Shareholders in uranium play Kalahari Minerals have thwarted its planned merger with Aussie-quoted Extract Resources.  

Headed by the entrepreneurial Mark Hohnen, London-based Kalahari holds 39.11 per cent of Extract, owner of the potentially attractive Rossing South uranium project in Namibia and the two companies had planned to merge. However, major mining group Rio Tinto, operator of the huge, long-standing Rossing Uranium mine nearby, recently bought 14.9 per cent of Kalahari and 13 per cent of Extract, mostly from distressed seller RAB Capital.

Those stakes would have given Rio a holding of roughly 19.8 per cent in a merged Kalahari/Extract, with no obligation (as under Australian takeover rules) to make a bid if its holding went above 20 per cent. Kalahari explains some of its larger shareholders were worried that would risk giving Rio effective control of Kalahari/Extract without paying a premium for it and also undue influence in any future negotiations the merged company might have with Rossing Uranium.

Kalahari suggested a commitment from Rio not to increase its holding in the merged company for a set period, but says the mining giant would not agree terms to a standstill that would satisfy Kalahari’s other shareholders. So the deal is off and Kalahari says it intends to explore other ways of maximising the value of its Extract holding.  

This is unlikely to be the last word on the matter. At 37.5p, Kalahari’s shares could prove a lively market.

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Kalahari Minerals	AIM	£78.72m	44.00p	0.00p
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Other company articles:
Kalahari cancels Extract deal			19/11/2008
Rossing glow for Kalahari			11/11/2008
Exploration Insights by Robert Tyerman			06/10/2008
Rio buys into Kalahari			11/09/2008
Kalahari in Namibia merger plan			05/09/2008