2006 News Releases
Mega Enters into an Agreement to Acquire Redport Limited
July 7, 2006
Mega has acquired 15.6% of securities of the Australian uranium company Redport Limited for C$10.5 million cash and has entered into an agreement whereby Mega will offer to acquire the other Redport securities through an off-market offer of 9.36 million Mega shares.
Redport’s principal asset is the 23.7 million pounds U3O8 Lake Maitland resource in Western Australia.
Toronto, Ontario, July 7, 2006 – Mega Uranium Ltd. (“Mega”) (MGA:TSX-V) is pleased to announce that it has acquired 15.6% of the shares and options (including 11.1% of the issued shares with voting rights) of the Australian Stock Exchange (“ASX”) – listed Redport Limited (“Redport”) for $10.5 million cash, and has entered into an Agreement with Redport whereby Mega will offer to acquire all of the other issued securities of Redport, in a conditional off-market takeover offer, for a consideration of 9.36 million Mega shares. In combination with its associates, Mega now has 14.4% of the shares and 18.2% of the shares and options of Redport.
Redport’s principal asset is the Lake Maitland uranium project in Western Australia, which contains a National Instrument 43-101 (“NI 43-101”) compliant inferred mineral resource of 23.7 million pounds U3O8. Other assets include interests in uranium exploration properties in Western Australia and South Australia, a royalty interest in Paladin Resources Ltd.’s Langer Heinrich project in Namibia, and cash reserves of approximately $A9 million ($C7.4 million). Through this transaction, Mega will also acquire the services of Redport’s management and consultants, who have considerable experience and expertise in uranium exploration, feasibility studies and mine development.
On July 7, 2006, Mega acquired 15.6% of the Redport securities, comprising 58,453,950 ordinary shares, 26 million listed $A0.05 options and 25 million unlisted $A0.05 options, for cash, based on $A0.14 per share and $A0.09 per option. The total cost to Mega for this transaction was $A12.73 million ($C10.5 million).
For the acquisition of the other Redport securities, totaling 470 million shares, 76.4 million listed options and 44.2 million unlisted options, Mega has offered a total consideration of 9.36 million Mega shares. In the event that the listed and unlisted options are fully exercised, the total consideration could be 9.83 million Mega shares. The Board of Directors of Redport has indicated that it supports the takeover and will recommend that the Redport shareholders and optionholders accept the offer, subject to their fiduciary duties concerning any superior competing bids. The offer is conditional on minimum acceptances of >50% of the Redport shares and listed options, the approval of the TSX Venture Exchange, and other conditions typical for a takeover of this nature.
In order to complete the acquisition, Mega will prepare and deliver a bidder’s statement and offer to Redport, each shareholder and optionholder of Redport, the ASX and the Australian Securities and Investments Commission. Mega’s offer will remain open for a minimum period of one month after issue of its bidder’s statement and offer. The offer will not be made in any jurisdictions where the offer would constitute a breach of securities laws.
The Lake Maitland uranium deposit is located in playa lake evaporitic sediments, of Tertiary to Recent age, in the Eastern Goldfields area of Western Australia some 130km southeast of Wiluna. It is a calcrete-style deposit occurring as carnotite mineralisation within an extensive, single, coherent mineralized layer, 1 to 3 metres thick, at a depth of only 2 to 6 metres from surface. Discovered by Asarco Australia Pty. Ltd. in 1972, the deposit was drilled by Mt. Isa Mines Ltd. (now Xstrata Ltd.) and Esso Exploration Australia Ltd. in the 1980s and 1990s, and by Redport in late 2005. Overall, the deposit has been drill tested by 1605 holes, of an average 7.81 metres depth, at 100 metre intervals, on lines spaced 200 metres apart. In 600 of these holes the uraniferous layer is defined by geochemical assay data, while in 837 holes the uranium intersection has been delineated by downhole radiometric logging.
On June 1, 2006, Redport announced that independent consultants, Hellman and Schofield Ltd., had reported that Lake Maitland contains a JORC-compliant (NI 43-101-compliant) inferred resource, at a 100 ppm U3O8 cut-off, of 32.7 million tonnes @ 0.03% U3O8 (23.7 million pounds U3O8). In the report it is stated that the provision of more density data on the ore would result in the resource being upgraded to the measured and indicated resource categories. Within the inferred mineral resource are two coherent higher grade zones at a 500 ppm U3O8 cut-off, which, together, amount to 5.5 million tonnes @ 0.086% U3O8 (10.5 million pounds U3O8). The overall resource is amenable to low cost open cut mining due to its single layer configuration, very shallow position and friable nature. It is anticipated that only minimal portions of the total resource will require blasting in the mining process.
Redport has commenced Stage 1 of its Development Programme in the Lake Maitland Project. Studies are underway on mineralogy, processing options, sources of water, infrastructure requirements, environmental aspects and local social issues. In addition, ore bulk density determinations are being undertaken in order to upgrade the resource from the inferred to the measured and indicated resource categories. The project is being managed by Peter McNally, Redport’s Executive Director, Development and Operations, who has considerable uranium project experience in Australia, including 12 years in various roles for Energy Resources of Australia Ltd at the Ranger Mine in Northern Territory and as General Manager of the Jabiluka Uranium Project. Geological aspects of the Lake Maitland Project are under the supervision of Malcolm Mason, a geologist with over 40 years experience in exploration and mining. This includes uranium exploration and feasibility studies in Western Australia and Africa (including the Langer Heinrich deposit in Namibia) in the 1990s, while Managing Director of Acclaim Uranium NL.
A small portion of the Lake Maitland inferred mineral resource, comprising 2.1 million pounds U3O8 at a 100 ppm U3O8 cut-off or 0.13 million pounds U3O8 at a 500ppm cut-off, is located within exploration tenements that were acquired by Redport in May 2006 from the ASX-listed View Resources Ltd. (“View”) for $A275,000 cash and 2.2 million fully paid ordinary shares in Redport. In the agreement covering this transaction, Redport is required to issue to View an additional 1.1 million Redport shares should it delineate a JORC-compliant mineral resource of 2500 tonnes (5.5 million pounds) U3O8 within the acquired tenements. In addition, the tenements are subject to a previous agreement between View and the ASX-listed Korab Resources Ltd. (“Korab”) dated September 27, 2005, whereby Korab can earn a 30% interest through expenditure of $A300,000 within 18 months, and increase to 60% through a further $A300,000 expenditure within the following 18 months. As yet, Korab has not incurred any expenditure on the properties.
Redport’s other assets include the following:
Kintyre Rocks Project, Western Australia (Redport 100%): Comprises 197km2 of ground surrounding the lease containing Rio Tinto Ltd.’s 79 million pounds U3O8 Kintyre uranium resource, and also ground held by Cameco Australia Pty. Ltd. Within the Redport ground are similar geological settings to that hosting Kintyre. Compilation and interpretation of previous exploration data is being undertaken by Redport with a view to identifying targets for testing by RAB drilling.
Kintyre East Joint Venture, Western Australia (Redport 50%, Kalgoorlie Boulder Resources 50%): Comprises ~1000km2 of exploration properties, some 100km east of Kintyre Rocks, containing potential for calcrete-style uranium deposits similar to Lake Maitland. Several target areas have been identified covering airborne radiometric anomalies and calcrete/ playa lake areas analogous to that of Lake Maitland.
Angelo River Project, Western Australia (Redport 100%): Located in the Peak Hill Mineral Field of the Ashburton Basin, 65km southeast of Paraburdoo, this project has potential for unconformity-related uranium deposits similar to those of the Athabaska Basin in Saskatchewan. Redport’s compilation and review of previous exploration results in the project area is underway.
Edwards Creek Joint Venture, South Australia (Redport 18%, Other partners 82%): This project is located some 750km NNW of Adelaide, on the interpreted northeast boundary of the Gawler Craton, on a major structural zone which is thought to be one of the genetic controls of the giant Olympic Dam copper-gold-uranium deposit some 250km to the southeast. The main area of interest in the 40km2 property is the Heraklion prospect, an 8.5km x 3.5km gravity anomaly, with elevated copper, uranium and rare earth elements geochemistry, which has potential for IOCGU-style mineralisation similar to Olympic Dam. Drill testing is planned for the last quarter of 2006.
Langer Heinrich Uranium Royalty: Redport has a royalty interest in Paladin Resources Ltd.’s Langer Heinrich uranium resource in Namibia, comprising $A0.12 per kilogram of U3O8 produced and sold. Based on the scheduled output of 1180 tonnes of U3O8 per year, Redport would receive an annual payment of $A142,000 ($C117,000).
Stewart Taylor, President, Mega’s Qualified Person under NI 43-101, is responsible for the contents of this release and has verified the data disclosed.
Mega Uranium Ltd. is a Toronto–based mineral resources company with a focus on uranium properties in Australia, Argentina, Mongolia, Bolivia and Canada. Further information on Mega can be found on the company’s website at www.megauranium.com
This news release contains forward-looking statements within the meaning of the “safe harbour” provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties and other factors that may cause Mega’s results to differ materially from expectations. These include risks relating to market fluctuations, property performance and other risks. These forward-looking statements speak only as of the date hereof. Mega Uranium disclaims any intent or obligation to update these forward-looking statements and cautions investors from placing undue reliance on forward-looking statements. Mega does have an ongoing obligation to disclose material information as it becomes available.
THE TSX VENTURE EXCHANGE HAS NOT REVIEWED AND DOES NOT ACCEPT RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE.
For further information, please contact:
Mega Uranium Ltd.
Sheldon Inwentash, CEO
Telephone: (416) 643-7630