Cue Resources Ltd.
TSX VENTURE : CUE

Cue Resources Ltd.

September 06, 2007 11:42 ET

Cue Capital Corp. Signs a Letter Agreement With Cameco Global Exploration Ltd. to Establish a Strategic Alliance

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Sept. 6, 2007) - Cue Capital Corp. (TSX VENTURE:CUE) "Cue" is pleased to announce that it has entered into a letter agreement with Cameco Global Exploration Ltd. ("Cameco") to establish a strategic alliance to facilitate the continued exploration and development of the Yuty Concessions currently being developed by Cue in Paraguay. Cameco is a wholly owned subsidiary of Cameco Corporation a reporting company having its shares posted and called for trading on the Toronto and New York Stock Exchanges. Cameco Corporation is the world's largest uranium producer.

The strategic alliance will be effected by Cameco participating in a three stage equity private placement with advances to be made in each stage to coincide with certain milestones and by Cue granting to Cameco ongoing rights as a shareholder of Cue, and possible joint venture participation to the extent of a 60% interest in the continued exploration and development of the Yuty Concessions.

Private Placement Component

Cameco will subscribe by private placement for a number of units of Cue having an aggregate purchase price equal to the sum of US$4.5 Million and CDN$15.0 Million in three tranches as follows:

(a) a subscription for units having an aggregate purchase price of US$4.5 million to close on the later of September 6th, 2007 or the date Cue causes a satisfactory title opinion to be delivered to Cameco in respect of the exploration and prospecting permits granted to Transandes Paraguay S.A. ("Transandes") for the Yuty Block 4 and Yuty Block 2 portion, of the Yuty Concessions, subject to Cameco being satisfied with its preliminary due diligence inquiries;

(b) a subscription for units having an aggregate purchase price of CDN$2,500,000 to close on the later of the closing of the first tranche and the date Cue causes a satisfactory title opinion to be delivered to Cameco in respect of the grant of exploration and exploitation work permits in respect of the remaining concessions held by Transandes;

(c) a subscription for units having an aggregate purchase price of CDN$12,500,000 to close on the later of:

(i) January 31, 2008;

(ii) 30 days following completion of a drill program consisting of a minimum of 75 delineation holes from the Yuty Concessions and a column leach test being completed on the samples;

(iii) the delivery of an independent National Instrument 43-101 compliant report on the results of such drilling and testing programs with the results of the programs being satisfactory to Cameco in its sole discretion;

(iv) Transandes acquiring an exploitation work permit in respect of the portion of the Yuty Concessions designated as Yuty Block 2;

(v) Cue receiving shareholders' approval of the third tranche of Cameco's subscription for units of Cue; and

(vi) Cameco and Cue executing a comprehensive strategic alliance agreement.

Each unit of Cue subscribed for by Cameco will consist of one common share of Cue and one-half of one common share purchase warrant. Each whole warrant will entitle Cameco to purchase for a period of two years following the date of issuance of the warrant one common share of Cue at a 35% premium over the purchase price paid by Cameco for the unit. The purchase price for units comprising the first tranche will be equal to 110% of the 20 day volume weighted average market price of Cue's common shares as traded on the TSX Venture Exchange, converted into US currency.

Cameco's purchase price for each unit comprising the second tranche and the third tranche will be equal to the 20 day volume weighted average market price of Cue's common shares as traded on the TSX Venture Exchange prior to the date of the closing of each such tranche.

The gross proceeds from the first tranche will be used by Cue solely to fund its acquisition of 30% of Transandes from Sebastian Reidl and Alexander Hirtz, as announced by Cue in a news release issued on July 3, 2007. Cue has the right to earn the remaining 70% of Transandes under a separate agreement dated November 3, 2006 as amended.

The gross proceeds from the second tranche and third tranche will be used by Cue solely for the continued uranium exploration and development of the Yuty Concessions.

Strategic Alliance Component

As of the date of closing of the first portion of the financing, a strategic alliance between Cameco and Cue will become effective to facilitate the exploration and development of the Yuty Concessions on terms whereby Cameco will have the right to acquire a 60% interest in any uranium deposits discovered on the concession lands as long as Cameco and its affiliates hold securities of Cue at least equal to 90% of the number of units subscribed for by, and issued to, Cameco in the private placement.

Cameco's right to earn an interest in the deposits is exercisable within 90 days of the definition of proven and probable mineral reserves and measured mineral resources totaling at least 20 Million pounds of U3O8 within any portion of the Yuty Concessions (a "Uranium Deposit") at which point Cameco may require Cue to establish a joint venture equity for the purpose of developing the proven and probable mineral reserves and measured mineral resources. If the option is exercised, Cameco has the right to purchase 60% of such joint venture entity from Cue for and in consideration of: (1) payment to Cue of US$2.00 per pound of U3O8 comprising Cameco's 60% indirect beneficial interest in the proven and probable mineral reserves of U3O8 within the Uranium Deposit; (2) Cameco agreeing to fund 100% of the costs to advance the exploration and development of the Uranium Deposit up to and including the completion of a feasibility study on the deposit; and (3) payment to Cue within 30 days of the completion and delivery of a positive feasibility study on the deposit of US$7.00 per pound of U3O8 as determined in the feasibility study comprising Cameco's indirect beneficial interest in the proven and probable mineral reserves of U3O8 within the Uranium Deposit. If following the formation of the joint venture entity, another Uranium Deposit is defined within the Yuty Concessions, such additional Uranium Deposit will either be transferred to the existing joint venture entity or vended into a new joint venture entity, depending on the additional Uranium Deposit's proximity to existing operations, on the terms described above, including an additional payment to Cue.

If Cameco exercises its option to acquire 60% of the outstanding rights to the joint venture entity and the uranium deposit in the joint venture entity is determined to contain 25 million pounds of proven and probable mineral reserves of U3O8, the first required payment of US$2.00 per pound would be US$30 Million calculated at US$2.00 per pound x 60% x 25 million.

The second payment after the completion and delivery to Cue of a positive feasibility study would be US$105 Million calculated at US$7.00 per pound x 60% x 25 million. Thereafter the properties would be developed in a joint venture whereby Cameco would be required to pay 60% of all future costs and Cue would be required to pay 40%.

As long as Cameco holds at least 90% of the securities subscribed for and issued in the private placement, Cameco has the right to appoint one representative to the Board of Directors of Cue. In addition, Cameco has the preemptive right to participate in any future financings so as to maintain its pro-rata percentage interest in Cue; the right to a top-up private placement each calendar year-end to prevent dilution of Cameco's interests which may result from the exercise of options and warrants throughout the prior calendar year; and the right at any time a take-over bid is made for common shares of Cue to maintain its pro-rata shareholdings in Cue through a top-up private placement to prevent dilution resulting from the exercise of options and warrants since the beginning of the then current calendar year.

The private placement is subject to TSX Venture Exchange and shareholder approval.

Shareholders of Cue will be asked to approve the terms of the third tranche of the private placement which may give rise to an effective change in control of Cue at Cue's first annual general meeting of shareholders to be held September 27th, 2007.

Chris Healey, P.Geo, COO Cue Capital commented; "This alliance with the world's leading uranium producer is a major step forward in the development of Cue to becoming a significant producer. It also clearly affirms the faith in the Yuty project exhibited by Cue's management. We eagerly look forward to a long and rewarding relationship with Cameco, the world's premier uranium producer. I know that we will benefit greatly from their technical and sales experience."

Also at the shareholders' meeting shareholders will be asked to pass a resolution authorizing Cue to change its name to "Cue Resources Ltd.".

CUE CAPITAL CORP.

Chris Healey, COO & Director

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 Resources Ltd.
    Chris Healey
    COO & Director
    (604) 921-1810
    (604) 921-1898 (FAX)