minesite article - eggers bounces back

After His Success With Summit Resources Alan Eggers Bounces Back Into The Uranium Game With Manhattan Corporation

By Charles Wyatt / www.minesite.com

There is a new kid on the block worth keeping an eye on. The name is Manhattan Corporation Ltd and it is the new ASX-listed vehicle for Alan Eggers. Remember him? He is the man who came across at short notice to present at our 2006 Christmas Forum when Jim Rogers, the US commodity guru, was our guest speaker. Summit Resources was Alan’s company back then, and at the time it could boast that it was Australia’s most advanced uranium exploration company with over 75 million pounds of uranium oxide under its control in eight deposits near Mount Isa in northwest Queensland. That was Christmas and quite a number of those at the Forum got a late present as Summit Resources was taken over early in 2007 by Paladin Resources – since renamed Paladin Energy, for around A$1.2 billion in paper.

Since then Alan Eggers, a uranium man through-and–through, has been carrying out research on uranium companies around the world, seeking a suitable vehicle on which to base his comeback. As we sat munching salt and chilli prawns in Bentleys off London’s Piccadilly last week, he explained just how meticulous and time-consuming the computer generated research had been. It was undertaken by his private vehicle, Manhattan Resources, and he reckoned his research team had sifted through some 700 companies.

One of the characteristics sought consistently was ore suitable for in-situ leaching as at the Beverley mine in the northern part of South Australia. Weak acid or alkali is pumped underground to dissolve the uranium which is then extracted through a plant above ground. The operation is cheap and efficient and environmental disturbance is minimal.

By January 2008 he had made up his mind that a little company called Uranio, which had only just listed on the ASX, fitted the bill and he acquired a shareholding amounting to 16.8 per cent in his own name and in that of Minvest Securities (New Zealand). As Alan points out, the one time that you really know what a company owns and where it is going is by studying the listing prospectus. The longer it is out-of-date, the less reliance you can put on it. Alan then confirmed his support for the board in November of that year when he agreed to acquire another tranche of shares costing around A$1 billion to help fund the acquisition of the Imaloto coalfield in Madagascar.

In January of this year that acquisition was cancelled and the assumption has to be that Alan used his influence to keep the company focused on uranium. Indeed Robert Wrixon, the managing director, confirmed at the time that exploration and development of its Australian uranium projects was what Uranio was about, with possibly a corporate deal or two thrown in. Following the merger between Uranio and Manhattan Minerals, which was ratified this week, Alan has taken over as executive chairman and he is at pains to emphasize the name of the merged company – Manhattan Corporation – and his commitment to it. He has also brought onto the board John Seton, a New Zealand lawyer who was with him at Summit and whose brother is well known to Minesite for running the gold producer Olympus Pacific in Vietnam.

Manhattan has three main assets at the moment, but Alan reckons that he has already targeted another acquisition, so life for his shareholders should be pretty exciting from now on. The first of these assets is the Ponton project which is in a highly prospective uranium province of the Eastern Goldfields of WA around the 54 million pound Mulga Rock uranium deposits and which contain numerous areas of known uranium mineralisation within the same palaeochannel system.
Ponton includes the Double8 uranium deposit for which an initial JORC resource estimate in the inferred category of 11 million pounds has been established. There’s also another seven to 15 million pounds, described as ‘mineralisation potential.’ This may not be up to JORC standards, but it gives a very clear idea of the direction in which the resource estimate will be moving. What Alan now plans to do is bring Double 8 into production as soon as possible, now that the old Australian Three Mines Rule is a thing of the past. Three years he sees as a reasonable time frame for this, and he has hit the ground running.

The second project, Gardner, is further to the northeast, in the Tanami region bordering the Northern Territory. Two prospects look promising at this stage: the Don prospect, where an unconformity related deposit, along the lines of Cigar Lake in Canada and Ranger in Australia, has been discovered, and the Deva prospect, which has delivered anomalous radioactivity readings, and is also thought to be associated with a similar geological setting. There is also the chance that gold may be present in economic amounts in a geological setting similar to the Coyote mine, which is not far away in Australian terms of distance.

The third project is the Siccus project. Siccus is in a prime location within South Australia’s Frome Embayment area, where uranium is already being exploited at the Beverley and Honeymoon deposits using in situ recovery techniques. Importantly, Siccus lies within a similar geological setting to those established deposits, overlying a tertiary palaeochannel within the same system as the nearby Goulds Dam and Honeymoon uranium deposits.

These three projects would give a fair start to life for any uranium explorer. Based on knowledge gleaned from previous exploration results all of them have the potential to host significant uranium deposits, not to mention their geographic proximity to delineated uranium deposits established by others and the similarity in geological settings to those nearby deposits. In the case of Manhattan Corporation, however, two other aspects have to be considered. First, the experience and success of the directors of the company in uranium exploration, and second the timing.

At the moment the price of uranium is comparatively low at US$51 per pound, as compared with a fairly recent high of US$135 per pound. Over the ten years from 2005 to 2015 electricity consumption is expected to rise by 35 per cent, yet only 16 per cent of the world’s electricity comes from nuclear power stations despite the fact they are the only truly green and efficient source of power. At the moment 34 power reactors are under construction, but this number is expected to increase sharply. Demand for uranium will then start to overtake supply and there is only one way the price can move. This is the reasoning behind Alan Egger’s latest move and it makes a lot of sense.