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UXA Resources receives first exploration funds from A$2.5m convertible note facility

UXA Resources (ASX:UXA) has completed the first stage of its convertible note facility with US-based La Jolla Cove Investors, drawing down its first monthly payment of $250,000 of the first A$1 million convertible note.

The agreement with La Jolla comprises the issue of A$2.5 million of convertible notes to fund exploration activities at the company’s three active projects.

Russell Penney, managing director of UXA Resources, commented “the issue of the convertible note will ensure that the company has sufficient funds to undertake the planned Phase 2 drilling program at the Dome 5 zinc-lead-silver project in New South Wales.

“It is a very welcome investment in the company at a time of such uncertainty in the capital markets.

“It is a low cost way of funding our exploration program compared to alternative funding arrangements and provides additional scope to advance the company’s diverse project pipeline that offers near term exploration upside.

“The notes are unsecured with no restriction on further debt or capital raisings.”

La Jolla Cove provided some very positive insights into UXA Resources, with director Rob Lizt adding, “we’re highly impressed by UXA Resources’ experienced management, diverse portfolio including zinc, copper, gold and uranium, well-known JV partners, and international cash flow positive logging business."
Issue and conversion of the second note is subject to UXA receiving shareholder approval at its annual general meeting in November 2011.

Exploration program - three diverse projects
1. At the Dome 5 lead-zinc-silver project in New South Wales, phase 2 exploration will include infill and step out drilling over eight holes for 2800 metres to test the potential MVT style mineralisation.
The exploration target is a 5Mt to 10Mt mineralised body at 10% lead plus zinc with silver credits.
2. Nabarlek North uranium project in Northern Territory, phase 2 exploration to follow up previous encouraging reverse circulation percussion drill results testing the potential strike length extension of the U40 prospect into Nabarlek North and radon cup sampling results pinpointing additional drill targets.
3. Myroodah and Mudjalla uranium projects in Western Australia, drill testing a large radiometric anomaly identified in a recent airborne geophysical survey.
The tenements are located in a highly prospective region for potential sandstone hosted uranium mineralisation amendable to low cost in-situ leach mining methods.
UXA Resources also has the rights to explore for coal on the Mudjalla and Myroodah West tenements.