Fellow UMC holders, everyone is justifiably excited in...

Fellow UMC holders, everyone is justifiably excited in anticipation of the pending results. Though I too look forward to the drilling/assay confirmation of our expectations, I for one am unfazed on the exact contents of this particular announcement.

Why? 193 RC holes at an average of 33m would have the potential, possibly in combination with any historical data they've managed to confirm, to prove up possibly 100MT to 200MT of DSO at BEST. Given UMC's location and consequent minimal capex requirements, a $5/tonne in situ value would appear to be a rough, yet conservative guide to appropriate value. On a fully diluted basis should the market agree, that would give us UMC shares of approximately $3.30 to $6.60. Now the market does not seem to value UMC, which historically has not communicated the potential of the project that effectively, as highly as other iron companies which are better marketers (see TLM). So let's discount the values even further by 50% ~ $1.65 to $3.30.

Pretty good you say? Time to take profits perhaps?

I'm going to play devil's advocate and take a contrary view. I believe that this announcement will instead provide us with an ideal buying opportunity, one which may not likely be repeated for a while. IF the announcement comes out with what is expected and what is already built into the price - I would expect the company's typically understated announcements will cause the price to hover around the low to mid end of the values above.

Now would be the time to cast our eyes back at the original acquisition announcement of Oct 2006, which ironically held probably the most detailed information around the tenements concerned. E47/1429 (Jocelyn/Camp Hill) is the current target of drilling and is widely expected to hold roughly 100MT of Marra Mamba, with possible further extensions under shallow cover.

Let's leave that for the moment and have a look at the structure surrounding the other leases. A total of around 500MT of previously published mineralisation surrounds UMC's other tenements, including 250MT in The Noose and Wild Flower Mountain prospects, of which substantial portions of further Brockman mineralisation appears to flow into E47/1429.

Hill 65 is claimed to hold 200MT. It is directly North and appears to spill over into E47/1431. If UMC's suspicion that these surface deposits are manifestations of significant extensions under shallow cover - are we looking at another 100MT - 200MT in E47/1431??

Let's not forget E47/1432! Smack bang in the middle of BHP's Area C... Southern Flank hosting 75MT... HUGE area size of which most appears to be Marra Mamba formation. Could this potentially hold as much Fe as the rest of the tenements combined??

We're looking at a potential of around 500MT in E47/1429 and E47/1431 deposits... maybe another 250-500MT in E47/1432. Perhaps more if there are significant under cover extensions?? The infrastructure is all in place.. just need to dig it up and ship it out. Now ask yourself this question.. what is 50-60% of an FMG worth these days? $10? $15? This is of course bullish but serves to indicate the potential in these tenements and in this company.

Then ask yourselves if the potential is there... and the drilling confirms their understanding of the mineralisation today or tomorrow... Is UMC a buy or a sell at $2?? ;)

Oh and let's not discount the further potential in the bauxite!

Cheers
UIO

p.s. if one of you gents would be kind enough to post up the picture and table from page 2 of the October '06 announcement, the picture might get even clearer! :P