Kalahari Minerals has a major shareholding in what is seen as the most promising of several new uranium projects in Namibia, the Husab uranium project, which encompasses the largest new uranium discovery in decades, the Rössing South deposit.

Husab is being developed by ASX, TSX and NSX listed Extract Resources, in which Kalahari is the dominant shareholder with a 40.41% holding. The next largest shareholders in Extract are Rio Tinto and Polo Resources with 14.7% and 10.3% interests respectively.

Kalahari’s executive chairman, Mark Hohnen, says that it has spent the past year focusing on ensuring Husab is developed in a timely manner. Hohnen also emphasises that two of the Extract board members are Namibians, (including the chairman). With the Rössing South project located adjacent to the original Rössing mine, which is owned by Rio Tinto, many have assumed that Rio Tinto might be the obvious buyer. However, according to Hohnen, this should certainly not be assumed as Extract is intent on developing the project itself. “In fact the first prize is to develop it ourselves, which is different from the philosophy of having a great asset and putting it up for sale.”

This is illustrated by the fact that Norman Green, the person responsible for commissioning the Skorpion Zinc project, has been brought on board in addition to the appointment of Jonathan Leslie, ex- managing director of Rössing Uranium Limited, Rio Tinto’s Namibian subsidiary, as chief executive.

“Both Leslie and Green have proven track records in the mining and energy sectors and I believe that with the combined expertise of both, Extract will be successful in developing the Rössing South project into one of the world’s largest uranium mines,” Hohnen says.

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Extract on site at Rössing South

The resource at Husab is the richest out of all the new prospective uranium projects in Namibia. Extensive exploration programmes are ongoing, aimed at increasing its JORC resource, which currently stands at some 300 million pounds of U3O8, to in excess of 450 million pounds this quarter. The original resource comes from Zones 1 and 2 and includes work done on the Ida Dome deposit, but exploratory drilling on the emerging Zones 3 and 4 indicate that this continues with what Kalahari describes as phenomenal grades and widths. Drilling has been underway during the first quarter of 2010 on these new zones, with more than 15 rigs in operation.

This work represents a burn rate of A$60 million a year, of which Kalahari is providing its share. However, it means that if the additional resources are defined, then what is already one of the world’s major uranium deposits as measured by contained metal, will by ranked among the top three in the world, comparable to the McArthur River mine in Canada. McArthur River is the world’s largest uranium producing operation and it is possible that Rössing South, located on part of the Husab property, could be a close second when it goes into production. The base case production, without taking into account the additional zones, will be double that of Rio’s Rössing mine.

The project could also turn Extract into one of the world’s top five uranium producing companies by 2014, behind Areva and Kazatomprom, which are both doubling production between now and that date, and Rio Tinto and Cameco.

Even before the new potential resource is included, preliminary scoping work undertaken in the second half of 2009 indicates that Husab could support a long-life, low- cost mine, producing 14.8 million pounds of U3O8 a year. This is equivalent to some 40,000 tonnes a day of ore being mined and the mill recovery rate is projected to be 92%. The recovery is good from coarse grind acid leach production, and low risk conventional mining is envisaged. The operation would produce at US$23.6/lb.

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View of Rio Tinto’s Rössing mine
from the Rössing South project

However, as mentioned, the emerging zones look as if they will at least match the grade and widths of Zones 1 and 2, upon which the existing JORC resource is based. Based on its expected expanded resource, Husab is now looking at a larger mine, one that could produce closer to 20 to 25 million to pounds of U3O8 a year.

Husab is showing all the signs of being a far richer and larger deposit than other nearby projects mooted or already developed. Bannerman’s Etango project has a grade of 200 ppm, Rössing Uranium, which is mining at 350 to 500 metres down in its pit, has a grade of 350 ppm, and Valencia has a grade of 150 ppm.

The Husab property overall covers 630 km2, of which 70% is under cover and thus non-responsive to radiometrics. Three major target areas have been identified. The first is Rössing South, which is just five kilometres south of the Rössing mine and on the same stratigraphy with potential extension of 15 km into the Husab licence. Rössing South contributes most of the resource base of Husab so far. However, there are also two other target areas, one of those being the Ida Dome deposit, a synformal structure with about 10,000 metres of uranium outcrop, to the south-east of the Husab property. Then, to the south-west there is Hildenhof, which is the eastern extension of the Goanikontes dome, and anomalous uranium is indicated over 2,000 metres of strike.

The plan for 2010 is to expand the resource at Husab by some 185 to 285 million pounds of U3O8 to take the project’s total resource base to over 500 million pounds. The other major target this year is to prepare a feasibility study. All things considered it would be feasible for the Rössing South project to achieve production by 2014, and Hohnen says the Namibian government wants to see production commence from the project.

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Kalahari chairman Mark Hohnen
and Extract chairman
Steve Galloway

Husab is well situated, some 50 km from the port of Walvis Bay, and with Areva building a desalination plant, which Hohnen says is only one eighth used, there is water available. With Paladin’s Langer Heinrich project, the Trekkopje project and Rössing as its neighbours, Hohnen also notes that the industry is working on a cooperative basis to benefit Namibia as a major uranium producer, and this puts Husab in a good position. If the project does go to production with the output that is envisaged by Kalahari, it could catapult Namibia to the second highest producer of uranium and see the country produce 35 million pounds of U3O8 a year.

With uranium being a commodity that off-takers look at in terms of long-term supply, they typically look at longlife orebodies – Husab fits that bill. This is reflected by Hohnen’s recent experience; “Not a week goes past when we aren’t approached by a potential off-taker.”

That Husab will become a mine seems extremely likely. “The only reason Husab has not been developed before is that no one found it, as it lies under a sand cover,” Hohnen says.

Kalahari also holds a 45% interest in North River Resources, which is advancing a number of copper and base metals projects in Namibia at various stages of development. In particular, it is developing two key heap leach copper projects as well as the old Namib lead/zinc mine with the intention of bringing one or more projects into production in the midterm.

North River is now assessing existing data, whilst also reviewing the best options to advance its two most prospective projects, which the company says may or may not involve partnership agreements.