email from dr alan eggers

I emailed Dr Eggers this week with a number of questions and he prompty replied with a lengthy and a very enlightening response. Email is attached below. I wasn't aware that there were more uranium targets in their prospects. Sounds very exciting and genuine, given the cowboys that are working the uranium line (Reefton).
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Dear Aaron,

Thank you for your interest in Summit and welcome to your parents and you as shareholders.

I will attempt to answer your questions as posed including your opening paragraph:

Q1. There are a range of reasons why we believe the position in Queensland will change:

These are global warming and greenhouse gas issues, the Kyoto protocol, the swing of green groups in support of nuclear power, the rapidly expanding nuclear power industry and demand for uranium oxide fuel source, the soaring price of uranium oxide as a result, the serious shortfall in existing supply, lack of alternatives such as inventories and reprocessing ex weapons grade etc., soaring energy costs and the real lack of an alternative that doesn't include the generation of massive quantities of greenhouse gases. These reasons combined with the fact that Australia is no negotiating a Free Trade Agreement with China and as part of that Chine will have to sign the non-proliferation agreement on nuclear fuel and Australia will have to "free up its uranium resources" as a source of supply. Foreign Minister Downer now has a select committee operating that is paving the way for uranium sales to China and there is the MacFarlane Inquiry underway. George bush has also indicated that Australia needs to free up its uranium resources and so the Australian federal government, who support uranium mining and export, will have enormous pressure from China and US to open up the states to mining and if it wants the China Free trade deal it will have to. As well the Labor party itself is realising it needs to drop the discrimitory and illogical policy and has several of its prominent leaders, including Beazley, Bob Carr and Peter Garret in favour of uranium mining and all the South Australian Labor politicians calling for the Labor policy to be abolished. All this is happening this year.........and with a conservative senate now there is no way Labor could stop us by legislation even if it maintained its position and was re-elected Federally.

Further, uranium is one of the few minerals that is subject to federal approvals that override the states.
As to the Inquiry Summit will be both making a submission and appearing before it...............co director Lindsay Colless was part of Prosser's campaign at the last election and Prosser is chairing it. We also prompted the inquiry by asking the Federal government to override the state and grant our approvals because of the size of the resource, export value (>1.0 billion in export income) and the fact that uranium mines are approved by the Chief Scientist AGSO and not the state surveys.

Further, the discrimatory Labor policy is favouring the two (foreign owned!) majors (RioTinto and BHP in NT and SA) and penalising good aussie companies like Summit with the largest uranium resources in Australia after the two majors.

Martin Ferguson of the Labor party stated that "there is no need for any more uranium mines in Australia as WMC's (now BHP's) Olympic Dam mine in South Australia could supply sufficient uranium to meet world demand"! He may have as well said that "as his father owns a used car yard.........there is no need for any other car yards in Australia as his father can supply all Australia's used cars"!!!!!

Australia will need to open up its uranium resources to China and others as the nuclear power industry goes through a rapid expansion phase in the next few years with the mining industry only capable of supplying 50% of the current demand...........never mind the future demand.

Further the strange situation in Australia with selective mines approved and others not, exports expertise, jobs, export income and commerce to Canada who willing take up what Australia fails to deliver.
There are more reasons, be we see it now as only a short time the Labor position will be "buried".

Q2. When is drilling to start?:

The drilling contract is being decided with quotations in to complete 16,000 metres of drilling this year in this week. We are dependent on rig availibilty for the start up but this is now anticipated to be late this month. Once we commence we will be drilling all year with a constant flow of results. The uranium resource base will be expanded however the quantum will await drill results. We do plan however on drilling the Valhalla, Skal, Andersons, Bikinin and Pile uranium prospects whereas previously we have only drilled Valhalla. We have another twenty uranium prospects in our ground near Mount Isa that will also be drilled in the future but unlikely this year as we don't have the people or rigs to get the work done.

Q3. Alternative listings:

We have considered dual listing including AIMs and TSX, but we are already on ASX and NZX and quoted in Berlin. The prime reason for a listing offshore is to raise capital on better terms than we may here in Australia. we have great support here and intend to maintain it. Also, the cost and servicing does not make either attractive, we would need more directors based in Toronto or London and remaining Australian owned is very im[portant for us in terms of developing uranium deposits here in Australia. In fact we may well be the only Australian company to do so as BHPBilliton and Riotinto are really overseas companies as is Heathgate in South Australia.

Q4. Laramide:

We have not had any contact with Laramide and for reasons outlined it maybe we are best "doing our own thing" in terms of dealing with State and Fedreal governments.

Q5. Arafura Resources:

Whatever negotiations we are in, intend to undertake or may have entered into are "commercial in confidence". We are aware of the Lagoon Creek prospect, but if you take a look at Summit's uranium assets (after BHP and Rio by far the largest in Australia) including the resources and prospects we own 100% we have too much to do already. we control a "uranium provoince" with over 30 known prospects and resources 100% with having, so far only drilled one deposit.

The head grade of our current resource is about 3.2lb/t U3O8. Our prefeasibility studies and cash flow model are based on this with 75% recoveries after taking into account mine dilution, plant losses and recoveries. These are "life of mine" grades. The first years however will see the higher grade open pits at Skal and Andersons feeding the mill and these grades are >3.5lb/t. Further we have inputted underground mining costs at around $20/t and the open pits will have mining costs in the order $4-5/t..........so there is allot of upside. As well the 3.2lb/t is very conservative and we anticipate that further drilling of our high grade zones and their extensions will lift this grade in the future. You may recall some of our last and best holes were returning grades well over 4lb/t. The current resource model without any further drilling indicates a profit in the order of $300 million in 3 years after the payback of capital and interest of $158 million. We intend to expand this production rate as well. Lagoon Creek is very small, not proven and early days of exploration in comparison to Summit's projects.

You should aslo remember that as far as all Australian explorers go, including Arafura and their partners, all States are now Labor governed and so we are all in exactly the same position as far as getting new mine approvals.

Q6. Other interests;

Watch this months Quarterly Report where there are some good exploration results and we are about to start drilling the Golden fault gold target and get Independent Consultants underway on scoping reports for our Constance range Iron ore. Our Mount Isa ground position alone with nearly 6,500km2 is worth more than the current share price without any other assets.

Summit is extremely well positioned with quality asets, a dominant ground position second to none and the money to explor and develop these over the coming two years and turn the Company into the new midcap Australian resource company that are now missing from the ASX.

I hope this helps. I have added you to our email list so you will get announcements and news as it's released.

Regards
Alan J Eggers
Summit Resources Limited
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