Australia | May 10 2007
By Greg Peel
From the “Strange ASX announcements we’d never thought we’d see” department comes this one yesterday from micro-cap Retail Star (RSL).
Retail Star is an internet shopping business focusing on sports and leisurewear. It was spun off from Gowing Bros in 2001 but unfortunately almost met the same fate as the iconic retailer, entering voluntary liquidation in November 2005. It managed to re-emerge as a penny stock thereafter (having originally listed at $1.00), and had struggled back to 5c before yesterday’s announcement.
Retail Star announced yesterday that it had agreed to acquire 100% of uranium explorer Orion Exploration Pty Ltd. As you do. Orion is a fully-owned subsidiary of Red Rock Resources Plc, which is listed on the London Stock Exchange’s Alternative Investments Market.
Orion is targeting uranium mineralisation at one project in Western Australia and five in the Northern Territory – two of which are in the Rum Jungle field.
Those of this writer’s vintage may recall learning about the riches of Rum Jungle at primary school. A surveyor first discovered something weird there in 1869. All he knew it wasn’t copper. In 1871 a bullock wagon loaded with rum, en route to appease construction gangs near Darwin, became bogged in a patch of jungle. So the drivers released the oxen and drank the rum. The name stuck.
In 1949 a prospector-farmer shooting roos in the area stumbled across an oxide he did recognise. Rum Jungle was then established as Australia’s first large-scale uranium mine, servicing the British atomic weapons program. Operations continued until 1971 when the project was shut down due to environmental devastation. The company which still owns the site is now called Rio Tinto (RIO). As late as 1990 the government was still trying to neutralise the pollution. Rio has always refused to contribute.
It is, however, no surprise that the Rum Jungle field should again be the target of prospectors, given the price of uranium. The area was never necessarily “mined out”.
Retail Star will acquire Orion Resources for $1.5 million cash. This will be raised through Red Rock’s agreement to purchase $1.5 million in Retail Star equity. Further converting performance shares will be issued to Red Rock on the transfer of further exploration licences located in southern Africa.
Retail Star intends to raise a further $562,500 through the issue of 1.5c shares in order to fund project development. Shares in Retail Star have subsequently fallen from 5c to under 3c over the last two days.
Retail Star made note in its ASX announcement that this did not constitute a change of direction for the company. It was merely an opportunity “to commit a small amount of funding to an exploration company for uranium entity”. The Board may consider an official change of direction if things work out.
Did anyone say bubble?