Looking for some short-term upside as well as some long-term serious upside? Look no further than Union Resources (
UCL.ASX). For an update of its fortunes look to the
latest quarterly report. But let me summarise:
1. The company has a 45% stake in one of the largest and easily accessible phosphates in the world; well-positioned to supply South American and European markets, if not Africa, where increasingly food production is important. The deposit has resources to last over 100 years; its a world-class resource which can be extracted using offshore dredging; the same technology used to recover diamonds. The difference is - the grade is 19% phosphate, not 0.2 carats per tonne. The resource is not fully-appraised, however 25-years mine-life is good enough for any commercial consideration. Its important because there is scalability.
2. Marawid Mining, a subsidiary of an Oman state-owned engineering enterprise, has acquired a 19% stake in UCL, as well as buying out Minemakers Ltd's stake in the Namibian offshore phosphate deposit for $25mil. That values UCL at twice its current valuation...that's the short term upside. The current
AGM announcement suggests there is scope for more capital raising and a placement to Marawid Mining.
3. UCL has a long-standing 34% stake in one of the largest undeveloped zinc-lead deposits in the world. The problem is that the project is in Iran; and the state-enterprise is not recognising its equity-contractual interest. It looks like nationalisation or corruption; but no one is calling it as much. Iran is of course a target for political reform, regime change, or otherwise. That project interest must be worth $350-500mil; which is further upside to UCL, given its uncertain stake. Fortunately, given the promising Namibian project, and the likelihood of a deal over that, this is a 'no-brainer' investment. I frankly am wondering why the market is not responding.
In the next few weeks I was expecting the following to occur....maybe it still will in the light of the recent appointment of a Marawid(?)
director and placement. I have no inside information; but I would have thought that the companies would seek for:
1. Marawid Mining to become the London-based investment vehicle for the Namibian offshore phosphate deposit
2. Union Resources would sell its stake in the phosphate project to Marawid in exchange for equity in that company.
3. Marawid Mining I expected to seek a listing on the Alternative Investment Market (AIM) in London, and raise equity in the project. This should attract a lot of investment attention, and being based in London, it will be a precursor to a London capital raising to advance the project.
4. Eventually we might expect the company to be taken over in some fertiliser market rationalisation/ consolidation
5. I suspect that Union Resources will continue to exist with its Iran project, its passive stake in Marawid Mining, and I suspect it will probably go after more exploration targets.
That is what my crystal ball was saying; but now I'm inclined to think that the companies are taking some other course. Its possible that Union simply needs the case, and Marwid Mining hopes to convert its equity in Union into greater control of both Union and the phosphate mine. Well, the stock I believe has fallen to support, so I will top up a little at 13c.
This company it at least more focused. The problem is that it found the most lucrative exploration area - highest grades after outlining the main ore zone. A great stock to trade though off that 9-10c support....though those trades will get commensurately smaller as that 'wedge' close out. 
