Polo Resources Ltd (LON:POL), the AIM and TSX listed mining group, has agreed to sell its entire 9.30% stake in Australian uranium explorer Extract Resources (TSX: EXT) for A$157.9m (£91.2m) to Nippon Uranium Resources, which is part of the Japanese conglomerate, ITOCHU Corporation. Shares in Polo jumped by 10.5% to 5.22p in early trading.
Extract owns 100% of the Husab (Rossing South) Uranium Project in Namibia. Husab is expected to become one of the leading uranium mines in the world, and is currently under a feasibility study for first production in 2013 or 2014. In May 2010, with financial support from Japan Oil, Gas and Metals National Corporation (JOGMEC), ITOCHU acquired a 14.9% stake in Kalahari Minerals, whose main investment is a 41% interest in Extract. ITOCHU is pursuing the Husab project in order to contribute a stable supply of uranium to Japan. For more about Extract Resources, click here.
In addition to Polo’s deal with Nippon Uranium, Stephen Dattels, Polo’s chairman, has also overseen the sale of 2,187,708 Extract shares through Regent Mercantile Holdings Ltd and another 368,721 Extract shares by Emerging Metals (LON:EML), in which he is chairman. In total, 10.3% of the shares in Extract are changing hands as part of the deal, although the Polo sale still requires shareholder approval.
Polo said it was now assessing ways to return value to shareholders, which may involve a special dividend of 3p per share. The company also intends to use the sale proceeds to carry out its investing policy and for working capital purposes. Last month, the company sold its interests in Peabody-Polo Resources B.V., which was a joint venture company set up in early 2009 to control Polo’s coal and mineral interests. As a result, it is now categorised as an investing company for the purposes of the AIM rules.
Last week, Laxey Partners Ltd, the active value investor that holds 4.04% of the voting rights in Polo, said it was considering making an all share offer to acquire the company through a special purpose vehicle. However, since then Polo gone on to terminate its merger discussions with Caledon Resources Plc (LON:CDN), dispose of its interest in the Peabody-Polo joint venture and has now sold its stake in Extract.
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