Perth, May 3, 2006 (ABN Newswire) - A major stake in the advanced Corachapi uranium project in Peru has been acquired by ASX-listed Contact Resources Limited.

Perth-based Contact announced today it had signed a Heads of Agreement with fellow ASX listed Range Resources Limited, to acquire up to 65% of the share capital of Range's Peruvian subsidiary, S.M.R.L. Corachapi (Somirelco).

Somirelco's key asset is the Corachapi deposit which Range calculated last year had an initial inferred JORC resource of 1.6 million tonnes at 0.15% U3O8 for 2,400 contained metal tonnes.

"This is our first foray into uranium and is designed to generate further shareholder wealth through expanding our involvement and spread of risk in more advanced mineral plays," Contact Resources' Chairman, Mr Ron Gajewski, said today

"With uranium prices at a 20 year high and shortages of supply predicted for the mid to long term, the Company sees our involvement in uranium exploration as timely with the potential to add significant value, Mr Gajewski said.

"Contact will engage local geological consultants to immediately move the project forward, including the formal due diligence program."

Terms of Acquisition

Subject to due diligence and shareholder approval, Contact will initially acquire 51% of the issued capital of Somirelco through the issue of 5 million ordinary shares and 5 million options (to acquire shares at 20 cents exercise price each on or before 30th June 2008) and a cash payment of A$850,000.

Contact has also paid Range a non refundable deposit of A$50,000 on signing the Heads of Agreement.

Mr Gajewski said Contact had the right to acquire a further 14% interest Somirelco by sole funding A$500,000 in exploration expenditure over a two year period - to give Contact a total interest of 65%. A meeting of Contact shareholders will be convened later this month to approve the transaction.

Project summary

The Corachapi uranium deposit is located in the Puno area of the province of Carabaya in the southeast of Peru and 1,600 kilometres southeast from the country's capital city, Lima.

The U3O8 mineralisation areas are located in a gently inclined plateau between 4,600 and 4,700 metres above sea level. Puno, which includes the districts of Corani and Macusani, is identified as containing significant uranium mineralization.

As well as the Corachapi project, Somirelco also owns the contiguous Taypicorani and Taititira uranium prospects and 15 kms to the east, the Kihitian prospect which is currently under application.

If approved, this would give Somirelco a total concession area of approximately 1,600 hectares in the Macusani District.

Mr Gajewski said uranium mineralization was present in the concession areas and sufficient work had been carried out in the area in the past to enable Contact to target a JORC compliant resource at Corachapi within the near future.

"Leases surrounding these prospects are presently being explored for uranium by a number of international companies including Canadian listed Vena Resources Inc and Strathmore Minerals Corporation," he said.

Technical Details of the Corachapi Deposit

There are two zones of mineralisation. The first, "Cornisa Oeste", ia 1.2 kms in length plus 0.9 kms with a lower grade, and 0.25 kms wide, located in the middle of the concession. The second zone, "Quebrada Corral", is 1.6 kms in length and 0.2 kms wide, located in the northeast area of the concession. The Peruvian Institute for Nuclear Energy (IPEN) discovered this prospect within its National Prospecting Plan between 1960 and 1975. Additional exploration was conducted by IPEN and IAEA (United Nations) between 1982 and 1987. Previous exploration includes drilling, various evaluation studies and a heap-leaching test.

The Corachapi uranium deposit consists of secondary uranium mineralization mainly autunite, a bright yellow-green mineral readily visible in the numerous cross uniting trenches that form part of the previous work by IPEN in the Macusani area.

Contact Resources - which listed on the ASX only late last year after a successful and fully subscribed $3 million Initial Public Offer - has six mineral exploration projects, all in Western Australia, with a primary focus being its 51% interest in the copper potential of Parry Range, located within the Ashburton area.

The Company has already extended the potential strike length of the Parry Range copper mineralisation to 15 kilometres - more than 20 times the previously reported zone of 700 metres.

Source:
Kevin Skinner
Senior Consultant
FIELD PUBLIC RELATIONS

231 South Road
MILE END SA 5031
Tel: (08) 8234 9555
Fax: (08) 8234 9566
Mob: 0414 822 631
kevin@fieldpr.com.au

>>> CONTACT RESOURCES LTD