urg::: Fin Review: Don't get nuked in the uranium game

Fri Sep 23 07:11:55 EST 2005

Financial Review

Don't get nuked in the uranium game

2005/09/23

Absolutely nothing is more fashionable than uranium these days. The 
Chinese and Japanese want to incinerate it as fuel, while Iran and 
Pakistan want it to incinerate their neighbours. So as long as the 
oil price stays high and atom bombs proliferate, uranium investors 
can get richer and happier.

The problem is to find a hot little uranium stock, because all the 
big ones are fully priced. Uranium is only a small part of BHP 
Billiton, while well-known miners such as ERA and Paladin have been 
bid up in the market for months.

As usual, Pierpont is here to help. He has found a little uranium 
stock that is hotter than chilli seeds.

It's Greater Pacific Gold, but if you want to sleep at nights after 
buying it, Pierpont advises you not to spend much time checking its 
background or you may get chronic insomnia.

Greater Pacific has an issued capital of 613 million shares, which 
are trading around 1.9¢. The share price needed an atom bomb to get 
it moving so they found one.

Greater Pacific has issued no fewer than four excited Australian 
Stock Exchange announcements this month to tell investors it has 
uranium in the Northern Territory.

On September 6, Greater Pacific announced it had an option to acquire 
25 per cent of the assets of Australian Uranium Pty Ltd. On September 
8, Greater Pacific said Australian Uranium held uranium prospects 
covering 700 square kilometres in the Mary River area about 100 
kilometres east of Darwin.

On September 14, Greater Pacific said it had obtained the right to 
buy 51 per cent of Australian Uranium. On September 19, Greater 
Pacific said the geological appraisal of the prospects was very 
encouraging and that the Mary River area was "adjacent to Batchelor, 
Rum Jungle and Jabiru".

Well there's plenty of uranium in the Northern Territory all right 
and it's the only place in Australia where a discovery has a sporting 
chance of being developed, with the partial exception of South 
Australia.

In Greater Pacific's case, the lead time to development is going to 
be particularly long because it hasn't actually found any uranium. 
Further, the area it has bought into is near the coast on the Mary 
River flood plain.

Mining data service Intierra describes the area as swampy, with the 
prospective basement rocks concealed beneath wetlands, which will 
tend to mask any buried anomalies. The area may well be rich in 
uranium, but in Pierpont's experience, what the Mary River is 
undeniably rich in is saltwater crocodiles of the large, aggressive 
variety. Pierpont would go prospecting there only in an army duck, 
preferably heavily armed.

Pierpont's none too sure about the word "adjacent" either. Mary River 
is about 100 kilometres north-east of the old Rum Jungle and 
Batchelor uranium mines and 120 kilometres west of Jabiru. Maybe the 
Greater Pacific chaps take an expansionary view of neighbourhoods.

Radioactivity has been reported around Mary River, but that doesn't 
mean much because the whole world is radioactive. Greenies who whinge 
about the dangers of radioactivity probably don't realise that 
they're exposed to larger doses among the granite pillars of Sydney's 
Central Station than they are at the Lucas Heights reactor.

Greater Pacific has reported strong radioactivity at two spots called 
Donkey Swamp and South Airstrip, but the reports are only anecdotal 
and were probably caused by radon anyway, because the radioactivity 
was merely temporary.

Even if Greater Pacific did find uranium at Mary River, Pierpont is 
none too sure how it would go about developing it, because at June 30 
the company had only $1.1 million left in the till.

In fact, Greater Pacific can't even afford to pay cash for its 51 per 
cent of Australian Uranium, but will earn the interest by 
contributing that proportion of exploration costs.

Wondering whether Australian Uranium was flush with funds, Pierpont 
looked it up on the Australian Securities and Investments Commission 
website.

The search revealed a few little surprises. One was that Australian 
Uranium was previously called Boldray Holdings. The directors agreed 
on September 2 to change its name to Australian Uranium because it 
had applied for a tenement in the Northern Territory and intended to 
concentrate on the mining industry. So it had been Australian Uranium 
for only four days before the deal with Greater Pacific was announced.

Nor does Australian Uranium, despite its grandiose name, look like 
any giant of the nuclear industry. Its issued capital is just two $1 
shares held by a lass named Carol Hardie.

Staring dumbly at the ASIC search document, it occurred to Pierpont 
that the chaps at Greater Pacific - probably because they were so 
excited - had failed to mention the linkage between Greater Pacific 
and Australian Uranium.

Greater Pacific's head office is at 68 Aberdeen Street in the Perth 
suburb of Northbridge. Australian Uranium's registered office is next 
door at number 70.

One of Greater Pacific's largest shareholders, with an interest in 
14.89 per cent of the company, is Dean Scook. Dean is a former 
director of Boldray, having stepped down in 2000. Australian 
Uranium's only current director is Carol Hardie.

Dean and Carol are not unacquainted with each other. As Pierpont 
mentioned in a previous column (May 10, 2002), Dean and Carol sold 
some vineyards back in 2000 to the listed Tuart Resources, which 
wound up suing both of them. Tuart went into voluntary administration 
and has since been reconstructed as Extract Resources.

Dean, incidentally, holds a high place in Pierpont's heroes of modern 
finance. He was a director of Mobi Tow which had one of the shortest 
listed lives in modern Australian history.

Mobi Tow was a Perth second-board company that raised $2million to 
market a device for towing vehicles. Mobi Tow listed on March 3, 
1988, was suspended on May 2 and put into liquidation. After it hit 
the wall, the liquidator, Anthony Douglas-Brown, estimated it had a 
deficiency of $2.4million on top of the $2million equity it had lost.

Pierpont awarded Mobi Tow a Mayfly Award, which your correspondent 
gives to companies that spare the suffering of shareholders by 
getting through their listed lives as quickly as possible.

Pierpont notes that Dean's colleague Carol believes in quick deals, 
too. When Pierpont checked the Mary River tenements with Intierra, he 
discovered they were pegged only on August 29 by Boldray.

Boldray changed its name to Australian Uranium on September 2 and the 
leases were transferred into the name of Australian Uranium some time 
between September 8 and 12.

So Carol - as the only shareholder in Australian Uranium - sold 51 
per cent of the Mary River tenements, within eight days of applying 
for them, to Greater Pacific, where Dean is a large shareholder. It 
all seems very cosy, which just shows what nuclear fuel can do for 
your household. But Pierpont will believe in uranium at Mary River 
only when the crocodiles start glowing in the dark.