Kalahari Minerals says Extract’s Rossing South likely to hold third mineralised zone

Kalahari Minerals PLC (AIM: KAH) announced a further fundraising aimed at maintaining its 40 percent stake in Extract Resources Ltd (TSX, ASX: EXT) which controls the Husab project in Namibia and its Rossing South uranium deposit. In a separate statement, it said exploration at Rossing South is increasingly indicating a third mineralisation zone along the same trend as Zones 1 and 2, and believes that the true scale and magnitude of the Rossing South project is some way off from being understood.

Kalahari has conditionally raised £20 million via placing 11.76 million new shares at 170 pence each. Furthermore, the company is in advanced discussions to raise an additional £10 million before expenses through the issue of convertible bonds, details of which will be published shortly. Kalahari will use the funds to satisfy its commitments with regard to the proposed A$91 million equity raising announced by Extract last week so as to maintain its stake.

Extract has announced that the proceeds of its proposed fund raising will primarily be used to accelerate and increase the drilling programmes for Zones 1 and 2 and to extend the regional exploration programme which will include areas of identified mineralisation located south of Zone 2.

Kalahari chairman Mark Hohnen said: "The Rossing South prospect continues to deliver outstanding results that underpin our confidence in the potential of this uranium prospect. Exploration lines in the newly identified Zone 3 have yielded some exceptional results which reinforce the potential of a third zone of mineralisation.”

Kalahari cited an Extract statement from yesterday saying that chemical assay results have confirmed strong uranium mineralisation 1.2 kilometres south of the current Zone 2 resource area. Reverse circulation drilling at the potential new zone returned 72 metres at 676 parts per million triuranium octoxide, including 35 metres at 866 ppm U3O8. Extract is confident that a second line of drilling, 400 metres to the South, will continue to extend and increase the known dimensions of mineralisation.

Extract Resources Managing Director Peter McIntyre, said: “The rapid growth of Zones 1 and 2 is now being complimented by the potential of a third zone of mineralisation along the same Rossing South trend. The potential of the entire 15 kilometre trend is enormous, with some degree of mineralisation being encountered on every line drilled to date."

Extensive exploration potential still remains to be tested throughout the Husab project with priority given to Rossing South.

One RC rig is currently drilling at the Salem prospect, approximately 10 kilometres south of Rossing South.  Initial handheld spectrometer results on drill samples, from all the holes completed so far at Salem, are very encouraging - with numerous zones of uranium anomalism being returned, according to Extract.

Ambrian Capital issued a note on Kalahari, calling the news a double-wammy for Extract, and by extension Kalahari. It previously valued Kalahari at £2.19 per share, but has now suspended its valuation and recommendation pending admission of the new shares to trading.

Regarding the first results from Zone 3, the broker said this is the first hole released “and we expect more like it.”  Although only one hole has been assayed chemically, the company map shows five more holes with good grades and widths from hand held spectrometry.

“With these new drill results confirming our speculative view of Zone 3, and Salem likely to add to this, we are now confident that the resource will ultimately reach 500 million pounds of U3O8, and may even exceed that,” it added.