Vancouver – UGL Enterprises (UGS-V) is bearing the market wrath following mistakes in reported uranium grades from its recently acquired Nergui project in northern Mongolia.
Two days after announcing its property acquisition, the company requested a trading halt of its shares after realizing errors had been made in transcribing grade units from the original Russian documents into Mongolian.
With original Russian documentation believed unavailable, UGL Enterprises relied upon data contained in summary reports sourced from the Mongolian mines department (MRAM). The subsequent discovery of the Russian reports and comparison to the Mongolian translation showed, in some instances, uranium grade units were mis-transcribed from grams per tonne figures to a percentage. This represents a potential variation of three orders of magnitude (1% being equivalent to 10,000 grams per tonne).
Although reported uranium grades were originally qualified as not being compliant with National Instrument 43-101, the discrepancies have cast significant uncertainty on all the figures. As stated in its news release “the company advises that none of the grades reported in the release can be relied upon.” The Mongolian report listed purported grades of 4-10% uranium (assumedly U3O8) over lengths of several hundreds of metres, all of which are now suspect.
Russian exploration work on Nergui from the early-1980s through to 1992 discovered numerous instances of widespread uranium mineralization over large areas. UGL Enterprises plans to commence its evaluation program upon melt of the snow cover in the region.
The agreement has the company paying the vendor US$136,500 and issuing 250,000 shares for 100% interest in the project.
Investors punished UGL Enterprises for the technical error. Its stock first surged 50%, on over 2 million shares volume, to 90 per share following announcement of the acquisition only to have a trading halt placed the following day to clarify the mistake. Upon being brought back to trade, the issue plummeted 46%, or 41 to close at 49 per share on 2.1 million shares volume.
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