cts dd report annoucement, page-2

DUE DILLIGENCE REPORT RELATING TO THE CORACHAPI URANIUM PROSPECT HIGHLIGHTS • Independent consultant’s recommendations include that; o It is strongly recommended that Contact pursue its option to acquire an interest in the Corachapi Uranium Project, and o It is strongly recommended that a drill program be commenced as early as practical to confirm the existence of the historically identified resource and to upgrade its confidence levels to at least those of a JORC (2004) Indicated Resource. • Contemporary hard copies of historical data give support to the historical estimate of the inferred resource of 1.64M tonnes grading 0.15% U3O8 for a contained estimate of 2,400 tonnes of U3O8. • Contemporary hard copies of historical drill logs (geological and assay) support extensions or repetitions of the known uranium mineralisation at depth with a best result from hole Pozo 03 of :- �� 22.14m grading 565ppm U3O8 (or ~1.2lbs/tonne) CORACHAPI DUE DILLIGENCE During July 2006, Contact’s Managing Director, Mr Allen Maynard visited the Corachapi uranium prospect in Peru, accompanied by independent Australian consulting geologist Mr Geoff Blackburn OAM and Peruvian geologist Sr Walter Herrara. Sr Herrara is the geologist formerly engaged by the Peruvian Government Nuclear Energy agency Instituto Peruano de Energia Nuclear (IPEN), to conduct the pervious exploration of the site pre-1990. The purpose of this field inspection was to conduct “due diligence” of the Corachapi Uranium Project prior to determining whether or not Contact should proceed with the acquisition of the project. Further, it was to assist with compiling a formal digital geological database on the project area for the first time. Whilst there, members of the local community (Corani village) were engaged in discussions resulting in a favourable outlook for future participation in exploration.

A preliminary draft copy of the Mr Blackburn’s report has now been received and is being considered by the company. His main conclusions are that; Based on his field inspection and review of that data, it is his view that: • At the completion of their exploration work in 1986, IPEN estimated a mineral resource at the Corachapi Uranium prospect of 1.64Mtonnes grading 0.15% U3O8 containing an estimated 2,400 tonnes of U3O8 and that this work was done consistent with the standards of the time. • The historical resource of 2,400 tonnes of U3O8 contained within 1.64M tonnes grading 0.15% U3O8 estimated by IPEN would not be JORC compliant under the JORC (2004) code, principally for technical reasons primarily relating to QA/QC issues appertaining to the inability to consistently audit the primary data. It is however a useful estimate of the likely amount of mineralisation contained within a confined part of the Prospect area that was made by a reputable governmental agency according to the standards prevailing at the time. • The known mineralisation is open ended. • The classification of known mineralisation should be capable of being readily upgraded to an indicated JORC category by a relatively straight forward drilling program – as the general outline and location of the mineralisation is already known. • The known mineralisation is located around the breakaway margins of a plateau. It is considered that this is likely to be due to the fact that the breakaway areas are the major areas of outcrop – the surface of much of the plateau is soil covered and there has been essentially no work aimed at uncovering “non-exposed” mineralisation. • It is considered that there is a high probability that there is additional non-outcropping mineralisation within the Plateau proper and that this view is supported by the previously unreported intersection of 22.14m grading 565ppm U3O8 (or ~1.2lbs/t) in historical drill hole Pozo 03. On the basis of his conclusions, Mr Blackburn made the following recommendations; • It is strongly recommended that Contact pursue its option to acquire an interest in the Corachapi Uranium Project, and • It is strongly recommended that a drill program be commenced as early as practical to confirm the existence of the historically identified resource and to upgrade its confidence levels to at least those of a JORC (2004) Indicated Resource.

BACKGROUND AND DISCUSSION OF FIELD VISIT As previously announced, CTS has entered into a Heads of Agreement with Range Resources Ltd (ASX: RRS) to acquire a majority interest in the 80% of the project held by RRS. The rare opportunity to acquire this interest in the Corachapi uranium project has arisen with the corporate decision by RRS to focus its exploration efforts on its Puntland JV (north eastern Somalia) for minerals, oil & gas. Visible uranium mineralisation in the form of autunite was observed in many locations alongside of, and within, pre-existing costeans (trenches). Three out of four known diamond drill hole collars were located on site. On return to Lima a comprehensive selection of relevant technical data was obtained. This included plans of geological mapping, sampling and assay data, geophysical results (radiometric data) and drill hole logs for the four drill holes sited by the previous explorer, a government agency called the Peruvian Institute for Nuclear Studies (“IPEN”). As part of the field examination 73 rock chip samples were collected over approximately 1,100m of strike from the old trenches and pits and these samples were returned to Australia for assay by Ultratrace Laboratories, Perth. The top ten significant results from these samples were announced to ASX on 1st September. The weighted average result of these samples is 0.74% U3O8. An examination of extant drill logs confirms that all holes were declined generally to the SE at angles of 55 to 60 degrees and this was supported by the field examination of the two drill collars located. The drill holes were generally located easterly of the exposed mineralisation in the trenches and tested generally soil covered areas. All holes reported significant assays and a summary tabulation of results is shown below.

HISTORICAL ASSAYS REPORTED FROM IPEN DRILL HOLES HOLE ID TOTAL DEPTHFROM(m) TO (m) INT (m) U3O8 ppm U3O8 lbs/tonne POZO 01 23.70 3.984.280.385421.20 POZO 02 27.69 6.516.970.463940.90 9.029.380.3614153.10 14.4115.861.455421.20 18.2718.670.402840.60 POZO 03 50.64 1.642.290.656011.30 8.3730.5322.145651.20 Incls. 8.3711.292.9218864.20 22.0022.280.2817693.90 25.1525.840.6925945.70 27.8430.532.6920044.40 POZO 04 23.14 1.001.440.4417693.90 4.545.030.495211.20 9.549.950.416061.30 20.5621.050.4920044.40 Note: Drill holes and results are shown for illustrative purposes only. These are historical results generated by the Peruvian Government’s Nuclear Agency in 1981. Details of sampling and analytical methodologies are not known. Core size was NX and recovery below approx 7.0m was reportedly >99%. (IPEN - Peruvian Institute for Nuclear Studies – an agency of the Peruvian Government). Of importance is the wide intercept in hole Pozo 03 of 22.14m grading 0.06% U3O8. This suggests that there is a significant possibility of expanding the historical resource estimate as none of these drill holes were included within the historical resource estimate. An exploration program, which will be focused on drilling in order to bring the historical resource estimate into JORC classification, is currently being planned and it is anticipated to commence this during the next quarterly reporting period (Sept to Dec). Figures 1 to 3 below depict the sampling plan and local and regional views of the Corachapi project area.