Korab uranium spinoff allocates 1:3 priority offer

Shareholders in Perth-based minerals explorer Korab Resources Ltd will be entitled to one share in the company's uranium and thorium spinoff for every three Korab shares held, the company announced today.

The spinoff, of 90 per cent of the uranium and thorium rights within Korab mineral projects in a new company to be called Uranium Australia Ltd, was announced in January this year.

Uranium Australia is preparing to raise between $20 million and $30 million, while reserving 15 million shares for Korab shareholders.

The company has set a record date of 30 June.

The full text of a company announcement is pasted below

Uranium Australia Ltd ("UAU") is a subsidiary company of Korab Resources Ltd holding 90% rights to uranium and thorium within projects where Korab has or is earning interest.

UAU has moved forward with the preparation of the IPO prospectus to raise between AU$20 million and AU$30 million and has been able to set the record date and the applicable ratio for the entailment of Korab Resources Ltd shareholders to participate in IPO of UAU.

The record date for Korab shareholders to entitle them to priority allocation of UAU shares issued under the IPO prospectus has been set as 30 June 2007.

The ratio of the IPO entitlement has been set as 1 Uranium Australia Ltd share for every 3 Korab Resources Ltd shares held on the record date. As an example, a person holding 15,000 Korab Resources Ltd shares on the 30 June 2007 will be entitled to subscribe for 5,000 Uranium Australia Ltd shares. This ratio will apply to all holders of Korab Resources Ltd shares. A person holding 3,000 Korab Resources Ltd shares on the 30 June 2007 will be entitled to subscribe for 1,000 Uranium Australia Ltd shares.

This entitlement means that 15,000,000 UAU shares (which are to be issued under the IPO prospectus) will be reserved for Korab Shareholders and any shares from this pool that have not been taken up will firstly be reallocated to Korab Shareholders holding more that 15,000 shares.

Please note that this IPO entitlement is separate from and does not form any part of the 90,000,000 UAU shares that have been already issued by UAU to Korab in exchange for the rights to 90% of uranium and thorium mineralisation within Korab's projects.

Korab intends to hold these 90,000,000 shares as a long-term strategic stake in UAU following its IPO and listing on ASX. This way Korab will retain substantial upside exposure to any exploration or development success of UAU.

More information regarding the IPO of Uranium Australia Ltd will be released to the market as it becomes available.