namibia, page-4

Hi Joe

If it gets any cheaper I'll be snapping up some more myself.

In regards to your previous questions, information relevant to them is contained in various reports and presentations on the UCL website, www.unionresources.com.au and also there's pertinent info out from MAK too.

A few basic responses:

Size of resource. MAK's Wonarah resource currently has inferred resources of 1258 mt and expanding. It's the biggest resource in Australia so obviously bigger than any other Australian based phosphate asset. Sandpiper/Meob currently stands at 1581 mt indicated and inferred and looks like it could double. On a world scale the resource could come into the top 5/6 total national assets in it's own right. It's very big. Few Aussie companies have targets that are even as big as the 75mt we've already proven as indicated at Sandpiper and most are just exploration targets that aren't close to same JORC stages.

Production cost/T. I haven't got much in the way of info on this although MAK needs $150/t RP for Wonarah to be seriously viable in the long term. $58/t potential production cost for Sandpiper gives some security about long term viability. From 2000-2007 the international rock phosphate markets were priced at roughly $50 per ton depending on the source of data. According to Intersuisse last year, the 50 yr long average in 2009 dollars was $77 pt. Although Morocco, in particular, theoretically has potential to weigh price down long term the commentators seem to suggest that it looks like escalating production cost factors generally around the world, the potential China may move to a net importer and fellow emerging nation India having no resources of their own will see a future long term basement significantly above that previous long term average. This would give Sandpiper a good chance of being profitable in any future market conditions.

Start up costs. Capex at US$144 million is low because a lot of the capital requirement will be carried by the dredging contractor and charged in the opex cost. It's a very nice set up really providing opex costs remain under control - a competitive market among dredgers should help ensure that.
As far as potential earnings, Intersuisse briefly assessed the Namibian resource as part of their recent reports on MAK. For MAK's 42.5% share (equal to UCL share) Intersuisse calcualated net earnings flow into MAK, after all costs including ongoing finance expenses and amortising capital cost. They came up with US$12.7m in 2013/14; rising to $58.5 m in 2016/17 and US$71.5m from 2019/20 on. These were based on roughly 50% higher capex assumptions and 4.5 mtpa production. They have all finance costs paid out by 2019/20 but clearly that can be done much much faster with those sort of earnings and potentially say max US$75mill or so to borrow if 100% debt funding were available. It should be allowed that the Intersuisse figures are speculative but they don't look far fetched.

Mine life. Scoping study was based on 30 years. There is resource enough for over 100 years. Mine life is no issue whatsoever if the feasibility study is satisfactory.