State-owned Chinese CGNPC Uranium Resources is in bid discussions with AIM-quoted Kalahari Minerals, which could lead to a 290p a share offer for Kalahari.

That would value the fully diluted share capital of Kalahari at £756m. Kalahari's board says that it intends to recommend a bid on those terms. There are a number of pre-conditions that need to be satisfied, including regulatory clearances, for the bid to go ahead.

The attraction of Kalahari is its 42.8% stake in ASX- and TSX-listed Extract Resources, which is developing the Husab uranium project next to the Rossing uranium mine in Namibia owned by Rio Tinto.

CGNPC Uranium has developed relationships with Chinese and overseas manufacturers and suppliers of natural uranium and owning Kalahari will enhance these relationships and help it to reduce China's reliance on fossil fuels.

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