China Guangdong Nuclear Power Corp. on Friday valued its proposed offer for Australia's Extract Resources at $2.17-billion Australian ($2.22-billion U.S.), after agreeing to buy Kalahari Minerals, the top shareholder in Extract.
CGNPC, which has been seeking new sources of uranium supply, is buying Kalahari for its 42.7 per cent interest in Extract, which owns the Husab uranium project in Namibia.
Husab is potentially the second-largest uranium mine in the world. Exploration work is continuing on the project, currently the world's fourth-largest uranium-only deposit, with an updated resource estimate due next year.
Under Australian rules, CGNPC is required to make a full takeover offer once it owns more than 20 per cent of Extract, but the securities regulator can grant exceptions.
Extract in a statement said it had not been party to the negotiations over the Kalahari offer or the proposed Extract offer, including the offer price.
"The Extract independent directors intend to carefully review the details of the proposed offers and consider all available alternatives for maximizing shareholder value before making any recommendation to Extract shareholders," it said.
The proposed offer price of $8.65 for Extract is derived from the $990-million agreed cash offer for Kalahari. Analysts had earlier estimated an offer for Extract could be worth between $8.75 and $9 per share.
Extract shares, placed on a voluntary trading halt in Australia, were scheduled to resume at 00:00 GMT. The stock last traded at $8.09. It last traded above $8.65 on Oct 10, according to Reuters data.
CGNPC said any offer for Extract was conditional on 50 per cent of Kalahari shareholders agreeing to sell their shares. It already has letters of intent from investors representing 3.9 per cent.