Rio Tinto Linked to Offer for Xemplar
By Charlotte Mathews
08 Jan 2008 at 08:55 AM GMT-05:00
JOHANNESBURG (Business Day) -- Diversified global mining group Rio Tinto [NYSE:RTP; LSE:RIO; ASX:RIO], the target of a merger proposal from rival BHP Billiton [NYSE:BHP; LSE:BLT; ASX:BHP], could be preparing an offer for Namibian uranium explorer Xemplar Energy Corp. [TSX-V:XE], London-based investment group Fairfax analyst Marc Elliott said yesterday.
Other potential bidders for Xemplar - which is listed on the Toronto venture capital, Frankfurt and Namibian stock exchanges - could include Areva or a Chinese company, he said.
Rio Tinto spokesman Nick Cobban said Rio Tinto had no comment to make. “We never comment on market rumour or speculation,” he said.
Xemplar’s main asset is its Warmbad property in Namibia, which is on the southern border with South Africa, where it believed it had “effectively discovered a new uranium province”, it said last month . It has identified 14 large deposits close to the surface in an area about 40 kilometres by 28 kilometres, and this month it will step up its exploration activities with the arrival of two more drill rigs.
Elliott said the company could be valued as highly as $6 billion after positive exploration results and the publication of a feasibility study and resource statement.
Xemplar’s market capitalisation is about C$737 million ($736 million). Its shares have soared more than sixfold from C$1 in August to C$6.75 yesterday.
Xemplar was the largest holder of uranium licences in Namibia, and the Warmbad property could host the world’s single biggest uranium deposit, Elliott said. Xemplar’s significant land holdings made it an attractive acquisition target and world-scale uranium deposits were needed by major mining companies before they could enter into supply contracts.
Rio Tinto owns the Rössing uranium mine in Namibia, which made a profit of N$304 million ($44 million) in 2006.
The life of the mine was recently extended to 2016, but plans are under way to extend this to 2021, according to the company’s website.
Rio Tinto’s other assets in southern Africa include copper mine Palabora Mining, a mineral sands operation, Richards Bay Minerals, and the Murowa diamond mine in Zimbabwe.
About 4% of its operating assets are in Africa.