Following almost immediately on yesterday's story that 9.1% holder of uranium explorer Extract Resources, Polo Resources had requested an Extraordinary General Meeting (EGM) to put its nominee, Stephen Dattels, on the Extract Board (see: Battle for Rossing South uranium control hotting up), Kalahari Minerals, which owns 39.6% of Extract has confirmed it is seeking the removal of Extract's Managing Director, Peter McIntyre, from the Board and to replace him on the Board with its own chairman, Mark Hohnen.
This all represents a major jockeying for position ahead of any decision to go ahead with a mine on the hugely promising Rossing South uranium deposit - the most advanced of Extract's slew of highly prospective uranium properties in Namibia.
According to Kalahari, in a statement issued today, it has sent a notice of requisition to Extract regarding the change in its Board structure. This move has, says Kalahari, been taken partly as a result of the breakdown of an initiative agreed on the 18th May between Extract and Kalahari, whereby Extract would move its executive and administrative base to Namibia in order to continue the development of its world class uranium assets. As part of this agreement, Kalahari says, CEO Peter McIntyre had agreed to step down in order for a new CEO to be appointed who would be based in Namibia.
Kalahari feels that it is vital that Extract's executive team should be Namibia-based at a time when the company is at such a key stage in the development of its uranium interests, and in Rossing South in particular.
Kalahari Chairman Mark Hohnen said, Our intention is to ensure that the value of Extract's world class assets, particularly the Rossing South discovery are maximised. We see that the relocation of Extract and its management to Namibia is imperative at this stage of its development, and something that we believed was agreed between all parties as being beneficial. We are therefore naturally disappointed with the current situation and have been forced to issue a requisition in an attempt to ensure that these initiatives are implemented.Extract, meantime, has countered saying that Kalahari's requisition is a breach of an agreement reached between Extract and Kalahari (dated 25 February 2009), under which Kalahari agreed to withhold from requisitioning any further meetings of Extract shareholders for the purpose of removing members of the Board of Extract. Extract says it has sought to engage with Kalahari on this matter in order to avoid further legal action, however recent discussions have been unsuccessful in aiming to resolve the dispute and it is now seeking legal advice in relation to these matters and will keep shareholders informed in due course.
Kalahari counters by stating that it has been assured by its lawyers that it is not contrary to and does not involve a breach of the terms of the agreement and that in any case any restrictions on Kalahari issuing a requisition regarding a Board change for Extract on basis of the February agreement will have lapsed after three months.
Meanwhile, following the Polo EGM requisition, which Extract says it has not yet formally received, and the Kalahari move, Rio Tinto - the other major shareholder in Extract with 15.3%, and also a major holder of Kalahari - has requested too that it should also have a representative on the Extract Board. Extract says it is now worried that should the proposed Board additions be implemented, the independent non-executive directors would become a minority.
It is hardly surprising that this battle for control is hotting up given the big advances Extract has made in proving up Rossing South this year. As we noted in yesterday's comment, the company has defined an initial resource estimate, following JORC Code and Canadian NI 43-101 guidelines of 108 million pounds U3O8 at a grade of 430ppm. This estimate is only in Zone 1 of what Extract calls the Rossing South deposit. A second zone a short distance away is also estimated to contain over 100 million pounds U3O8 and the next resource announcement due later this year is expected to be considerably larger as drilling continues to define the deposit.
With several shareholders in place with significant holdings, together with the proximity of the find to Rio Tinto's existing major Rossing uranium mining operation, it seemed unlikely that Extract could retain its independence from the major players involved for long. Indeed one wonders whether Kalahari itself may not be under pressure from its biggest shareholder, Rio Tinto, for more formal representation on its Board too.
While all the fuss at the moment is being made about Extract's Rossing South deposit, it should not be forgotten that it has also made some other significant Namibian uranium finds, including several others in the same general area.