unwisely sold phosphate assets for peanuts, page-4

A couple of months old - but saw this the other day

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Sale of PDN's Non-Uranium Assets in Queensland (PDN 81.85%)
PDN via its proxy, SMM, has entered into an agreement with unlisted UK company MM Mining Plc for the farm out of 80% of Summit’s interest in a number of tenements in the Mt Isa region of North-West Queensland. According to SMM, these properties are not considered important to the company's primary uranium exploration and development program, although the company has retained the right to continue to explore for uranium deposits on these tenements. The joint venture includes SMM's Isa
South, May Downs and Mt Kelly base metals projects and the Constance Range iron ore and phosphate project. SMM will
retain a 20% interest in these projects, which will be free carried through to any decision to mine. To earn its interest, MM Mining Plc (who will be the Manager) must spend $10M within the next 2 years. In return, SMM will receive $9M being:

$2M within 30 days or upon receipt of the approval of the assignment required under section 151(4)(a) of the Mineral
Resources Act (Qld)1989, whichever is the later;

$3M within 6 months or upon MM Mining Plc listing on a stock exchange, whichever is the sooner; and

$4 million within 18 months or within 12 months of MM Mining Plc listing on a Stock Exchange, whichever is the sooner.

We can understand PDN's assertion that its (and by implication, SMM's) focus has shifted to its uranium projects, to the point that these projects have assumed overwhelming significance. However, we would point out that the Mt Isa province hosts four "super-deposits (George Fisher, Mt Isa Pb-Zn, Century & Mt Isa Cu deposits), which makes it unique among mineral provinces
in Australia, all of which only contain one super-deposit (e.g. Kalgoorlie which contains a pre-mine resource of at least 1,388t of Au), a fact that further highlights Mt Isa's mineral prospectivity. Historically exploration has concentrated on the Eastern Succession which has resulted in numerous discoveries, including Cannington (47Mt @ 10.9% Pb, 4.3% Zn, 493 g/t Ag), Dugald River (38Mt @ 13.2 % Zn, 2.1% Pb, 32g/t Ag) and George Fisher (108Mt @ 11.5% Zn, 5.4% Pb, 93g/t Ag) among many others.

Although SMM's Mt Isa tenements reside in the Western Succession, it has been relatively underexplored, hence it has been perceived to be less endowed with mineral discoveries. However this is misleading for a number of reasons:

Mount Isa Mines (MIM) controlled much of the Western Succession. MIM s primarily geological focus was to find another Mt Isa or its look alike. Their exploration focus, therefore, solely concentrated on sedimentary basinal sequences to exclusion of other prospective lithologies and/or geological settings. However, despite these geological constraints, in using this model, MIM were still successful in finding Lady Annie (42Mt @ 0.75% Cu), Lady Loretta (14Mt @ 17.1% Zn, 5.9% Pb, 100g/t Ag) and Hilton (120Mt @ 10.2% Zn, 5.5% Pb, 60 g/t Ag).

There is a geological perception that the Western Succession was not as mineralogically endowed as the Eastern Succession. However, recent radiometric dating of uranium deposits suggest that mineralisation in the Western
Succession occurred at around the same time as the Eastern Succession of the Mt Isa Inlier, implying that mineral
prospectivity for both successions may in fact be very similar.

Recent conceptual IOCG (iron-oxide copper gold) models looking for deposits hosted by brecciated dolomitic, pyritic and carbonaceous sediments or brecciated sandstones proximal to regional fault/shear zones, have resulted in the relatively recent discoveries of the Ernest Henry and Century deposits; and

Furthermore, much of this tenement package was only recently relinquished after the corporate take-over of MIM by Xstrata, who did not allow other conceptual geological models to be tested. Many of these leases have been
subsequently acquired by SMM.

The deal with MM Mining also includes the Constance Range assets, containing iron ore and phosphate resources, located near the Century zinc mine, 300km northwest of Mt Isa. The Constance Range tenements contain the C, D, H iron ore deposits and the strike extensions of the E iron ore deposit. Inferred Resources from BHP s Constance Range drilling in the 1960 s was over 200Mt of iron ore. The targets are "open pittable" flat lying bodies with favourable strip ratios.

BHP abandoned the area in the late 1960's due to the lack of infrastructure in the area (power, rail and port facilities) and competing deposits in the northwest of Western Australia which were eventually developed by them. With mains power now at the nearby Century zinc mine (< 20km away), and should the proposed rail link from Mount Isa to Northern Territory line go ahead, all the prior infrastructure impediments that stopped BHP in the 1960's would have largely been removed.

Despite the $10M price tag, we are extremely surprised that the announcement containing details about the
above project vend into MM Mining was never released as a PDN announcement.

As far as we are aware, since the effective takeover of SMM by PDN, neither company has not allocated any
expenditure investigating the geological prospectivity of their tenement areas for either copper and/or lead-zinc
deposits, despite being surrounded by a "world-class" base metal province. We believe this to be a major oversight when one considers that some of their tenements are within 15km of the world's best known (largest?) base-metal deposit (Mt Isa).

Furthermore, we are not surprised that the tenements prospectivity has been recognised by the former Chief
Geologist for SMM, Peter Rolley, who is now the CEO of MM Mining Plc, effectively securing base metal and
iron ore prospectivity over PDN's Qld tenements.