Year 2 annual report for EL 25378 for the period 15 February 2008 to 14 February 2009

Abstract

The Bundey River Project is located in the Plenty River area about 125km northeast of Alice Springs. The project is part of two contiguous tenements that cover about 1,200km2 of the Tertiary Waite and Huckitta Basins within the Proterozoic Arunta Block, which are prospective for palaeo drainage hosted uranium mineralisation. The Bundey River passes through the west and the Little Frazer Creek to the east of the Bundey River project area. The prospective areas within the tenement are topographically flat and are covered by scrubland and grassland. The project area covers part of the Tertiary Waite and Huckitta Basins which are relatively shallow sedimentary basins; the central portions of which were probably lakes during deposition of their sediments. The basins were fed from both the Harts Range metamorphic rocks in the south and by various channels that drain areas of Proterozoic granitic and metamorphic rocks to the north. The sedimentary sequence within the basin is dominated by clays and sandy clays, with lesser amounts of sands. Lignite and evaporite horizons are also present. The sediments were subject to slight uplift during the late Pliocene and the upper parts of the sequence have been eroded in part. The sequence is poorly known, with the approximate 1,200km2 of basin within the project areas having been tested by only about 15 drill-holes. Within the Plenty Highway tenement basement was reached in only one hole and the basin is known to be in excess of 200m vertical depth at it's deepest point. Early stratigraphic information was obtained by the BMR, which drilled two holes into the basin during the 1960s. Alcoa explored the basins for uranium during 1979 and 1980. Alcoa drilled 71 holes to maximum depths of 200m for a total of 6,260 metres. Of these holes, six were drilled within the area of EL 24810 and a further six within the adjacent tenement EL 25378. Significant uranium intersections were only achieved in four holes, drilled outside Hale Energy's project areas. The best intersection, at a depth of 104m, was of 45ppm U3O8 within a reducing horizon of pyritic carbonaceous silt. In late January of 2008, a helicopter borne time domain electromagnetic survey (SkyTEM) was flown over the eastern half of the tenement. Modelling and interpretation by Montana GIS identified numerous drill targets. 27 Air Core holes were drilled totalling 1685m to test some of the anomalies before heavy rain ended the programme prematurely. The drilling program confirmed the presence of units of carbonaceous clays and lignite/coal coincident with the modelled conductive shells within the paleochannel which are potential hosts for 'roll front style' uranium mineralisation. No significant assays results were returned from the drilling. Basement conductors were also drilled and were coincident with massive to semi massive pyrite in a quartz-biotite-magnetite gneiss.