PTS Platsearch

[blacksheep]

Platsearch [ASX:9c] has farmed out its accumulated exploration permits to companies like Red Metal, Marathon, Inco and Newcrest, seeking uranium and other metals. With 66M shares o/s, current marketcap is less than A$7M at a share price under 10c. The company has just published a slide show presentation: http://www.platsearch.com.au/310805.pdf

[blacksheep]

PTS chairman Soper's address to AGM Nov 22 05 spells out the reality of mining exploration - it's gambling! - and the hazards of being a long-distance runner when success proves elusive.

"We seek to use other people’s money to fund the high risk drill testing phase of exploration. Over the past nine years we have entered into 48 joint ventures, and been able to average $1.6 million of other companies’ money being spent on our projects for an average net spend of our shareholder’s money of $250,000 pa.

"We think that the strategy is valid. Grassroots exploration is a long odds game, requiring perhaps 100 or more targets to be tested before success can be realised.

"In our view, keeping the capital structure tight, costs tightly under control, and maximising the spend of others on our property is the best way, in the long run, to ensure that PlatSearch shareholders participate fully in the rewards of success.

"Some companies expect to secure ore grade results with the first hole, whereas any experienced explorer understands that the first hole usually can only confirm that we are testing the right environment.

"It is usually necessary to drill at least a further three or four holes to establish vectors that can lead the drilling programme towards the mineralised zones.

"This explains why PlatSearch has numerous good quality targets that remain not fully tested and require further drilling.

"Ideally, PlatSearch would raise sufficient funds to test its own targets using its own technical capabilities. However, unless this can be done at prices substantially in excess of the levels that have prevailed in recent years, raising such high risk funds is very dilutive for existing shareholders.

"We are open to other approaches. An example is the recent IPO of Western Plains Gold NL. PlatSearch worked with Bob Duffin and Gary Jones, two very capable and experienced geoscientists who share Bob’s Geopeko background, to establish Western Plains Gold using projects largely identified by PlatSearch. Some of these properties were vended into WPG. Others were the subject of joint ventures with WPG. Already, initial results are confirming the merit of this approach.

"Given the challenges described above, PlatSearch is interested in varying its approach as illustrated by the WPG example above. Certainly, if we had a situation where our share price reached 50c or $1 based on a discovery or other favourable development, we have indicated in past years that we would take the opportunity to raise meaningful funds, say of the order of $5 million, to advance exploration on our tenements ourselves, and retain 100% ownership.

"Over the past 18 years some 51 targets generated by PlatSearch have been tested by core or percussion drilling. Of these, half have been discarded as being unlikely to yield a worthwhile discovery. However, another 26 targets have shown encouraging results, are not fully tested, and have considerable remaining potential.

"Grassroots exploration is a long odds game. Some observers consider 100 to 1 risk profile as being at the lowish end of the odds spectrum. If so, that says that companies like PlatSearch must participate in at least 100 tests if we are to make a serious discovery (actually the statistical concept of Gamblers’ Ruin says that to achieve a 90% chance of success in a 100 to 1 game, considerably more than 100 tests must by undertaken).

"All we can really say here is that if we keep at it, sooner or later we will have a success that will amply reward shareholders and the Board and management team for their persistence and patience over the years.

"Over the years, PlatSearch has gained a reputation for being a competent and honest group of people. Bob Richardson is respected throughout the industry as being one of the very best geophysicists in the industry, but also being a very capable explorationist as well. Bob has more than kept up to date with the rapid advances in computer exploration technology over the years, and the development of new exploration techniques. A recen