EL 23462 Kukalak Project Annual report for the period 25 July 2004 to 24 July 2005

Abstract

Kukalak is a uranium exploration project area in northwest Arnhem Land, which is managed and operated by Cameco Australia Pty Ltd (Cameco). The exploration activities carried out in the 2004-2005 reporting period were designed to elucidate the uranium mineralisation potential of the main structural and airborne radiometric anomalies in the tenement and to drill test the western Devils Elbow area along the Ranger Fault (Table 1). The latter consisted of a single helicopter-assisted diamond drill hole (KLD104) that totalled 354.1 m, intersecting 108 m of Mamadawerre Sandstone, 208 m of Oenpelli Dolerite, a further 4 m of sandstone and 36 m of Nimbuwah Complex granite. No significant mineralisation was intersected, but two ~30 m wide intersections of Oenpelli Dolerite are cross-cut by narrow widely-spaced fractures and veins, with associated chlorite, sericite, leucoxene and Kfeldspar alteration, and elevated gamma radiation (average 5 times background with spikes up to 30 times background). The best composite geochemical analysis is 112 ppm U over 3 m, while the best spot geochemical analysis is 638 ppm U and 46 ppb Au. Uranium-bearing fluids were clearly active in this area, but there appears to have been insufficient deformation and subsequent fluid-rock interaction to form economic grade intersections. Drilling successfully verified the postulated geological cross-section and the existence of a westerlytapering wedge of Mamadawerre Sandstone below the Oenpelli Dolerite. Re-logging and sampling of segments of historic drill core suggests that there are a number of exploration plays that require follow up, particularly in the Devils Elbow area. Chlorite, sericite and haematite alteration are present near the unconformity in most drill holes from Devils Elbow and are associated with elevated scintillometer readings. Specifically, KLD001 has a 5 m wide zone of intense phengite alteration and elevated cps at the base of the Mamadawerre Sandstone, encompassing significant mass loss. Myra Falls Metamorphics and Nimbuwah Complex in KLD011 and KLD017 at Dog Leg were found to include monzogabbro and graphite-bearing mafic gneiss respectively, both of which are considered to have excellent reductive capacity and therefore uranium potential. The grade of metamorphism is interpreted as upper amphibolite to lower granulite facies. An atypical dickite PIMA signature is present in the lower Mamadawerre Sandstone in KLD002, in the far west on the Leichhardt Plateau. Field mapping, prospecting and sampling revealed a priority target at China Block, the coincidence of the north-trending Quarry Fault and NE-trending China Fault, radiometric anomalism, brittle deformation and TEMPEST structural perturbation. This area will be the focus of drilling in the next reporting period. Geochemical data from outcrop samples are able to corroborate the existence of most airborne radiometric anomalies in EL23462, but their significance is still unknown. It is difficult to extrapolate with confidence the geochemical anomalism of the near-surface mafic rocks (Nungbalgarri Volcanics and Oenpelli Dolerite) into the underlying basement. For example, there are numerous coincident radiometric and geochemical anomalies along the Kukalak Valley, but none appear distinct enough to suggest they are the result of leakage from an underlying orebody. They do, however, support the existence of the postulated sandstone pinch-out play along the length of the valley and encourage further investigation of the structure. Regardless, the best geochemical results from beyond Devils Elbow are those from China Block, where uranium is up to 361 ppm and gold is up to 755 ppb. Cameco Australia Pty Ltd August 2005 - Report No. KL05-02 Page ii of v An airborne electromagnetic TEMPEST survey has provided some significant insights into the geometry of the sandstone-basement unconformity along with the identification of structures and several priority targets. These will be evaluated in 2005 to determine whether drill testing is warranted.