Monday, 2 April, 2007

by Ross Louthean
Mine Web

The festering hostile takeover battle between Paladin Resources Ltd and quarry Summit Resources Ltd produced added research today that may show that uranium mining will be sterilised in Queensland and Western Australia during the terms of current state Premiers and perhaps beyond.

In releasing a document late today critical of downgrading of two of Summit's uranium deposits in Queensland, Paladin's managing director John Borshoff pointed out that Queensland's Premier Peter Beattie had spoken recently of party leader, Kevin Rudd, undertaking to produce a motion at the national conference that would allow individual states final say on mining uranium.

Beattie and Labor Party colleague in Western Australia, Alan Carpenter, have been uranium averse, so Beattie's statement earlier today has a solid ring to it. That comment was that if states were given this discretion should Rudd beat the Liberals John Howard in the next Federal election, then Queensland would not allow uranium mining.

The possibility of Rudd using this stance as a compromise to appease the anti uranium faction has has until now flown under the Australian sharemarket radar, with new uranium floats emerging almost weekly and generally proving good fodder for stags. Should a states' discretion be part of the motion to overturn the party's No New Mines policy, then South Australia and perhaps the Northern Territory will be the only Labor Party states to develop new mines in the foreseeable future.

Under this scenario the NT would be debateable, as Chief Minister Clare Martin was an avowed anti-uranium journalist before taking up politics. She was unhappy with the Howard Government over-ruling her wish to prevent any new uranium mines in the Territory. It would become a question of whether a Rudd government in Canberra would adopt the same stance, seeing that this dependency has always needed big Federal government financial props.

John Borshoff has a library on uranium geology, mining and nuclear power that would be the envy of any research organisation and it is no surprise he picked up a point that had zoomed over the heads of others.

In today's statement he spoke both of disappointing resource estimates by Paladin and Queensland's policy uncertainty.

Borshoff said it was "no surprise to us" that Summit released disappointing results after market close on Friday.

He was referring to the company's Andersons and Watta deposits.

"A consistent theme seems to be emerging. Summit has now announced two of the promised six JORC resources on the 100% owned properties (in the Mt Isa region of north west Queensland) and, in each case, there has been no increase to the historical reported metal inventory," Borshoff said.

"Yet, in each case, there has been a drop in grade - 37% for Andersons and 19% for Watta. Rather than demonstrating any resource upside at Mt Isa, Summit's efforts since October 2004 seem to be directed at retaining the historical resource by lowering the cut-off grades to critical levels."

Borshoff said Paladin's effort, should its takeover be successful, would be to focus resource definition and extension activities on the Valhalla and Skal deposits that provide 88% of currently stated resources and provide "the best opportunity to provide the bulk of uranium required for a development project. These two deposits are already 50% owned by Paladin, after its takeover of Valhalla Uranium.

Summit said Anderson's inferred resource was 4.7 million lbs of U308 at 2.31 lbs/t, using an 0.5 lbs/t cut-off, while Watta's new estimate is 4.2 M lb at 0.81 lbs/t using an 0.25 lbs/t cut-off.

Borshoff claimed today that these developments were a further indication of "the compelling nature of Paladin's takeover bid. Paladin is offering one of its shares for every 2.04 Summit shares, valuing Summit shares $A4.77 ($US3.88).