update

Hi All

Have called the company today and chatted with John Lemon about a number of questions I had. He was very open within the parameters of not disclosing anything that might be viewed as market sensitive.

Some of the areas discussed:
i. Financials/Financial Viability.

Cash continues to burn of course. Cash at hand likely to last another month or so meaning things are getting tight.

ASX called yesterday with same question as me ie how close is possibility of insolvency and what is being done about it. Same answer ie they are working hard on finance options. John commented it is an appallingly difficult environment for juniors to raise funds which he is seeing also with other companies he works with so it's not just UCL.

A number of options have been considered including another capital raising at a price more attractive to investors. This is unlikely to be the chosen option now.

They are investigating other options including bringing in a new partner and separately raising money for the Sandpiper JV. The latter, which should be straight forward, would not resolve UCL funding needs.

Given the challenged positions of the major shareholders (as discussed on here previously neither Lundin nor RAB are in a position to currently fund) so my gut feeling is that we'll probably see an announcement of a new partner, if they can find one. (maybe BON in some form?? although merger has not been discussed)

Outgoings/operating expenditure. They are reviewing ways to reduce the impact of current cash flow drains which are essentially admin costs. When/if anything is decided it will be announced promptly eg changes to board makeup, wages etc.

ii. Shareholder selling

Previous selling pressure from two major shareholders was Societe Generale and Rob Murdoch. That is finished as both have either sold down completely or to very low remaining holding.

RAB has also sold some shares. They still have 115 million left so if they intended to sell out then they could cap for a long time. No indication at this stage that they intend to. I guess that a. they have stalled off their own problems as discussed in here before and b. they won't make enough selling it all at current prices to make a difference.

iii. Mehdiabad

Dr Frank Reid is in Iran next week for regular monthly meeting of the MZC board.

Generally speaking Mehdiabad ranks behind Sandpiper in current priority for UCL. This suggests that, despite recent progress, much of the inertia on Iranian side remains. The board is of the opinion that the Iranians have a will to resolve the dispute with us.

EFIC claim remains in play. Worth US$4.4 million, if claimed and paid would go a long way to supporting near term needs at Sandpiper. No guarantee of course it would be paid but the company is confident of the rightness of a possible case and EFIC continue to work with UCL.

iv. Sandpiper

Dr Reid remains bullish about Sandpiper prospects and has good working relationship with BON and Mike Woodbourne. (Agreed with me that BON display good will and no predatory behaviour. Also that ownership Sandpiper is an asset for UCL in the relationship against BON's greater financial stability).

Everybody is pushing to stick with the aggressive timetable that has been set.

Have to do new drilling to replace the historic cores that were lost in order to confirm JORC. Confidence is there that it will be higher quality than the good one already announced by BON from Meob but obviously will be delayed further until cores are obtained and assayed. Apart from that everything else is moving steadily.

An insolvency act on UCL's behalf would trigger a right for BON to pull out of JV. In that case ownership would revert to pre JV status. I suspect that if such an event occurred BON would end up with Sandpiper in some way eg buy it by offer from administrator.

Dilution to BON is an option.