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Friday 20 June, 2008

Union Resources Ltd

Acquisition of Namibian Phos

RNS Number : 1646X
Union Resources Limited
20 June 2008
 



UNION RESOURCES


'Union


Acquisition of Namibian Phosphate Project 


Union Resources Limited ('Union') announces that it has acquired Namibian company Sea Phosphates (Namibia) Pty Limited ('SPL'). SPL holds two Exclusive Prospecting Licences nos. 3414 and 3415 ('the EPLs') issued by the Namibian Ministry of Mines and Energy for Phosphates and Precious Stones. The EPLs lie approximately 60km offshore from the coast of Namibia between Walvis Bay and Luderitz (a diagram showing the location of the EPLs is contained within the ASX version of this announcement, available on the Company's website). The combined total area of the EPLs is 200,000 ha. 


Highlights


  • The EPLs cover the heart of the central enriched phosphate area off the Namibian coast.


  • The area has been subjected to significant past exploration, and SPL has collated the pre-existing database which will accelerate future evaluation of the prospect.


  • Previous work has shown that phosphate occurs over an area of at least 1,000 sq. km with drilled P2O5 (phosphate) grades on average in the range 15-20%.

Such an area could contain a large deposit if further drilling establishes continuity of the phosphate horizon, but currently it is not possible to estimate resources. However the drill pattern and results do suggest that the deposit is large because there are positive holes (without intervening negative holes) over a large proportion of the drilled area. Of the holes drilled only 15% contain no phosphate.


  • Analysis of the previous exploration and assay data is currently being conducted by an independent expert to bring it up to the standards required under the JORC Code, and this work will hopefully be completed in the next two months.


  • Significant work on previous samples exists on the behaviour of the material in phosphoric acid production, and there is no reason to believe that the material will not be a suitable feedstock for standard phosphoric acid plants. A sample has been sent away for further verification.

  • A desktop study has been undertaken which has indicated that subsea recovery should be technically viable and economically cost effective.


  • The deposit of peletal phosphorite occurs as unconsolidated sediment in water between the depths of 250 and 300 meters. It is geologically simple and exhibits good consistency in area and thickness which the board believe will simplify exploration and development.


  • World rock phosphate prices have risen substantially recently, with industry standard Moroccan export prices increasing from US$50 per ton FOB to US$200 per ton FOB over the last year. This has significantly changed the outlook for SPL's EPLs off the Namibian coast, which are located in a belt of phosphate concentration in unconsolidated seabed sediments.


History of the Area


Phosphates were discovered in the area in the 1970s during regional marine surveys. In subsequent years the areas held by SPL have been subject to significant exploration and evaluation by several entities:


  • Gencor (1992 and 1994) ran a sampling program consisting of 50 vibracore holes covering at least 1,000 sq km with excellent recovery. SPL acquired data for 38 of the holes. Set out below under the heading 'Memorandum' is a report of the drill hole results prepared by an independent consulting geologist. The report shows the range of grades of P2O5 as falling between 12.30% and 21.49% with most falling in the range 15-20% in water of between 250 and 300m depth. Within the 1,000 sq. km area surveyed one area of approximately 8km x 8km where 11 holes were drilled returned an average of 4.6 metres at 17% P2O5 (see Table below). The program also demonstrated that phosphate occurs in an adjacent area over 30 km long and over 10km wide, which constitutes a very large deposit. It should be noted however that only six holes were drilled in this larger area (nos. 53, 55, 57, 59, 60 and 62 in the attached report) which is insufficient to establish continuity of the phosphatic horizon. Despite a recommendation for further evaluation by the evaluation team, when Gencor was acquired by Billiton work on the prospect ceased. 


  • Foskor of South Africa kept a defensive watching brief on the area as part of its competitive strategy and evaluated the possibility of blending the sedimentary Namibian phosphorites with the rock phosphate material it was processing in South Africa. A significant difference in the reactivities of the material (the Namibian Material was significantly more reactive during the production of Phosphoric acid) meant that the material was not suitable for blending, and Foskor's interest lapsed. 


  • The Ocean Phosphates Consortium (2004) extended the bulk sampling program of Gencor and commissioned a desk top study into the technical viability of recovering the phosphate material from depth. Subsequent to the death of one of the senior executives of a member of the Ocean Phosphates Consortium, exploration discontinued. 


  • The EPLs were then applied for and acquired by SPL.


Union is currently having the raw data from the Gencor study re-interpreted in order to produce an acceptable resource estimate consistent with the JORC Code. This work is now well advanced.


Immediate Program


Union intends to:


  • Confirm the Gencor results. An analysis of the previous exploration and assay data is currently being conducted by an independent expert to bring it up to the standards required by the JORC Code. Union anticipates this data to be available within the next two months;


  • Commence a bulk sampling program in order to confirm the behaviour of the material in Phosphoric Acid plant circuits;


  • Identify a strategic partner in the area of submarine material recovery in order to confirm the technical viability of recovering around 3 million tpa of the material; 


  • Seek potential off takers for the material; and


  • Confirm the technical and economic viability of the project.


Significant Terms of the Acquisition of SPL


Union has acquired 100% of the issued and outstanding share capital of SPL on the following significant terms: 


1.    The issue of 9,000,000 Union shares to the vendor of the shares of SPL ('the Vendor').
        The Union share price at the close of business yesterday was AUD$ 1.2 cents.


2.    Final completion under the contract will take place on or before 20 April 2009, subject to satisfaction of a number of conditions precedent, namely:

 

(i)    receipt of any required regulatory approvals;

(ii)    the Namibian Minister of Mines and Energy either granting renewal of the EPLs or granting a Mining Licence over all or part of the area covered by the EPLs; and

(iii)    Union forming the view that the exploration and proposed development of phosphate mining operations in the areas of the EPLs is commercially viable.


3.    Provided the conditions precedent referred to are satisfied, Union will:

 

(i)    on completion pay to the Vendor the sum of US$500,000 and issue to the Vendor 9,000,000 unquoted options over ordinary shares in Union, each option having an exercise price of AUD$0.13 per share and expiring on 30 April 2011; and

(ii)    grant to the Vendor a royalty, capped at US$10,000,000, equal to 3% of gross revenue derived from sales of product derived from the ore mined on the site of the EPLs.


4.    If the conditions precedent are not satisfied, the 9,000,000 Union shares to be issued to the Vendor will be cancelled, and Union will transfer back to the Vendor the shares in SPL.




   TABLE


Hole ID
Drilled
P2O5
P1Vc6-34
3.98
17.52
P1Vc9-37
4.12
13.38
P1Vc7-35
6.15
17.13
P1Vc8-36
4.26
18.35
P1Vc4-32
6.35
17.37
P1Vc5-33
5.42
17.27
P1Vc1-29
2.90
18.59
P1Vc2-30
4.73
19.66
P1Vc15-43
3.78
17.57
P1Vc14-42
5.48
17.06
P1Vc12-40
3.19
18.64
 
4.58
17.44

 


Union Resources Limited Namibian Phosphate Prospect - Holes drilled in an area approximately 8 km by 8km.


(Average quoted as 4.6 m grading 17% P2O5).





The information contained in this report relating to exploration results is based on information compiled by Mr Les Davis. Mr. Davis is employed by Veronica Webster Pty. Ltd. Mr Davis is a Fellow of the Australasian Institute of Mining and Metallurgy and has the relevant experience in relation to the mineralisation being reported upon to qualify as a Competent Person as defined in the 2004 Edition of the Australasian Code for Reporting of Exploration Results. Mr Davis consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.


MEMORANDUM



FROM: Les Davis, Veronica Webster Pty Limited 

TO:        Directors, Union Resources Limited


        



L W Davis of Veronica Webster Pty Limited ('VWPL') was supplied hard-copy drill logs for the Sandpiper Phosphate deposit located offshore in Namibia. He was informed that these data originate from an exploration program carried out by Gencor Ltd of South Africa but the logs are not accompanied by a report outlining the details for the work program. The method of drilling is believed to be Vibracore (or Vibrocore) which collects a continuous core of sediments. The drill holes are surveyed to a local grid and the origin point of the grid was not supplied.


VWPL has perused the drill logs and observed that:

 

·        Sampling has been carried out on geological divisions of the core.

·        Within the geological divisions the sample interval is commonly regulated to 0.5 m but ranges from 0.1 m to 0.7 m.

·        The higher P205 (phosphate) assays are within those geological divisions logged as phosphate bearing and conversely barren zones are identified as not phosphate bearing.
  •     The phosphate horizon extends from the sea floor to over 6.0 m thickness in places


The drilling is widely spaced from ~2 km to ~10 km between holes. At such spacings correlation between drill intersections is speculative.


VWPL has applied a lower cut-off to of 10% P205 to the drill assay intervals to produce an average estimation (width weighted) of % P205 for each hole over the intersection width drilled. These are listed in the following Table. (Assays were unavailable for two samples and VWPL applied the weighted average of the adjacent samples to these intervals). 



Sandpiper deposit - Summary List of intersections at a lower cut-off of 10% P20 Average grade over drilled thickness (length).

Hole Number

Easting

Northing

elevation below sea level

From m (sea floor)

To m (sample depth) 

Sample length m

%P2O5

PHF2-45

-90300

2661488

-240

0.00

1.13

1.13

15.95

P1Vc11 - 39

-86999

2733702

-245

0.00

5.61

5.61

17.80

PHF3-46

-100690

2661491

-217

0.00

5.37

5.37

17.36

P1Vc13 - 41

-84949

2733743

-259

0.00

1.10

1.10

13.33

PHF5 - 48

-100714

2669485

-217

0.00

3.76

3.76

19.75

p1Vc9 - 37

-85003

2734696

-254

0.00

4.12

4.12

13.38

p1Vc7 - 35

-87998

2734708

-242

0.00

6.15

6.15

17.13

PHF4-47

-93498

2669498

-243

0.00

1.22

1.22

15.44

p1Vc8 - 36

-87998

2734708

-246

0.00

4.26

4.26

18.35

p1vC10 - 38

-84011

2734720

-276

0.00

0.09

0.09

13.10

PHF8 - 50

-100586

2677374

-217

0.00

2.62

2.62

17.57

p1Vc6 - 34

-84988

2735697

-254

0.00

3.98

3.98

17.52

p1Vc4 - 32

-86974

2735698

-247

0.00

6.38

6.38

17.37

PHF7-49

-90299

2677397

-258

0.00

1.52

1.52

15.36

p1Vc5 - 33

-85998

2735713

-251

0.00

5.95

5.95

17.27

p1Vc3 - 31

-83998

2736684

-260

0.00

2.26

2.26

15.83

PHF9 - 51

-90297

2685491

-268

0.00

1.66

1.66

17.59

p1Vc1 - 29

-87989

2736703

-242

0.00

2.90

2.90

18.59

p1Vc2 - 30

-85952

2736713

-251

0.00

4.73

4.73

19.66

PHF10 - 52

-100558

2685566

-215

0.00

1.42

1.42

16.18

PHF12-53

-90295

2693595

-274

0.00

5.05

5.05

16.94

PHF13 - 54

-100492

2693595

-208

0.00

2.68

2.68

22.30

PHF14-55

-90270

2701451

-271

0.00

3.98

3.98

21.49

PHF16-57

-87252

2709005

-283

0.00

3.32

3.32

20.46

PHF18-59

-93553

2712731

-244

0.00

3.48

3.48

20.77

PHF19-60

-85243

2717029

-284

0.00

1.86

1.86

20.30

PHF21-62

-93665

2721616

-216

0.00

1.78

2.48

13.77

PHF22-63

-84022

2725992

-289

0.00

0.19

0.19

12.30

PHF24-65

-91695

2730383

-226

0.00

3.10

3.10

16.66

P1Vc15 - 43

-85993

2732679

-250

0.00

3.78

3.78

17.57

P1Vc14 - 42

-87997

2732702

-241

0.00

5.48

5.48

17.06

P1Vc16 - 44

-84002

2732711

-280

0.00

0.24

0.24

13.00

P1Vc12 - 40

-89570

2733674

-245

0.00

3.69

3.69

19.24


VWPL does not know the methods of sample collection, sample preparation and analysis. We recommend that grades are reported to the nearest per cent and widths to the nearest 0.1 m.




For and on behalf of


VERONICA WEBSTER PTY LIMITED


W DAVIS



Enquires to:


Australia    Union Resources Limited 

        Dr Frank Reid - Managing Director

       Phone: +61 07 3833 3833


London:      Hanson Westhouse Limited 

       Bill Staple or Martin Davison 

       0207 7601 6100  


      Bankside Consultants

      Simon Rothschild / Louise Mason

                  0207 367 8888





This information is provided by RNS
The company news service from the London Stock Exchange
 
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