The Extract Complex

Wednesday, Jun 24 2009 by

This thread relates to companies, news etc that surrounds ASX listed uranium explorer Extract Resources (ASX:EXT) - Extract's latest investor presentation can be found here: . The attractions of Extract are:

a) It has consistently underpromised and overdelivered

b) It has made one of the most significant uranium discoveries in decades, in politically stable & mining friendly Namibia. [It now has Namibian govt linked directors on its Board]. Once fully scoped its undeveloped resources are likely to be at least 550Mlb of U3O8, according to Kalahari's chairman. 292Mlb of JORC resources are currently declared, with exceptional grades for the ore type (439ppm average). An independent estimate, based on drilling results released up to 18Feb2010, suggests that a total of at least 434Mlb  should be identified in the next JORC estimate. Recent trade sales indicate a value of US$6/lb is conservative for undeveloped resources - suggesting US$3bn as a conservative valuation.

c) It has attracted the interest of Rio Tinto, who have substantial shareholdings in Extract and Kalahari. If you study the 2007 and 2008 "stakeholder reports" for Rössing Uranium, you will see that the existing Rössing mine is in need to new ore sources: and 

d) The initial scoping study for developing a mine has indicated a target production rate of ~15Mlb U3O8 pa. This rivals production from the world's largest current U mine at McArthur River, Canada (which has reserves of 333Mlb by comparison to Rossing South's resources). Indicative cost figures will also place Rossing South amongst the world's lowest cost producers.








NB: The vast majority of U3O8 is sold on long term contracts and the spot market is small & illiquid.


Long Term Contract U3O8 Price


Linked Companies

All the following companies have significant investments in Extract (either directly or via investments in Kalahari, which owns 40% of Extract), hence understanding Extract and goings on surrounding it is rather important, if you have a direct interest or an interest in any of these companies:

Kalahari Minerals (AIM:KAH)

Polo Resources Ltd (AIM:PRL)

Emerging Metals (AIM:EML)

Niger Uranium Ltd (AIM:URU)

NWT Uranium (TSX-V:NWT) (33.8% shareholder of Niger Uranium)

AfNat Resources (AIM:AFNR) (11.7% shareholder of Niger Uranium)

Regent Pacific (HK:0575)

Brazilian Gold Corporation (TSX-V:BGC)


All of these companies have connections with the directors of Uramin, which was sold to Areva for US$2.5bn in 2007. Of particular note is the heavy involvement of Stephen Dattels (see and James Mellon (see See this thread: to keep up-to-date on SD's activities (and for further background).

*Ambrian is confident that the resource will exceed 560Mlb. See$/News.aspx?id=119


Forthcoming Events

I am now expecting the following newsflow over the next few weeks and months:


Links & Further Reading

Paydirt article on Extract's recent history:

Useful Wikipedia articles (these are excellent IMO):

Uranium supply & demand thread:

Illustration of Rössing South resouce drilling and results:

A website that dynamically calculates the discounts of KAH, URU and EML to the value of their tangible assets:


Recent Presentations by Extract & Related Companies

February 2010 Mining Indaba:

March 2010 Paydirt Uranium conference, Adelaide:

Kalahari update, February 2010:

Audio Interview with Kalahari's Mark Hohnen:


DISCLOSURE: I have shareholdings in Extract, EML and Polo. Together (even after topslicing) these consititute a significant part of my overall portfolio.

Filed Under: Asx, Uranium,


The author may hold shares in this company, all opinions are his own and you should check any statements that appear factual and not rely on them before making an investment decision. The author is NOT a qualified analyst nor authorised to give investment advice. Whilst the author is a director of ShareSoc, all views expressed are entirely his own and not necessarily those of ShareSoc.

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URU Metals Limited is engaged in exploration and development of mineral properties in South Africa and Sweden. The Company's segments include Exploration and Corporate office. The Exploration segments include obtaining licenses and exploring these license areas. The Company's projects include Zebediela Nickel Project, The Narke Oil-Uranium Project and Nueltin Lake Gold-Uranium Project. The Zebediela Nickel Project is located in the Limpopo Province of South Africa close to the platinum mining town of Mokopane. The Narke Oil-Uranium Project is located approximately 150 kilometers west-south-west of Stockholm. The exploration licenses cover approximately 7,087 hectares of land overlying prospective Alum Shale outcrops. The Nueltin Lake Gold-Uranium Project is located in the Kivalliq Region of the Territory of Nunavut, Canada. The Nueltin Project consists of 34 mineral claims and a mineral lease covering a combined area of approximately 27,279 hectares. more »

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433 Posts on this Thread show/hide all

xigris 5th Oct '09 154 of 433

‘History is more or less bunk’ – Henry Ford

‘Those who cannot remember the past are condemned to repeat it’ – George Santayana


In 2007 Uramin cleared their Niger assets from their books and sold the rest of the company to Areva:

04 Jun, 2007        UraMin Inc (UMN).          Joint Venture

11 Jun, 2007        UraMin Inc (UMN).          Potential Sale Update

15 Jun, 2007        UraMin Inc (UMN).           Re: Cash Offer


Today, Kalahari released:

05 Oct, 2009        PRN Kalahari Minerals PLC (KAH). Agreement with North River ...


Areva and the Russians are talking in Namibia next week about joint projects:

Russians and Cameco are talking on possible mining joint ventures in Africa and Australia:

I wonder what they're all talking about?


Having spent some time this evening reviewing Uramin’s and Kalahari’s RNS, I find it curious that Kalahari are taking the opportunity to put their Copper and Gold assets at arm’s length into North River. At the same time:

Mark Hohnen, Executive Chairman of Kalahari, and Professor Glyn Tonge, non-executive director of Kalahari, will join the board of directors of North River (`the Board') as Chairman and non-executive director respectively.

Take your pick of the quotes, but I'm glad that I fortuitously extended my position in Kalahari. I feel that the rest of this month is going to be interesting (at the least!).

As ever – DYOR,


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marben100 6th Oct '09 155 of 433

Eh up, nice price on offer for EML today. I have just swapped some KAH @ 185.8 for EML @ 7.62. At that price it's at around a 30% discount to its direct holdings and at over 40% against the indirect value of its stake in Extract. Polo is at an even bigger discount 45% to its NTAV but I've got lots of those already. :0)

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marben100 7th Oct '09 156 of 433

Interesting: looks like CQS have been selling the convertible debt they took up in Kalahari's placing. Gone from 3.5m units to 2.5m units. Presumably someone was prepared to pay more than the 212.5p conversion price per unit that CQS paid in the placing a month ago? ;0)

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xigris 9th Oct '09 157 of 433

New release confirming presence of Zone 3:

A new zone of uranium mineralisation has been discovered on the western limb of the Rossing South antifrom

Zones 1 and 2 - Infill drilling continues to return high grade intersection

Further along, "As stated recently, we believe a total resource of 500Mlbs is achievable from targets already defined."

From these preliminary results of Zone 3, I wonder suspect it is bigger than either Zone 1 or 2.

What an excellent start to the day, EXT up 4% as I type.

All the best,


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marben100 9th Oct '09 158 of 433

Holy cow! We have intercepts of over 53-55m @ more than 1400ppm... but note this:

the intercepts are likely to be 65% to 75% of true thickness


In other words, once we drill this zone at the correct angle (i.e. not at the usual 60° dip with 270° azimuth), holes at similar locations should return true widths of 70 - 85m. Those are some of the very best results we've seen so far.

Delighted to see that Peter's departure has not affected the timeliness and completeness of drilling data that Extract has released. [but they seem to have omitted "Figure 2" from the relase, referred to in the text]. I shall feed the detailed results into my model ASAP & see how this improves the appearance of the resource. It may clarify whether the "new zone" is ADDITIONAL to zone 3 or part of it.



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fordtin 9th Oct '09 159 of 433

Morning Mark,


I suspect they may have got that the wrong way around. If they drill through an ore body at 60 degrees,  the intercept will be considerably wider than drilling perpendicular to the ore body  (true width) .

I think the true width should be smaller than an angled intrcept, not larger.

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marben100 9th Oct '09 160 of 433

Good point fordtin. That needs investigaton.

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marben100 10th Oct '09 161 of 433

There's a summary of a new Ambrian note on Kalahari's website, that includes their interpretation of the new drilling results, which I concur with:$/News.aspx?id=119

Here's the conclusion:

We have previously expressed our confidence that the total resource will exceed 560Mlbs. This news, along with the 31 August 2009 announcement that Zones 1 and 2 likely meet at depth, not only gives us increased confidence that a 560Mlbs resource will ultimately be defined, but also that the resource could be well in excess of 600Mlbs. In all likelihood, Zone 2 and Zone 3 will coalesce, and the entire 8.5km strike length will be variably mineralised.

[my bold]

[edit]For avoidance of doubt, this note confirms that the new R3RC drill holes, with large width, high grade, intercepts are NOT part of what was previously called zone 3 in the August release but, rather, represent an entirely new zone of mineralisation. The previously identified "zone 3" may actually be an extension of zone 2. Further drilling is required to define the extent of these zones.

1bn lbs, here we come :0) I will update the header.



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marben100 10th Oct '09 162 of 433

There is some excellent original data analysis by BeerBaron on ShareScene:

His previously published resource estimates, based on feeding the drilling reports into his own resource model have shown good agreement with official figures subsequently pubished by Extract and have been conservative, to date. The latest data, released today, increases the total resource estimate to around 370Mlb (including Ida Dome & Salem). Note that this is an unofficial figure but one that I believe is very likely to be met or exceeded by the next official estimate from the company.



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AbAngus 10th Oct '09 163 of 433

First - a big thankyou to Mark for this and the other Dattels/Uranium threads.  They are an education.

I have slight anxieties about all these continuing drilling successes - can one have too much of a good thing?  AIUI the original view was that Extract would be sold fairly soon (I seem to remember a suggestion that it would happen by the end of summer).   With each increase in potential resource the value of the company goes up - but by how much?  At a resource of 500Mlbs and annual production of 15M lbs, the mine life would already be >30 years.  Uranium demand must be pretty inelastic, so all 'new' increases in resources would presumably be assets for a distant future - and yet they introduce complexities in valuing the company.  I am not in any hurry to see Extract sold, but are the continuing excellent drill results going to add much value - or are they just going to delay matters?        

Yours ignorantly,


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marben100 10th Oct '09 164 of 433

AA - I refer you to the Uranium supply & demand thread . You will discover that the large (and growing) reactor building programme that is currently underway, combined with an eventual rundown of secondary supplies from weapons decommissioning, is forecast to lead to shortages around the time that Rossing South is expected to come on-stream.

Nowadays, when a reactor is built, the puchaser often requires a guarantee of fuel supplies from the constructor. Given reactor lives of ITRO 60 years, a major long term source of guaranteed supply, such as Rossing South, is of great strategic value. NB the value to a reactor supplier, such as Areva, or a consumer may be more than the DCF-derived NAV that a miner such as Rio Tinto would assign. Bear in mind that the cost of U is small relative to the cost of of building and operating a reactor, so considerable price-elasticity exists for purchasing U resources. Security of supply is paramount.

Talks are underway this month between Areva and Russia's ARMZ in Namibia:

ARMZ plans this month to hold talks in Namibia with French state-controlled nuclear reactor maker Areva on uranium projects in Africa, the Russian company's general director, Vadim Zhivov, said last month.

Now, I wonder why they might have chosen Namibia as a venue to talk? ;0)

Timing of the release of these drilling results seems rather opportune, don't you think?

Best regards,


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AbAngus 10th Oct '09 165 of 433


yours less ignorantly,


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marben100 11th Oct '09 166 of 433

I have now entered the new hole data into my speadsheet. Here is a picture that shows how the new data fits:



[If you have any difficulty viewing the above image, click this ]

Green 100m x 100m cells represent previously "virgin" cells that had not been drilled before but now have results reported in the 9th October release. Yellow cells have been drilled before but data for new holes has been published which more accurately defines the resource in those cells.

In the August release, Extract identified the area I have ringed within zone 2 as the "newly emerging zone 3", the company has now decided to include it as part of zone 2. I think I can see why. Just as the ore dives downward between zones 1 and 2, it appears to do the same at the southern end of the previously identified zone 2 (though probably not to as great a depth as at the zone 1/2 boundary).

When zone 2 was originally delineated, Extract's geos thought that it petered out at around northing 7,502,400. Now that deeper drilling has been conducted and more southerly drilling has been conducted, it looks as though it may just dip a bit at that point (to a 200-400m depth) and pop up again a few 100m further south. Given that Extract's geos have now included ALL of the new drilling, right down to northing 7,500,800 within zone 2, I presume that's the conclusion they've reached. If you look at Figure 1 of the October drilling results, you'll see that it now extends over 4km strike length. This implies that zone 2 has at least 50% more strike length than previously thought. Not only that, but we haven't yet found the southern end of it, so it remains an open question how far south it continues.

As you can see from both Extract's Figure 1 and my diagram above, the "southern half" of zone 2 has only been drilled at a 400m line spacing, so loads more drilling needs to be done. ISTM that Zone 2 could easily contain 300Mlb U alone.

It seems likely to me that the ore identified in Extract's cross-section as the "Rossing South Anticline" extends over the full length of zones 1 and 2, i.e. over a strike length of over 7km (so far), but undulates in depth. It is this undulation that led Extract to identify zones 1 and 2 originally as separate and to consider previously that zone 2 ended at northing 7,502,400. Remember, it is still open and we still don't know where it really ends, in a southerly direction, but we do know that it goes at least as far as 7,500,800. No reason to think it stops there.

Then we have the "new zone", currently identified to the south west of zone 2. We have no idea, yet, of how far north-south that extends.

NB This hypothesis (that, apart from the new zone, it is all one humungous orebody) still has to be verified by more drilling but it looks good to me: pretty much everywhere along strike that Extract drills they find ore, though sometimes at depths below 300m, downhole.



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marben100 11th Oct '09 167 of 433

So, what does the above technical information imply from a commercial and investment standpoint?

Firstly, it means that it is likely that Rossing South is significantly larger than Extract had demonstrated just one month ago. That gives Extract's Board a nice problem on how to proceed. One thing is clear: if at all possible, the pace of drilling needs to be stepped up even further, there is just so much to drill.

Based on BeerBaron's work (which will doubtless have been replicated by professionals at Rio Tinto and other seriously interested parties) a resource of at least 400Mlb seems pretty much nailed-on, though not officially/independently confirmed. The "extra length" we have found means that there are more options on how to exploit the resource and what extraction rate to design the plant for. I expect that Extract's Board will be enganged in intensive discussions with the interested parties, probably via Rothschild. Amongst issues to be discussed are:

  • Whether any of those parties wishes to make an outright bid at a knockout price - before Extract goes on to define a much larger resource!
  • If Rio "wants in", how they would suggest combining Rossing South and Rossing to maximise shareholder value for both parties. [Pooling ore processing facilities, U resources and expertise offers lots of synergies]
  • What offtake agreements consumers would be interested in entering into, i.e. how much U per annum they would like to have (this is a further input to plant sizing).
  • As part of the offtake agreements, whether those consumers might be prepared to help fund Extract's CAPEX and in what manner (i.e. debt/equity split)
  • Pricing guarantees within the offtake agreements

We're in a very interesting situation currently - watch this space for newsflow!



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JPGH 11th Oct '09 168 of 433


excellent analysis as always. I have NPV, IRR ..etc spreadsheet that I plagurised (from one of your that you sent to me) on a notoinal 15 MM lbs/yr development . On paper, it's easy to up the reserves and plant capacity in the model and play with the numbers. However, I don't have a great feel for the size/degree of mining/logistical "effort" for a 15 MM lbs/yr U3O8 mine/treatment facility, let alone that required for an increase in this capacity.

If additional resources are identified then it seems a higher capacity development than a 15 MM lbs/yr U3O8 is required to maximise ROI and NPV of project. How difficult to you think it would be to go from say 15 MM lbs/yr  to a 20 development? Or even higher again?


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marben100 11th Oct '09 169 of 433


TBH I have little idea.

Another issue the Board will have to wrestle with is whether to start more detailed design studies or wait for more drilling first.

Now, I know that Dattels is "a man in a hurry", what I expect he'll tell the engineering team is: "design something scaleable and let's get on with it". If that's possible, then there's no need to wait for further drilling. Enough high-grade ore is proven already to justify a substantial operation.

ISTM that the mining operation is easily scaleable, as the enormous size of the resource lends itself to digging multiple pits anyway. Not sure how easy it would be to design a scaleable ore-processing operation.


Mark (PS if you, or others, like my post a rec would be nice)

Rec tart :0)

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StrollingMolby 11th Oct '09 170 of 433

Hi Mark,

I don't think I can add anything meaningful to your comments at this stage, but to borrow a phrase from Steve Galloway, your analysis and hard work on the spreadsheet of all the drillholes is 'spectacular'.  I can honestly say I know more about the potential of Rossing South now through your recent posts than I have garnered from the RNS's!

Looking forward to catching up with you at the next opportunity, where there will be several Kir Royales with your name on !  :o)


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marben100 12th Oct '09 171 of 433

In reply to fordtin (post #159)

I have now queried this issue with Extract and they confirm that fordtin is right. The true width will be LESS than the reported width, so 40m rather than 55m, is probably a better estimate of the true width of the high grade intercepts reported in the release. Nevertheless, still results to drool over. :0)

BTW looking at where the intercepts come, across the 100m spacing between the two holes, the depth of the intercept reduces by ~50m as we go westwards - but still has the same excellent width. [It's between 157 & 212m in R3RC0001 and between 104-157m in R3RC0002].  It seems logical to expect that if another hole were drilled a further 100m W of R3RC0002, the intercept would be found close to the surface (starting at ~50m depth), if the dip angle is consistent and the orebody continues.

It must be fun being a geo at Rossing South, wondering what amazing new finds you're going to turn up each day. :0)



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xigris 13th Oct '09 172 of 433

Thanks for the hard work over the weekend Mark and also the link to ShareScene, very good stuff.

Learnt of some interesting background into Kalahari's North River deal on minesite

Australian accountant David Steinepreis, who is probably best known for bringing Norseman Gold to Aim via a reverse, intends to do something similar with North River Resources. This company has been listed on Aim for some time, as David and his brother Gary set it up as a shell back in 2006, just after they did the same for Davos Resources, the company which eventually morphed into Norseman Gold early in 2007. Norseman, it hardly needs pointing out, has been one of the best performing junior gold stocks of 2009. North River acquired a number of gold and uranium projects in Mozambique from OMS a few months ago. These included the historically-worked Mavuzi mine, the Castro uranium prospect, and the Boa Vissau and Murrupula gold prospects.

The deal that North River has just announced with Kalahari Minerals and North River is, however, the big one, as it brings in some advanced copper and base metal assets in Namibia, results in an ongoing close association between the two companies, and has resulted in suspension of North River listing as it is a reverse deal under the Aim rules.

Like all the best deals, this one has advantages for both sides. Most shareholders in Kalahari Minerals are in it for its 40 per cent holding in Extract Resources, the company which holds the huge Rossing South and Ida Dome uranium deposits within the Husab uranium project, just south of Rio Tinto’s Rossing uranium mine. Even so the price of Kalahari’s shares sits at a discount to the value of its shareholding in Extract alone, so no value whatsoever is accorded to its gold and base metals assets in Namibia.

North River, for its part, wants assets that it can really get its teeth into, and an association with Kalahari Minerals will certainly help to raise its profile. David Steinepreis points out that he was a director of Extract Resources in its early days and has known Mark Hohnen, the executive chairman of Kalahari for a number of years.

Does seem to be the sort of thing SD & co like to do, keeping overall control through a network of contacts/friends.


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marben100 16th Oct '09 173 of 433

Extract ‘Inundated’ by Potential Namibia Uranium Mine Partners

By James Paton

Oct. 16 (Bloomberg) -- Extract Resources Ltd., a uranium explorer whose shares have surged almost eightfold in Australia this year, said it has been “inundated with requests” from companies proposing to join or take over its Namibian project.

“We’re looking at options to see whether one of the big players would want to come in on a strategic partnership level,” Chairman Steve Galloway said in an Oct. 13 telephone interview from Namibia. Extract is being advised by Rothschild, the largest family owned bank, and may ask shareholders in November to consider proposals to bring its Rossing South mine to production, he said. He didn’t name any potential partners.

Extract, 15 percent owned by Rio Tinto Group, has gained more this year than any other stock in Australia’s S&P/ASX 200 Energy Index as investors bet countries will turn increasingly to nuclear power, using fuel derived from uranium, in response to climate change. Drilling at Rossing South suggests it could become one of the world’s largest uranium mines, Galloway said.

Investors “are jostling for a piece of the action,” said Gavin Wendt, an independent resources analyst who has followed Extract for three years and met with executives from the explorer in the southwest African country about two months ago. A joint venture, possibly with Rio, may be the most likely scenario, he said, adding that the stock’s “remarkable ride” has driven up the potential acquisition cost.

Extract Resources has told suitors “we’re not for sale,” Galloway said. Rio Tinto doesn’t comment “on market rumors or speculation,” Tony Shaffer, a spokesman for the company, said by phone from Melbourne yesterday. ..


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