Japan's nuclear crisis will make it harder for uranium projects to secure funding and may stymie smaller developments, said Extract Resources Ltd. (EXT.AU), which aims to invest $1.48 billion to build one of the world's biggest uranium mines in Namibia.

"All uranium projects are now going to be more difficult than they were before" in the wake of explosions and radiation leaks at the earthquake-damaged Fukushima Daiichi nuclear power plant in Japan, Extract Chief Executive Jonathan Leslie said.

Shares in uranium miners have fallen sharply since the Japan quake and tsunami, as investors fretted at the potential for a global rethink in nuclear power. Perth-based Extract was among those to suffer, falling 39% in the six trading days after the March 11 disaster before partly recovering to be 23% lower at A$8.22 at 0415 GMT Tuesday. In contrast, the S&P/ASX 200 is up 5.8% over the same period.

China, which accounts for nearly a third of reactors planned globally, has launched a safety review and suspended approvals for new reactors. India, too, has recently said it is revising operating rules.

Analysts say uranium miners will likely struggle to raise capital in the near term due to higher risk premiums following the quake. Most at risk are marginal projects or small exploration companies that lack the cash reserves to take them through to production or need a high uranium price to be profitable.

A dearth of project financing could end up benefiting Extract as fewer uranium mines in development will tighten supply, supporting the uranium price further down the track, Leslie said.

"Whilst it makes it somewhat more difficult for us, I think we're of a size that we will get developed," Leslie said.

Extract owns the Husab uranium deposit in Namibia, located a few kilometers away from Rio Tinto PLC's (RIO) producing Rossing uranium mine. Husab is the world's fifth-largest uranium deposit, and has a large untested resource.

Husab's appeal was highlighted this year when China Guangdong Nuclear Power Holdings Co., one of China's two largest nuclear-power generators, launched a takeover bid for Kalahari Minerals PLC (KAH.LN)--Extract's largest shareholder with a 42.8% stake.

Difficulty financing a standalone development could have implications for Rio Tinto, which owns 14% of Extract and is talking to the company about processing output from Husab through Rossing instead.

Leslie said China's approach is now key, given the Asian giant wants to more than double the share of nuclear-power in its energy mix to 5% by 2020.

"I think there might be some delays whilst they do all their safety checks, but when you think about Fukushima, the reactors there were 40 years old," he said.

Many reactors under construction in China are based on third-generation technology and designs developed by Toshiba Corp.'s Westinghouse Electric Co. and France's Areva SA.

Extract said Tuesday a feasibility study indicates that building a standalone Husab project would cost US$1.48 billion, broadly in line with analysts' expectations. Including early preparation works, the cost would rise to US$1.66 billion.

With an estimated construction time of 33 months, Leslie said a final investment decision must be made by the end of June if Extract is to start shipping ore in early 2014 as planned.

He declined to comment on how much cheaper a tie-up with Rossing could be, saying discussions with Rio are confidential.

Toni Addison-Lafferty, an analyst at Foster Stockbroking, said securing an offtake agreement will substantially increase Extract's chances of building a standalone project, which she described as "doable" despite potential funding pressures.

A joint venture with Rossing, however, would substantially cut costs, she added.

"It won't be the easiest time to try and secure funding, but it's a project that will go on for a long time, and there will still be demand for uranium with all the new builds that are being put in place," she said.

-By Ross Kelly, Dow Jones Newswires; 61-2-8272-4692; ross.kelly@dowjones.com
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