IKN

a plague o both your houses

Mining PRs and the Ottotrans™: Part Six

Here we go again, trying to make sense of all that malarkey written by junior mining companies in those endless press releases. Today’s victi…SORRY! example is today’s PR from Cue Resources (CUE.v), operators of a uranium prospect in Paraguay.

This is what it says:

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Vancouver, British Columbia CANADA – Cue Resources Ltd. (CUE – TSX Venture), (“Cue”) announces that the Subscription Agreement between Cue and Cameco Global Exploration Ltd (“Cameco”) dated September 6, 2007 has been dissolved, by mutual consent. The two companies have also agreed to terminate their Letter Agreement dated August 31, 2007. This action releases Cue shareholders from the potential of significant ownership dilution at current market prices.

The Subscription Agreement contemplated three staged equity investments in the amounts of US$4.5 Million, CDN$2.5 Million and CDN$12.5 Million, respectively. The first two stages of this transaction were successfully completed in September and October 2007. Since that time global market conditions related to the resource sector have materially changed and many of the conditions embedded in the Subscription Agreement and Letter Agreement became untenable. As such, both parties discussed the possibility of modifying the aforementioned Agreements; however a mutually-acceptable solution could not be agreed upon.

Damien Reynolds, President and CEO noted, “While we are disappointed that the commercial agreements could not be re-negotiated, we have parted company in a positive manner. Market conditions for financing early-stage exploration companies have changed significantly since the original agreements were signed. The shareholders of Cue were exposed to massive dilution of their equity should the third payment by Cameco have been executed. This dilution was deemed unacceptable, given the excellent potential of the Yuty project, even in today’s turbulent financial environment.”

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And this is what it means:

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Vancouver, British Columbia CANADA – Cue Resources Ltd. (CUE – TSX Venture), (“Cue”) announces that the Subscription Agreement between Cue and Cameco Global Exploration Ltd (“Cameco”) dated September 6, 2007 has been dissolved, because Cameco told us it was walking away and we couldn’t do a thing about it. The two companies have also agreed to terminate their Letter Agreement dated August 31, 2007. This action releases Cue shareholders from the potential of actually owning something worth money in the future.

The Subscription Agreement contemplated three staged equity investments in the amounts of US$4.5 Million, CDN$2.5 Million and CDN$12.5 Million, respectively. The first two stages of this transaction were successfully completed in September and October 2007. Since that time the ridiculous bubble in uranium juniors burst and marginal projects like searching for U308 in Paraguay of all places have become plain silly. As such, both parties discussed the possibility of modifying the aforementioned Agreements; however a mutually-acceptable solution could not be agreed upon because the guys at Cameco weren’t born yesterday.

Damien Reynolds, President and CEO noted, “We’re totally screwed on our only project now, but we have to put some kind of positive spin on the thing otherwise my salary for next year might be in danger. The shareholders of Cue were exposed to massive dilution of their equity, but that wouldn’t have stopped us if Cameco had decided to move forward. It was good while it lasted, I suppose.”

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Previous Ottotrans™ available here

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