ABN 23 108 456 444 30 Ledgar Road, Balcatta, Western Australia 6021 PO Box 717 Balcatta WA 6914 Telephone:(618) 9240 7266 Facsimile:(618) 9240 2406 www.contactresources.com.au 02 May 2006 ASX RELEASE AGREEMENT TO ACQUIRE URANIUM INTERESTS The Board of Contact Resources Ltd (“Contact”) is pleased to announce a Heads of Agreement with ASX listed Range Resources Limited (Range) to acquire up to 65% of the share capital of Range’s Peruvian subsidiary, S.M.R.L. Corachapi (Somirelco). Somirelco’s key asset is the Corachapi uranium deposit located in Peru. As announced to ASX on 25 July 2005, Range has calculated an initial inferred JORC resource of 1.600M tonnes at 0.15% U3O8 for 2,400 contained metal tonnes. PROJECT SUMMARY The Corachapi uranium deposit is located in the Puno area in the province of Carabaya, Southeast Peru. It is 1,600 kilometres southeast from the capital city, Lima. The U3O8 mineralisation areas are located in a gently inclined plateau between 4,600 and 4,700 meters above sea level. Puno, which includes the districts of Corani and Macusani, is identified as containing significant uranium mineralization. Somirelco owns the Corachapi, Taypicorani, Taititira uranium prospects (contiguous to each other), with the Kihitian prospect (approximately 15kms to the east) currently under application giving a total concession area of approximately 1,600 hectares in the Macusani District, south eastern Peru. Uranium mineralization is present in the concession areas and sufficient work has been done in the area in the past to enable the Company to target a JORC compliant resource at Corachapi within the near future. Leases surrounding these prospects are presently being explored for uranium by a number of international companies including Canadian listed Vena Resources Inc and Strathmore Minerals Corporation. Technical Details of the Corachapi Deposit There are two zones of mineralization. The first is “Cornisa Oeste” being 1.2 kilometres long (plus 0.9 kilometres with a lower grade) and 0.25 kilometres wide, located in the middle of the concession, and “Quebrada Corral” being 1.6 kilometres long and 0.2 kilometres wide, located in the NE of the concession. The Peruvian Institute for Nuclear Energy (IPEN) discovered this prospect within its National Prospecting Plan between 1960 and 1975. Additional exploration was conducted by IPEN and IAEA (United Nations) between 1982 and 1987. Previous exploration includes drilling, various evaluation studies and a heap-leaching test.. The Corachapi uranium deposit consists of secondary uranium mineralization mainly autunite, a bright yellow-green mineral readily visible in the numerous cross uniting trenches that form part of the previous work by IPEN in the Macusani area. Acquisition Terms Subject to due diligence and shareholder approval, Contact will acquire 51% of the issued capital of Somirelco for consideration comprising the issue of 5 million ordinary shares and 5 million options (to acquire shares at 20 cents exercise price each on or before 30th June 2008) and a cash payment of A$850,000. The Company has also paid Range a non refundable deposit of A$50,000 upon signing the Heads of Agreement. The Company has the right to acquire a further 14% interest in the share capital of Somirelco from Range by sole funding A$500,000 in exploration expenditure over a two year period giving it a total interest of 65%. The Company has a 45 day due diligence period and a shareholders meeting will be convened for mid May 2006 to approve the transaction. Range has agreed to a voluntary escrow period of 6 months from the date of allotment of the consideration shares and options. PROJECT MOVING FORWARD The Company will engage local geological consultants to assist with the project moving forward, including the formal due diligence program. With uranium prices at a 20 year high and shortages of supply predicted for the mid to long term, the Company sees its involvement in uranium exploration as timely with the potential to add significant value to the Company. Ron Gajewski Chairman The information in this report that relates to exploration results, mineral resources or ore reserves is based on information provided to the Company by Range Resources Ltd. Range Resources Ltd consents to the inclusion in this report of the matters based on its information in the form and context in which it appears.
RRS Price at posting:
0.0¢ Sentiment: Buy Disclosure: Held
