Any ripped off CTS shareholders still out there? This is part of the story as to why your investment in CTS was sunk like a torpedo ... the assets were shuffled between the mates club. The much vaunted Peruvian Corachapi deposit, despite the ongoing glowing buzz from CTS, eventuated as a dud. Meanwhile, the insiders made many millions, rebadged the company to RMR and away they go again.
Mihran (Mick) Shemesian is a major shareholder in CTS/RMR via Exchange Minerals.
IAN MCILWRAITH October 2, 2009 IF IT was not for the fact that his favourite commodity is radioactive, former Contact Uranium chairman Richard Napier would probably be winning environmental awards for being a dedicated recycler.
Lancelot stumbled across Contact and Napier while looking at the remarkably high incidence of Australian companies beavering around the back blocks of Kyrgyzstan in pursuit of, mostly, uranium but also petroleum and precious metals.
Back in October 2006, Contact (before it was known by its current name of Ram Resources), revealed a deal to buy 90 per cent of International Mining Company Invest - described as an advanced Kyrgyzstan-focused uranium and gold group run by Sergei Khokhlov out of New York.
A month later Contact told the market the Kyrgyzstan areas were very promising, and three days after that installed Napier, who had been on the board since January, as chairman.
Interestingly, Napier had also been a director of IMC Invest since June, but from what Lancelot can see of Contact's public statements, only revealed that to investors tangentially when he became executive chairman the following May.
Perhaps they did not want to shout about the connection because Contact was hit with a pretty stiff non-refundable ''exclusivity'' fee of $US300,000 for a three-month option over the Kyrgyzstan properties.
It then paid another $US1 million in March 2007 for a direct 20 per cent stake, based on a $US5 million valuation by consulting group Snowdens.
By July, Contact had decided the uranium was, forgive Lancelot, so hot that it wanted all of the Kyrgyzstan project and agreed to pay IMC $US2 million and issue it 10 million shares - theoretically worth $5 million at then share prices. Total cost, then, was close to $7.5 million by Lancelot's reckoning.
About the same time Contact was simultaneously enthused with uranium leases in Peru, and eagerly signed up to buy control of them from Range Resources, which was instead devoting its heart and soul to Puntland in Somalia. Early last year Range became a substantial shareholder in Contact as a result of the Peruvian deal. Three days before the end of the 2008 financial year, Contact announced that Napier had quit - not just as an executive and chairman, but as a director. His departure coincided with the revelation Contact had arranged a joint venture on Kyrgyzstan with the private UK group Pangaea Energy.
Maybe it was the boardroom tumult or the GFC, but it clearly slipped the mind of Contact directors to tell investors in announcing the deal that one of Pangaea's two founding directors was Richard Napier. The deal was that Pangaea fork over $US1.3 million on exploration over the following six months to earn a 37.5 per cent stake in the leases.
The connections with Napier were still unmentioned when the annual report came out late in 2008, although the terms of the deal were unchanged and Pangaea had the right to lift its Kyrgyzstan stake to 80 per cent by spending almost another $US1 million getting one project to production, and paying an additional $US1.75 million in cash. It also agreed to give Contact just under 5 per cent of its own shares if all went to plan. After it got to 80 per cent, Pangaea needed to pay $US20 million for the remainder.
Handily for Range, its executive director, Peter Landau, was also a director of Pangaea and so could keep a weather eye on Kyrgyzstan's progress.
What Contact did not say at the time was that it was not as enamoured of Kyrgyzstan as Peru. It wrote off almost $10 million in exploration costs against Kyrgyzstan, and reduced the carrying value of its investment from almost $7.5 million to $2 million.
By February this year Contact, now Ram Resources, was under new management and trying to sort out its debts. Pangaea had also told it that it could not afford to meet all its commitments on Kyrgyzstan, so the cash-strapped Ram nobly ended the deal.
Lancelot is a little puzzled by this. Normally if you are short of the readies, you might generally be expected to push someone who is, so to speak, on a contractual hook, to meet its obligations in some form.
Ram, however, had the problem that it was about $1.5 million in debt to Range Resources over the Peru leases. So instead it struck a deal with Range to extinguish its debts in exchange for giving ownership of the Kyrgyzstan operations to Range ''or its nominee''.
Surprise, surprise - Pangaea was Range's nominee, and it swapped Kyrgyzstan for shares in the unlisted Pangaea, which it was hoping would come good.
Enter Nimrodel Resources, which in May announced it had spent $US100,000 to secure a deal with Pangaea to buy up to 80 per cent of ''an advanced uranium project in northern Kyrgyzstan''. Yup, they were Napier's much-recycled uranium leases that had gone from IMC to Contact to Range to Pangaea and now were off to Nimrodel.
Lancelot notes Nimrodel is being very cautious about the due diligence process in finalising the Pangaea deal, but it has called a shareholders' meeting for early November to approve handing over 30 million shares and 15 million options to Pangaea (worth more than $3 million at yesterday's 10.5¢ close for Nimrodel).
Lancelot wonders whether (a) this time someone might actually mine the fabled northern Kyrgyzstan deposit that always seems to be a gnat's wing from development and (b) if Range Resources might turn out to pick up a swag of Nimrodel shares as nominee for Pangaea.
