Red Rock takes 15.8% stake in uranium explorer Cue Resources

·         Yuty project in Paraguay includes 9.5m pounds of 43-101 compliant resources

·         Multiple targets present along 130km regional redox front

·         Transaction enhances company's uranium portfolio at low cost 

Red Rock Resources, the AIM-listed mineral exploration and development company, says it has subscribed for 9,898,000 Units at a price of C$0.10 each in Cue Resources Ltd, a company listed on the TSX Venture Exchange (Code: CUE).  Total consideration is C$989,800 or approximately £565,000, to be settled in cash.

Each Unit comprises one ordinary Cue share and one warrant entitling the holder to subscribe for one additional Cue share at a price of C$0.15 for a period of two years from November 1, 2009.  Both the shares and warrants are subject to a four month hold period, and the warrants will carry an acceleration provision for the mandatory exercise or lapse of the warrants in the event that the shares trade at a price of more than C$0.30 for a period of over 20 trading days.

Commenting today, Red Rock Chairman Andrew Bell said:

"The investment in Cue greatly enhances Red Rock's uranium portfolio at low cost.  Cue's uranium assets include an established Resource with upside potential, in a country with infrastructure and a positive attitude to mining. This investment is the culmination of a ten month disciplined search process conducted by the former and the current CEOs of our 27% owned uranium associate Resource Star Ltd, currently re-listing on the ASX, both of whom are experienced ex-Western Mining uranium geologists. We screened 190 companies and projects worldwide that appeared to meet our investment criteria, and refined our search in stages until we arrived at our top three value propositions. Cue stood out.

A year ago we had no projects with established Resource figures. As a result of opportunities thrown up by the global crisis of late 2008/early 2009, we are now participating in projects with JORC or 43-101 Resources in all three of our areas of operation: iron in the Yilgarn through Jupiter Mines; gold through our farm-in to the Mid-Migori project in Kenya; and now uranium."

The principal asset of Cue Resources is 100% of the 230,000ha Yuty uranium project in Paraguay on which the defined mineralisation is interpreted to be a sandstone-hosted roll-front uranium deposit.  The licence is interpreted to contain 130km of a regional redox front with multiple uranium targets, one of which, San Antonio, has been previously explored.

The Anschutz/Korea Electric Power/Taiwan Electric Power joint venture completed 266 regional drill holes on it between 1976 and 1983, and latterly by the Cue/Cameco JV drilled 234 holes between 2007 and 2009 before that JV was terminated by mutual agreement earlier this year.

An  NI 43-101 compliant Indicated Resource of 8.3m lbs U₃O₈ at a grade of 420ppm U₃ O₈, has been outlined at San Antonio, together with an Inferred Resource of 1.2m lbs grading 500ppm U₃O₈.  Further drilling is planned to expand the resource base and define new prospects at other identified zones of mineralisation.

Initial leaching, permeability and porosity testwork has been carried out at San Antonio.  These show positive indications that the deposit is amenable to in situ recovery of the contained uranium since suitable impermeable horizons are present above and below the ore zone.