husab - 4th largest uranium deposit in world

Kalahari Minerals (LON:KAH) confirmed that the Husab project in Namibia is the fourth largest uranium deposit in the world after revealing an increase in its total resource.

The AIM-listed company is a major stakeholder in the project through its 42.76 percent stake in Extract Resources (ASX:EXT, TSX:EXT), which has published a significant rise from ongoing drilling.

The Husab data, revealed today, includes an impressive 33 percent upgrade in the total resource figure to more than 500 million pounds of U308 (uranium) and a maiden measured resource in zones 1 and 2 of 84 million pounds of U308.

The upgrade is across zones 1-5 at Husab and follows the drilling of 1,725 holes.

Kalahari's executive chairman Mark Hohnen said the upgrade underlined the project's significance.

"This, in tandem with the recent publication of the definitive feasibility study (DFS), the project's multi zone potential, grade continuity, depth and access, all point to Husab being the most exciting undeveloped uranium deposit in the world."

He added: "The globally strategic nature of the assets, its projected development into a long life mine mean Husab will become the
largest producer of uranium in Namibia, and one of the three largest producers in the world."

Extract's CEO and managing director Jonathan Leslie said his company had defined resources of more than 500 million pounds of U3O8 at Husab from zones 1 - 5 and the Ida Dome deposits.

"We expect that the resource base will continue to increase with continued drilling of known deposits and new discoveries. In particular we look forward to the results of further drilling at the Middle Dome, Pizzaro and Salem prospects to the south of zones 1 and 2," he said.

Extract also revealed a 39 percent increase in the measured and indicated resources for zone 1 and 2 to 358 million pounds U3O8 compared to the numbers in August last year.

It also said there had been an 18 percent increase in inferred resources to 130 million pounds of U3O8, including the definition of a maiden inferred resource at Zone 5.

Extract continues to drill on site aiming to expand and improve the classification of existing deposits, and to discover new areas of mineralisation.

It has five drill rigs currently operating there and plans 100,000 metres by the end of Q1, 2012. A further resource update is expected in H1 2012.

It was in April that the definitive DFS for Husab was published.

Indeed, there has been no shortage of news about Kalahari Minerals in recent months.

On March 7, Chinese firm CGNPC-URC announced a possible recommended cash offer for Kalahari. Talks to alter the terms of the deal, originally pitched at 290 pence a share or £756 million in total, took place in the wake of the Fukushima nuclear scare.

Then, the Takeover Panel ruled that the chinese firm could not table a lower, 270 pence a share offer for Kalahari Minerals.

Kalahari then appealed but the case was dismissed and the Chinese bidder withdrew its possible offer. Broker Ambrian was upbeat about today's release.

"These results continue to emphasise that the Husab uranium project is a world-class mineral asset. In fact, on the publishing of these figures it is now known to house the world’s fourth largest uranium deposit."

The City broker said it was currently reviewing its price target for the company but retained its "buy" recommendation and highlighted that Kalahari and Extract were now looking cheaper than some uranium plays in their peer group.

"We find this extraordinary given the size and quality of the deposit at Rossing South," it said.

Ambrian believes the main value drivers over the coming months will be: the potential for a revised offer from CGNPC; and a revised mine plan based on the updated resource model (2H11).

BHP Billiton's Olympic Dam mine 560km north of Adelaide, Australia is the world's fourth largest remaining copper deposit, fifth largest gold deposit and the largest uranium deposit.