Kalahari Minerals (LON:KAH, PINK:KMPLF) is an AIM listed listed resource company, whose main asset is its near 41% stake in ASX and TSX listed Extract Resources (ASX:EXT, TSE:EXT). That stake is worth in the region of £370m at current market prices. Extract, in turn, owns 100% of the Rossing South uranium project, which is on track to become the world's second largest uranium mine.
Further to a recent writeup - What's happening with Extract Resources? - I attended Kalahari Mineral's AGM today. [1] [2] [3] and have set out some thoughts and reflections below.
Meeting Environment
It seems to me that Kalahari is “growing up”. There were more “suits” and fewer private investors present than at previous meetings. Mark Hohnen kept proceedings brief and Rio Tinto’s representative, Andy Lloyd and I were the only ones who asked questions. There was no presentation and the meeting was complete in half-an-hour.
All Kalahari Board members were present except Glyn Tonge and Richard Lockwood. Also in attendance were:
- Andy Lloyd, Rio Tinto
- Jonathan Leslie, Extract Resources
- David Steinepreis, North River Resources Plc (LON:NRRP)
I spoke to Mark Hohnen, Jonathan Leslie and Takashi Yasuda outside the formal meeting. My comments (as opposed to my understanding of responses to questions raised) are in italics. NB responses are not verbatim but as per my notes/understanding.
Formal Business
The formal business was dealt with without delay but with one question on Resolution 7 (authority to issue shares) from Andy Lloyd. AL asked whether Kalahari had any intention to issue shares. MH gave a full reply. MH stated that the Board’s policy was to keep sufficient cash reserves to be able to redeem the convertible note, if required, and pay any tax liability. Ongoing expenses were minimal, so MH currently foresaw no need to issue shares to raise cash. He also stated that Kalahari would use its available cash to buy Extract shares when the market was “soft”. Kalahari may also need to raise funds to maintain its stake in Extract when Extract needs to raise funds.
Q&A
Q1. What is Kalahari’s understanding of the key drivers behind Itochu & APAC’s decisions to invest?
A1. Kalahari was first approached by Itochu in September 2009. Itochu & APAC’s involvements mark a move from a more speculatively oriented shareholder register…
