Cue Resources Ltd.
TSX VENTURE : CUE.P

Cue Resources Ltd.

November 23, 2006 16:27 ET

Cue Capital Corp.: Agreement Signed to Acquire 70% of the Yuty Uranium Property, Paraguay

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - Nov. 23, 2006) - Cue Capital Corp. (TSX VENTURE:CUE.P) is pleased to announce that it has signed an Agreement dated November 3, 2006 that sets out the essential terms between Cue Capital Corp. ("Cue"), Transandes Paraguay S.A. ("Transandes") a Paraguayan Corporation, Sebastian Reidl, of Vancouver, British Columbia and Alex Hirtz, of Quito, Ecuador whereby Cue can in an arms length transaction earn a 70% interest in the Yuty uranium property located in Paraguay through the acquisition of 70% of the issued and outstanding shares of Transandes. The terms of acquisition are subject to TSX Venture Exchange (the "Exchange") approval and if approved the acquisition will constitute Cue's acquisition of a Significant Asset as a qualifying transaction under the CPC Policies of the Exchange.

The Yuty property is a large property covering approximately 250,000 hectares in south-central Paraguay that was the focus of extensive uranium exploration between 1976 and 1983. This activity was centered on a large belt of Permo-Carboniferous age continental sandstones that represent the western flank of the Parana Basin. In neighboring Brazil these same sandstones contain numerous uranium occurrences including the Figueira Mine that reportedly hosted approximately 19 million pounds of U3O8. Most of the uranium occurrences in this environment are "roll-front" type deposits similar to those being currently exploited by low-cost in-situ leach methods in the western United States, Central Asia and Australia. Exploration activity on the Yuty property ceased in 1983 due to low uranium prices.

Transandes has accumulated an extensive database on the project, including logs for approximately 350 core and rotary drill holes (approximately 75,000 m). Almost half of these holes (162) encountered anomalous, or better, radioactivity.

Between 1976 and 1983 the Anschutz Corporation (a private, Denver-based oil company) with joint venture partners Korea Electric Power and Taiwan Power Company spent approximately US$30 million evaluating an area covering over 2.5 million hectares of prospective ground in which the Permo-Carboniferous age continental sandstones subcrop in south-eastern Paraguay and on follow-up work on primary target areas.

This work consisted of airborne radiometric and magnetic surveys, detailed geological mapping, ground geophysical and geochemical surveys which narrowed down the areas of interest. This was followed with regional scale diamond drilling with initial drilling at 15 kilometer spacings drilled across inferred host trends. This work identified several primary target areas, including the San Antonio, San Miguel, Typychaty and Yarati-i areas near and around the village of Yuty. Follow-up drilling at the San Antonio area with 266 drill holes encountered significant mineralization in 103 holes (greater than or equal to 0.03% eU3O8 over 0.60 m). Twenty-four of these holes had grades in excess of 0.10% eU3O8. The term "eU3O8" refers to equivalent uranium, estimated by down-hole logging with a gamma-ray tool. It is believed that Anschutz, the operator from 1976 to 1983, used North American industry standards to log the holes.

By 1982 the mineralized roll front system at San Antonio had been identified over a strike length of approximately 7 kilometers, with widths of 10-60 m. At that time Anschutz speculated that approximately 2 million pounds of U3O8 per kilometer of strike length may be present at San Antonio, for a total of 14 million pounds U3O8 in the area. This data is not NI 43-101 compliant and is not to be treated as a resource estimate, but rather an estimate of the geological potential of the area.

The depth of the known roll-front type uranium mineralization on the Yuty property intersected by the past drilling is at depths between 60 - 140 meters and the characteristics of the host formations suggest that low cost in-situ leaching recovery could work well in this environment.

The other primary targets areas identified by Anschutz remain to be tested with follow-up exploration. In addition, substantial portions of the project lands have received only very limited attention in the past, and are considered to have good potential to host uranium mineralization.

A Technical Report dated October 16, 2006 on the property has been prepared by Scott Wilson RPA, and will been filed on SEDAR concurrently with the issuance of this News Release.

Under the terms of the Agreement, Cue can acquire a 70% interest in Transandes by fulfilling a Minimum Funding Commitment of US$8,000,000 for exploration expenditures on the Yuty property and by making aggregate cash payments of US$305,000 (of which US$20,000 has been paid as a non refundable deposit) and by issuing an aggregate of 4,000,000 common shares of Cue to Sebastian Reidl and Alex Hirtz each participating equally. US$3,000,000 of the Funding Commitment will be advanced within 18 months of the Effective Date of the Agreement and the balance of $5,000,000 of the Funding Commitment for cumulative Exploration Expenditures of $8,000,000 is to be advanced on or before 3 years from the Effective Date of the Agreement.

Cue is then required to deliver a Pre-Feasibility Report with respect to the lands covered by the Concessions within 90 days after completing its Minimum Funding Commitment.

The 4,000,000 shares to be issued under the Agreement will be issued in 4 equal installments the first installment being due for issuance on the Effective Date of the Agreement. The balance of the installments are due and payable annually thereafter on the anniversary of the Effective Date.

Transandes will be the operator of the joint-venture programs and a management committee comprised of representatives of Transandes and Cue will implement the exploration programs on behalf of participants in the venture. Cue will have a casting vote on the management committee after the first US$3,000,000 of the Funding Commitment has been spent on the property.

The Agreement between Cue, Transandes, Sebastian Reidl and Alex Hirtz remains subject to Exchange approval. There will be a finder's fee payable to an arms-length person on completion of this transaction subject to regulatory approval.

CUE PLANNED WORK PROGRAM:

Cue's initial goals will be to compile all previous data with a view to locating old drill holes on the ground and then commencing a drilling program as soon as possible in close proximity to the areas where anomalous or significant grade uranium mineralization occurred in previous drilling. As exploration for this type of uranium occurrence requires a great deal of drilling it is anticipated that approximately 23,000 meters of drilling will be completed within the first year.

For 2007, Cue has proposed a budget of approximately US$2,000,000, with a work program that includes completion of data compilation and interpretation, leading to 3000 m of core drilling to validate early work, and to provide samples for disequilibrium and leach studies, as well as 20,000 m of rotary drilling to better define the San Antonio mineralization and to begin the systematic testing of other primary targets. The preparation of a 43-101 compliant resource estimate is planned for later in the year, and is included in the proposed budget.

Chris Healey, P. Geo, is the Qualified Person, as defined in NI 43-101, and is responsible for the preparation of the technical information contained in this news release.

BROKERED EQUITY FINANCING:

As part of Cue's qualifying transaction Cue has negotiated a brokered private placement of 7,700,000 purchase receipts at a price of $0.50 per purchase receipt for gross proceeds of $3,850,000. Each purchase receipt will convert into one unit of Cue consisting of one common share and one-half of one common share purchase warrant, with each whole warrant entitling the subscriber to purchase one additional common share in the capital of Cue at a price of $0.75 for a period of one year following the issuance of the units. The purchase receipts will automatically convert into units on the date the Exchange issues a Final Exchange Bulletin confirming that Cue's acquisition of a right to earn a 70% interest in the Yuty property through shares of Transandes has been accepted by the Exchange as Cue's qualifying transaction. The date of issuance of the Final Exchange Bulletin is the Effective Date of the Agreement. In the event the Final Exchange Bulletin is not issued by December 31, 2006, proceeds from the placement of the purchase receipts will be returned to the Agents. The private placement is subject to compliance with applicable securities laws and Exchange approval.

As compensation for the placement of the purchase receipts, the Agents will receive a 6.5% commission calculated on the gross proceeds which commission is payable in purchase receipts having the same terms as the purchase receipts issued pursuant to the brokered private placement. In addition, the Agents will receive non transferable warrants in a number equal to 8% of the number of purchase receipts sold. Each Agent's Warrant will entitle the holder, on exercise, to purchase one additional common share of the Issuer at a price of $0.50 per share at any time until the close of business on the day which is 24 months from the date of issue of the Agent's Warrants.

For other services rendered to Cue, the Agents will receive an administration fee of $5000 and a corporate finance fee of 120,000 corporate finance units. Each corporate finance unit will be comprised of one previously unissued common share and one half of one share purchase warrant each whole warrant being exercisable at $0.50 to purchase one additional common share with the corporate finance warrant expiring 24 months from the date of issuance.

Proceeds of this private placement will be primarily used for property costs and the commencement of exploration and drilling on the Yuty Property as well as for general corporate purposes.

NEW INSIDER

Insiders of the Company have also agreed to transfer within escrow 700,000 shares to Longview Capital Partners Incorporated subject to Exchange approval. The shares transferred within escrow will remain subject to the escrow restrictions imposed on the shares under the CPC Policies of the Exchange after the agreement to acquire an interest in the Yuty property has been accepted for filing by the Exchange.

In addition, Longview Capital Partners Incorporated has agreed to purchase 2,900,000 Purchase Receipts in the brokered agency offering announced in this news release as a result of which Longview Capital Partners Incorporated could become a control block shareholder of Cue if the Purchase Receipts are converted into units and the warrants attached to the units are exercised.

Damien Reynolds, Chairman of the Board of Cue and a director of Cue is the President and Chief Executive Officer of Longview Capital Partners Incorporated.

NEW DIRECTOR

Incidental to Cue's proposed acquisition of an interest in the Yuty concessions and entry into the uranium exploration field, Cue has appointed Chris Healey, P. Geo. to its Board of Directors and as Chief Operating Officer and Derek Pink has resigned as a Director of Cue. Mr. Healey is the former exploration manager for Cameco Corporation and the former VP of Exploration for US Energy Corp. Mr. Healey also serves on the Board of Directors of Uranium Power Corp. an Exchange listed company.

Mr. Healey will receive a stock option to purchase 225,000 shares of Cue at the price of $0.50 per share.

Following the appointment of Chris Healey to the Board of Directors, the Board consists of the following:

Damien Reynolds, Chairman of the Board and Director;

Rahoul Sharan, President and Director;

Chris Healey, Chief Operating Officer and Director

Steven Vanry, Director

Bev Funston, Secretary and Director

Damien Reynolds is the President and CEO of Longview Capital Partners Inc. Rahoul Sharan, Chris Healey and Bev Funston are Directors and/or Officers of Uranium Power Corp., an Exchange listed issuer. Chris Healey is a professional geologist previously employed by US Energy Corp. of Riverton, Wyoming. Rahoul Sharan is a chartered accountant by profession.

Steve Vanry is a member of the Chartered Financial Analyst Institute and Vancouver Society of Financial Analysts currently serving as President, Director and Chief Executive Officer of Fury Explorations Ltd. Both Rahoul Sharan and Bev Funston as past Directors and/or Officers of Fury Explorations Ltd.

CONDITIONS TO THE CLOSING OF THE QUALIFYING TRANSACTION

The following conditions will have to be fulfilled before the qualifying transaction is approved by the Exchange:

1. the consent of shareholders representing more than 51% of the issued and outstanding shares of Cue in writing to Longview Capital Partners Incorporated becoming a control block shareholder of Cue;

2. Independent confirmation of existing legal opinions issued to Transandes Paraguay S.A. confirming good and valid title to the Concessions; and

3. The issuance of a final Exchange Bulletin on or before December 31, 2006 unless the date is extended with the consent of the Purchasers of the Purchase Receipts.

"Completion of the transaction is subject to a number of conditions, including but not limited to, Exchange acceptance and if applicable pursuant to Exchange Requirements, majority of the minority shareholder approval. Where applicable, the transaction cannot close until the required shareholder approval is obtained. There can be no assurance that the transaction will be completed as proposed at all.

Investors are cautioned that, except as disclosed in the management information circular or filing statement to be prepared in connection with the transaction, any information released or received with respect to the transaction may not be accurate or complete and should not be relied upon. Trading in the securities of a capital pool company should be considered highly speculative.

The TSX Venture Exchange Inc. has in no way passed upon the merits of the proposed transaction and has neither approved nor disapproved the contents of this press release."

(The company has 12,477,000 common shares outstanding.)

CUE CAPITAL CORP.

Rahoul Sharan, President

WARNING: The Company relies on litigation protection for "forward looking" statements. Actual results could differ materially from those described in the news release as a result of numerous factors, some of which are outside the control of the Company. This news release does not constitute an offer to sell or a solicitation of an offer to sell any of the securities in the United States. The securities have not been and will not be registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act") or any state securities laws and may not be offered or sold within the United States or to U.S. Persons unless registered under the U.S. Securities Act and applicable state securities laws or an exemption from such registration is available.


The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of the content of this News Release.

Contact Information

  • Cue Capital Corp.
    Rahoul Sharan
    President
    (604) 921-1810
    (604) 921-1898 (FAX)