Ann: RIGHTS ISSUE OF OPTIONS , page-4

Yatchy,

I've seen the CUX price at 30 cents a couple of years ago.

But it is a good question, what would it take to see the price at thirty cents?

At the moment the Market Cap (MC) is stated by Hot Copper as 6.78 Million with a Share Price (SP) of 4.3 cents. Basically, the share price will need to increase by 3.5 times to get to 15 cents which equates to a theoretical market cap of 3.5 x 6.78 Million. This equals a MC of about $24 Million.

Let's examine what the money is for. It's for a scoping study which will show if the Charlie Creek resource is economic to mine.

What do we know about Charlie Creek? We can presume it is one of the largest resources in the West. It can be extrapolated from the JORC results that the resource is over 4 million tonnes of TREO of which about 800,000 tonnes is HREO. Of course these are estimates but they could be very conservative.

The point being is that there should be no problem that the mine life will be well over ten years and therefore the life of the mine should not be a constraint on development.

Let us look at costs. I've been thinking about them for awhile. I believe that as a guess it can be assumed the ore can be Wet processed for about $3/tonne and the Wet processed ore can be Dry processed for about $25/tonne. This of course is just a guess.

But on these guestimates to increase the grade of the ore from .03% to 3% willl require 100 tonnes of ore to be processed at a cost of $300.

Then 17 tonnes of the wet processed ore will need to be processed to get 1 tonne of ore of 50% TREO. This would cost $425.

So a estimate of the cost to extract a tonne of ore with a 50% concentrate would be $725. This equates to $1,450 for two tonnes of ore conaining one tonne of TREO.

The current value of the seperated ore is $85,000/tonne. The Toshiba 2016 prices were calculated at $47,000/tonne. I will assume the worst case at $47,000 but personally I believe the uses and demand for rare earths will increase over the next couple of years especially as the mixed basket of CUX rare earths are 17% HREO.

But lets assume the price of a tonne of CUX ore will be able to be sold at 50% of the Toshiba price. That gives $23,500 less $1,450, which equals $22,050 for the costs of leasing capital equipment, employee costs, other costs such as insurance etc and profit. It seems to me that there are a lot of fat to be able to pay these costs.

Let's take the figure of 5,000 tonnes of TREO being able to be minned a year. This gives earnings $23,500 X 5000, which equals about $120 million. Lets assume a conservative P/E ratio 5. This would relate to a MC of $600 Million. This is essentially a 100 fold increase on the current MC.

It would seem to me that mining could commence in 2015 and possibly earlier so that the full price would not be made until the resuts had been proved, which would not happen till 2015 - 2016, but when that happens the share price could be at least $4.30. Of course there will be dilution to get the mine into operation. I believe that part of the dilution will be through the exercise of the options. So let's assume the price is halved through dilution. We could be looking at a share price of $2 in 3 to 4 years.

Work is being done by a take off partner so they can determine if they can easily and economically seperate the rare earth elements. It needs to be noted that the TREO are in Monazite and Xenotime which should make the seperation of the REO a relatively simple task.

Therefore, if it can be shown that CUX's resource can be economically mined by the scoping study and CUX has a purchaser for their rare earths do you really think that the year before mining starts that CUX's share price will not be at least 15 cents?

Not only do I think this is an attractive offer but I feel that the owners of the options will be presented with another attractive offer when the share price does get to 15 cents because the company will not want dilution at 15 cents when the share price goes substantially over 15 cents. Thus, the warning in the offer for future Capital raisings so option holders will be able to convert their options to heads to take advantage of any future offer. I think the offer when the SP gets to 15 cents will be very interesting for option and heads owners alike.

I also believe that once the scoping study is completed and shows the economics of Charlie Creek are viable we should see a dramatic increase in the CUX share price.

The take-off deal will be icing on the cake.

We know the mine life of the resource is well beyond what is needed be economic.

IMHO Cux is a no brainer and it is a pity the market appears either not to understand or disagrees with me, but that is their problem.

Of course this is only my opinion and as such it should not be relied on for investment decisions. In other words do your own research and draw your own conclusions on whether to invest in CUX.

Cheers

Stoops