Namarrkon Project EL 23700 Annual report 31 May 2006 to 30 May 2007

Abstract

The Namarrkon Project consists of Exploration Licence (EL) 23700 with a total area of 100.6 km2, located in West Arnhem Land, about 250 km east of Darwin. The EL was granted to Cameco Australia Pty Ltd (Cameco) on 3 June 2005 for the period of six years. In early December 2006 a Joint Venture agreement was signed between Cameco Australia Pty Ltd and Uranium Equities Limited (UEL). UEL can earn a 40% stake in EL23700 if expenditure obligations are met before the end of 2010. During the second year of tenure covered by this report, Cameco conducted exploration for uranium mineralisation. The exploration program included two helicopter-supported diamond drill holes, a ground-based RC drill hole, an airborne hyperspectral survey and the collection and analysis of 45 rock chip samples and 2 water samples. NMD0002 was drilled to test the Black Bream target, a TEMPEST conductor adjacent to the NNW-trending Quarry fault occurring at a depth of 300-400 m. After intersecting 173.5 m of broken sandstone interpreted to represent the damage zone of the Quarry fault, the hole intersected Oenpelli Dolerite. Uranium mineralization was present in the dolerite between 240 and 280 m, hosted in discrete hematite-uraninite fractures and quartz-hematitechlorite veins. Integrated over this interval, processing of the downhole gamma returned 119 ppm eU3O8. Geochemical sampling over the veins returned a best result of 2.8 % U3O8 over 16 cm. Composite sampling of dolerite away from the veins confirmed the restricted nature of the mineralization with an average of 23 ppm U3O8. Core from the dolerite interval was also intensely fractured leading to limited orientation data, though the uraninite-bearing fractures are tentatively interpreted to be associated with the Quarry Fault. Beneath the Oenpelli dolerite (335.7 m) NMD0002 intersected Tin Camp Granite until the end of the hole (492.2 m). No uranium bearing veins were intersected in the Tin Camp Granite, despite extensive sericite and hematite alteration. NMD0001 was targeting the Hot Dot radiometric anomaly first identified by AFMEX in the 1990s and confirmed to be associated with uranium-bearing quartz veinlets in dolerite. The hole was specifically targeting the intersection of two NNW trending structures and the WNW trending Spencer thrust. The hole intersected a thin interval of Nungbalgarri Volcanics, followed by silicified and chlorite altered Mamadawerre Sandstone down to 364.05 m. This interval included a small fault zone at 347.3-347.7 m with limonite stained clay gouge, suggesting oxidation due to meteoric waters. The lower 15-20 m of sandstone above the unconformity was intensely chlorite-altered, in many places all relict sandstone texture had been completely replaced by fine grained, pale green chlorite. Obliteration of all textural features leaves the nature of the unconformity (tectonic vs. depositional) uncertain. Beneath the unconformity an unfoliated, intensely chloritised granitoid rock with coarse quartz crystals was present. The RC hole NMR0003 was drilled to target uranium mineralization occurring at the unconformity along Stevens fault. The hole, drilled at ?60 towards the fault (215) constrained the geometry of Stevens fault and adjacent unconformity by intersecting dolerite, followed by the Stevens fault, a narrow wedge of sandstone and finally through the unconformity into basement granitoid, most likely Nimbuwah complex. Geochemical assay results for U were disappointing, with a maximum U3O8 content of 11.9 ppm occurring in a narrow dolerite interval between 114 and 114 m, interpreted to be a narrow dolerite dyke intruding the unconformity. Outcrop sampling produced a best U3O8 assay value of 89.5 ppm from soil developed over weathered dolerite in the vicinity of the Hot Dot airborne radiometric anomaly. Outcrop sampling along Stevens fault revealed anomalous U3O8 up to 11.9 ppm associated with drusy quartz + specular hematite veins in sandstone. Geologic reconnaissance on the sandstone plateau identified two ESE structures, the Lightning and Thunder faults, which notable for their apparent vertical offset, suggestive of thrust fault geometry. A radioactive spring (most likely due to radon) was discovered in the wall of the Lightning fault. Exploration activity in the 2007 field season is expected to focus on diamond drilling at Black Bream and Hot Dot. Drilling at Black Bream will aim to target area with potential for increased vein density, whilst it is intended to collar a drill hole within the radiometric anomaly at Hot Dot and test both the dolerite hosted veins as well as the Spencer thrust and adjacent sub-Kombolgie unconformity.