Uranium section"A preliminary uranium resource has been...

Uranium section

"A preliminary uranium resource has been delineated at the
Mt Fitch prospect. The indicated and inferred resource is
8.9Mt @ 1.01lb/tonne for 8.9Mlbs or 18.3Mt @ 0.79lb/
tonne for 14.5Mlbs at a lower cut-off grade. Drilling in
August will chase the mineralisation to the north, west and
at depth. A high grade intercept of 19m @ 4.6lb/tonne
occurs along the northern edge of the resource. Mt Fitch is only one of several promising prospects and has not
been closed off. A preliminary development study and cost
estimate for Mt Fitch uranium has begun. Processing rates
up to 2Mtpa feed will be investigated with a full feasibility
study likely to follow. A new uranium prospect has also
been identified at Area 55 West. Previous results include
3.7m @ 2.58lb/tonne U3O8. Area 55 West validates the
concept of a central uranium processing plant serving
multiple orebodies in the region. That said, CMR’s primary
target at Rum Jungle is a Ranger type deposit of 50 to
100Mlbs U3O8.
Our CMR valuation increases 10% to $5.75ps and
conservatively only credits 50% of our calculated value
for the sulphide project. Applying 100% for the sulphide
project increases our valuation to $8.60ps. Long term
assumptions are US$1.75/lb copper, US$15/lb cobalt,
US$5.00/lb nickel, US$0.41/lb lead, A$/US$ exchange
rate of 0.76 and a 10% discount rate. We include $0.27ps
for exploration excluding uranium and $0.10ps for the
Wyoming royalty and Territory Iron agreement. We now
apply a separate $0.40ps value for the uranium assets
equivalent to $5.00/lb of resource at the higher cut-off,
in line with the market average. This value could increase
rapidly given high uranium prospectivity. CMR has drilled
only two prospects and has ore grade intercepts on many
more. The uranium prospects represent very considerable
blue sky.
Assays from NSW drilling and additional uranium and
copper results from the NT are expected within a couple
of weeks. Any continuation of the high quality Browns
East results would continue to enhance sulphide project
value. Our FY07 earnings forecast declines 27% to 22.5cps
on the slip in first oxide production. We retain the Buy
recommendation. CMR has over $80m in cash excluding
past expenditure repayments and no debt.