In May of 2007 GCR purchased King Eagle Resources for $3.3...

In May of 2007 GCR purchased King Eagle Resources for $3.3 million mostly in shares of GCR valued at 5 cents. A large part of the transaction involved a group of claims in Northern Queensland that were very prospective for uranium and other metals.Those claims also contained four phosphate deposits containing 480 million tonnes of phosphate. The two largest deposits at Lilly Creek 191 MT @ 14.9% phosphate and Sherrin 175 MT @ 16.5% phosphate are located 80-100 kms from Mt Isa and near roads.

These four deposits have been JV'd to Legend (Gutnik) who took an 80% interest with GCR free carried for 20%. GCR retained all of the other mineral rights. Legend is listed in the US and its shares have exploded on the strength of its Phosphate interests in Queensland and the announcement that Indian fertilizer interests will fund the first Legend project at Lady Annie. This will cost US$800 million, produce 5 million tonnes of 32-34% phosphate and at a base price of US$200 tonne produce a gross profit of around US$700 million per annum. This IS part of the reason why Legend is valued at US$750 million. Assuming that Legend gives up 50% to finance the deal (and less taxes and finance charges) then Legend is selling for about TWO TIMES FORWARD PE on ONE project. The other reason is that they have phosphate reasources of 1,463 million tonnes of which GCR contributed 480 million tonnes.

The GCR tenements are located much closer to Mt Isa than Lady Annie (which will pipe to the Gulf and have a customized shipping system). The size of the two largest deposits (at a minmum) could also produce 5 million tonnes of phosphate per year (36 years), so using the Legend/Lady Annie scoping studies we get a capex of US$375 million (with a contingency of 15%). Assuming the plant is the same size as Lady Annie and ships thru Mt Isa (no pipeline or port infrastructure) then revenues are roughly the same at US$700 million per year. So GCR's 20% free carried could produce US$140 million per year.

Assuming we apply the same valuation to GCR AND a sales / financing deal is done on the GCR tenements then GCR could be worth US$140 million x 2 = US$280 million / A$294 million or 47 cents per GCR share.

Last May GCR paid 5 cents per GCR share for the above assets so at yesterday's closing price of 4.5 cents the Legend deal is worth -0.5 cents or -$3,155,000. Its real valuation is somewhere very substantially North of 5 cents, say at 10-15 cents puts the valuation at $30-60 million on the project, pending resolution of a development deal AND then the stock explodes from 10-15 cents.