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UXA Resources to double services business for strong near term cash flows

UXA Resources (ASX: UXA) plans to double the current capacity of exploration services subsidiary GAA Wireline to deliver stronger near term cash flows with a modest investment.

GAA provides borehole wireline logging services to the coal, coal seam gas, iron ore, base metal and uranium sectors in Australia and the United States.

In addition, GAA owns the global rights to the Prompt Fission Neutron device, which helps to define new uranium deposits.

The Prompt Fission device played a key role in the discovery of Alliance Resources' (NASDAQ:ARLP) Four Mile uranium project and Heathgate Resources' Beverley uranium mine in South Australia.

In the six months to December 2011, GAA reached $2.3 million in revenue, a 51% increase on the previous corresponding period.

Although UXA remains focused on advancing its base metal and uranium exploration projects in Australia, the company sees the expansion of GAA as the best way to deliver stronger ongoing cash flows.

UXA chairman Neill Arthur said expanding GAA's business would allow the company to capture some of the growth in the mining services sector within Australia and internationally.

"We are driving GAA to double its capacity covering all mineral sectors and substantially increasing earnings over the course of the next two years through the expansion plans now approved by UXA."

"With the uranium exploration industry also becoming increasingly aware of the advantages of PFN, its demand will soon outstrip our capacity to cater to this demand."

Some key parts of the growth plans for GAA are doubling the fleet of logging trucks, acquiring more industry standard tools and expanding the company's technical advantage in providing high quality service.

Director appointments

Two directors, Scott McKay and David Sutich, have been appointed to the board of UXA to assist with the new growth strategy for GAA.

McKay is a senior executive at international engineering management and specialist technical services provider Aurecon.

His experience includes supply chain logistics, infrastructure development, mergers, acquisitions and financing for the resource sector.

Sutich is an electrical engineer and wireline specialist who has worked with major international oilfield services company Schlumberger for 18 years, in the Middle East, Asia and Australia.

Sutich brings extensive experience in global business development for the high technology resources services industry to the board of UXA.

Meanwhile, founding director of UXA, David Hawley, has announced his intention to retire on June 30, 2012.