Annual report EL 27181 Denison for the period 12 November 2010 to 11 November 2011

Abstract

Callabonna Uranium Ltd conducted exploration activity in search of uranium and Rare Earth Element mineralisation on the exploration lease area defined as the Mount Denison project (EL 27181) during 2011 following Arafura Resources Ltd success at Nolan?s Bore to the east. In early 2011 Callabonna Uranium Ltd was notified by the Aboriginal Areas Protection Authority (AAPA) that its primary Rare Earth Element prospect was within unsuitable proximity to a site of significance and could not be drilled. Subsequently Callabonna Uranium Ltd scaled down the proposed deep diamond drill program in favour of a shallow 3 hole diamond drill program on a granite exposure (Platform prospect area). These holes were designed to target anomalous uranium values (100 to 1000ppm) ascertained from rock chip assays and ground radiometrics (collected using a handheld gamma-ray spectrometer) in order to determine if higher-grade uranium mineralisation occurred at depth or was restricted to the surface weathering profile. A total of 9 intersections were assayed from the 3 holes and revealed a very near-surface (less than 17cm depth) secondary enrichment of uranium with a peak of 1170ppm uranium at 2cm depth in drillhole DP1 with deeper intercepts (below 17cm) returning uranium values below 100ppm. The lack of higher-grade uranium mineralisation down hole in any of the Platform Prospect drillholes has lead to the Company?s decision to terminate further drill programs in the Wangala Hills region in the foreseeable future. However weathering of these secondary enriched granite carapaces since the Proterozoic could provide an excellent potential source for sedimentary and surficial-type uranium mineralisation in the drainage systems to the north of the Wangala Hills. Buoyed by this, the Company also completed the planned extensive MMI soil geochemistry survey over the northern area of the exploration lease in search of uranium and Rare Earth Element mineralisation undercover within Palaeo-drainage channels and young active drainage channels. 634 MMI (Mobile Metal Ions) soil geochemistry samples (including 614 primary and 20 repeat samples) were collected and yielded elevated and attenuated uranium anomalies up to 136 times background over a 1-2 kilometres along the strike of the soil survey lines in the vicinity of the Five Mile Creek area (Five Mile Prospect Area) in the east of the exploration tenement. Callabonna Uranium plans to use this successful exploratory MMI survey to target a drill program in the Five Mile Prospect Area in early 2012.