woosh, page-6

heathgate to buy out its 25 pc stake Here are the facts:

1. GIR has a 25% free carried interest with Heathgate in the Lake Frome area

2. the GIR interest is IMMEDIATELY adjacent to Heathgate's Deep South and Beverly East deposits.

3. Heathgate is completing a drilling program on GIR's land, and is finding economic intersections of uranium (> 0.03% cut off) which also seem to be amenable to in-situ-leaching (such as that at Beverly mine)

4. Heathgate is a private company, therefore has no reporting requirements on drill results beyond its statutory requirements

5. Heathgate also has a 75% interest in joint venture with Alliance Resources (AGS). The share price of AGS has risen from 20c to $2.00 in 12 months, putting it with a market cap of ~ $550m.

So we infer:

1. If Heathgate was to buy out is stake from AGS, it would have to pay in excess of $500m for it. From my research, I understand that Heathgate is not entirely happy with the AGS share price movement and the lofty premium the market is placing on uranium stocks at the moment, as it just means they have to fork out more money to get a 100% stake.

2. If Heathgate was to buy out the 25% stake from GIR, it could probably do so with a spend of $150m to $200m for GIR's 25% interest.

3. If Heathgate wanted to avoid the situation that has occurred with AGS, and me more savvy with their JV with GIR, it would be looking to buy chunks in GIR now, as it completes the drilling program.

4. If there are favourable drilling results, would it make more sense for Heathgate to buy out its 25% interest before the drilling program gets too far advanced and the market factors in the potential, or would it make more sense to pre-empt the move and get the 25% stake at a cheaper price?

5. If you had a choice between buying something for $500m with the potential of it making you $750m, or buying something for $200m with the potential of making you $400m, which one would you choose? The return on investment is greater with the second option, despite the first option netting you $50m more. And return on investment is what governs purchasing decisions.

Here is a fact:

Since the initial Lake Fromely announcement and the price rise to 80cents, GIR dropped back as low as 64.5cents. Since then, it has been increasingly trickling its way higher, despite the recent sell off in commodities prices. Clearly there is someone buying......