Luck Creek Project EL 24716 Lucy Creek EL 24724 Johanssen Range group annual report for period ending 2 December 2008

Abstract

The Lucy Creek Project comprises three tenements, EL24716 Lucy Creek, EL24724, Johanssen Range and EL10215 Jervois. These licenses were applied for and granted to Arafura Resources NL in December 2005. Two licenses, Lucy Creek and Johanssen Range, were transferred to NuPower Resources Ltd during the demerger by Arafura of certain uranium assets into the new company. Arafura retained Jervois but transferred the rights to uranium to NuPower. Arafura's interest in these tenements, prior to the demerger, included the potential for orthomagmatic Fe-Ti-V, Ni-Cu and Pt-Pd-Au and other types of mineralisation associated with mafic intrusions of the Arunta block, tungsten, molybdenum, other base metal and gold mineralisation in the Bonya Schist and equivalent rocks of the Arunta, Mary Kathleen style or iron-oxide copper gold related mineralisation in the Arunta Block, various styles of uranium mineralisation including sandstone and unconformity related styles in the Georgina Basin, sediment-hosted MVT, base metal or phosphate mineralisation in the Georgina Basin and a range of other commodities associated with intrusives such as carbonatites, kimberlites and pegmatites. The uranium interest is based on the 2004 NTGS airborne radiometric data that contains a large uranium anomaly in the western Jervois Range, mostly within EL24716 but extending into the adjacent EL10215. Previous exploration here by CRA for unconformity U-Cu-P mineralisation in the mid 1990's tested the lateral undercover extensions of the Mount Baldwin/Arthur Creek Formations and while uranium results were disappointing they intersected significant intervals of phosphate mineralisation at the Patanella Prospect but did not proceed with this. The extensive radiometric anomaly appears to have received little attention. Less significant radiometric anomalies in the Johanssen Range license include a prominent short wavelength high amplitude uranium-thorium anomaly associated with the Eurowie Sandstone Member of the Arrinthrunga Formation in Arrinthrunga Creek, several small uranium-thorium anomalies associated with the unconformity between the Mt Baldwin Formation and Arthur Creek Formation in a similar stratigraphic position to the radiometric anomaly at Lucy Creek and small isolated anomalies elsewhere in the Arrinthrunga Formation. The geology of the two licenses comprises mostly cover sediments of the Georgina Basin overlying basement rocks Arunta Block Bonya Schist preserved in the south. Georgina Basin sediments crop out in the Jervois Range where they dip gently to the west and in the Johanssen Range where they dip more steeply westwards. The Early Proterozoic Bonya Schist is the oldest formation here confined to the southern parts of Lucy Creek and Johanssen Range where it overlies the Mascotte Gneiss Complex. The formation is subdivided into 5 informal units and one formal unit, the Kings Legend Amphibolite, present immediately south of Johanssen Range. The Schist comprises mostly muscovite and two-micas schists derived from mostly pelitic, psammopelitic and calcareous metasedimentary rocks, with subordinate psammitic and quartzite units, and felsic and mafic igneous rocks, metamorphosed to upper greenschist to lower amphibolite facies. Various Proterozoic granites intrude the Bonya Schist, one of which is represented here, on the southern side of the Johanssen Range, consisting of foliated, locally porphyritic, muscovite granite with local magnetite or tourmaline aggregates. The Schist is also intruded by several different phases of Samarkand Pegmatite of medium to very coarse grained plagioclase and minor K feldspar and quartz with accessory muscovite, tourmaline, apatite and sphene. The earliest sediments of the Georgina Basin represented here are laminated to thinly bedded, fine grained, quartz arenite to sublitharenite with minor thin to thickly bedded, coarse grained, quartz arenite of the Grants Bluff Formation in the eastern flanks of the Jervois and Johanssen Ranges. This is overlain by recessive, micaceous, very thin to very thickly bedded, siltstone, laminated mudstone and medium grained quartz arenite of the Elkera Formation. In the Jervois Range this formation contains a stromatolitic dolostone unit near the top of the formation that is capped with a lenticular very thickly bedded, feldspathic, pebbly orthoquartzite. Mild tectonism (Huckitta Movement) followed the Elkera Formation so that it is overlain disconformably by the Mount Baldwin Formation comprising thin to very thickly bedded, frequently cross bedded, fine-medium grained, quartz arenite forming prominent ridges in both ranges. Red Heart Dolostone disconformably overlies Mount Baldwin Formation and consists of basal sandstone grading upwards through silty shale to a white dolostone-silty dolostone unit 23m thick. This is overlain by a silty sandstone to siltstone unit 36m thick that is topped by a limestone and dolostone unit containing sandy carbonate, 67m thick. This formation, containing phosphorite, outcrops along the base of the eastern flank of the Jervois Range, and is locally indurated by Tertiary laterite and silcrete as observed at Lucy Creek. The formation may be locally absent on the NW flank of the Jervois Range and the northern flank of the Johanssen Range where Arthur Creek Formation appears to rest directly on Mount Baldwin Formation. Arthur Creek Formation overlies Red Heart Dolostone (and Mount Baldwin Formation where Red Heart Dolostone is absent). It contains a lower sequence of recessive, fossiliferous, organic-rich, laminated, pyritic, calcareous siltstone the upper part of which contains very thick limestone beds, overlain by calcareous quartz arenite to quartzose limestone. Arrinthrunga Formation conformably overlies Arthur Creek Formation in the central and western part of the project area containing a thick well bedded sequence of dolostone and limestone with minor siliclastic rocks. Eight interfingering lithofacies have been recognized one of which is the Eurowie Sandstone Member preserved in the NW corner of the Johanssen Range license. This is the youngest formation of the Georgina Basin represented here. The Arthur Creek and Arrinthrunga Formations underlie most of the central and western parts of the project area but are covered extensively with Quaternary alluvium from Arthur Creek and its tributaries. Base metals, hosted by the Palaeoproterozoic Bonya Schist, have been prospected and mined at Pioneer B, Green Parrot, Reward, Marshall-Reward, Attutra, Skyes, Clifton, Cox, Wards, Holmes, Van Gils, Schrubby Hill, Bellbird and other unnamed occurrences in the Jervois Mining District, south of the Jervois tenement. Copper and tungsten have been prospected and mined at Green Hoard, Damascus, Wells, Ashmara, Xanten, City of Medina, Jericho, Tashkent, Bonya, White Violet, Ultra Violet, Samarkand, Petra, Kings Legend, Johanssen's Pillar and other unnamed occurrences from the Bonya Schist and associated units, in the Bonya Hills region, in the Jervois license south of Johanssen Range. Ti-V-rich magnetite occurrences, some with anomalous Cu-Pt-Pd-Au are known from the Attutra Metagabbro to the east. In Year 1 Arafura Resources completed an RC drilling program at Lucy Creek, in EL24716 and the adjacent EL10215 in November 2006 to test for uranium mineralisation associated with the airborne uranium radiometric anomalies identified by the 2004 NTGS regional survey and subsequently reflown for greater detail by Arafura Resources in December 2005 (Hussey 2006). Although they completed little geological mapping they collected some rock chip samples with locally encouraging uranium assays from the southern part of the radiometric anomaly, in EL10215. The airborne uranium channel anomalies coincide with a series of black and white hills and mesas that lie in a broad valley between high standing ridges in the western parts of the Jervois Range where they are related to highly ferruginous caps and a dissected well developed regolith weathering profile on Red Heart Dolostone outcropping between Mount Baldwin and Arthur Creek Formations. Of the total of 60 holes and 1713 metres drilled throughout the anomaly, 45 holes for 1472 metres were completed on EL 24716. Individual and composite samples were assayed for U, Th, Ce and Sr returning disappointing results with best intervals of 4.0m at 163ppm U3O8 (0.36lb/t U3O8) from surface in LCRC027 including 1.0m at 272ppm U3O8 (0.60lb/t U3O8) from surface, 1.0m at 123ppm U3O8 (0.27lb/t U3O8) from 3.0m in LCRC045 and 1.0m at 157ppm U3O8 (0.35lb/t U3O8) from 6.0m in LCRC058. In Year 2 following the demerger of uranium assets from Arafura to NuPower, NuPower completed preliminary metallurgical testwork of two composite samples to determine the suitability of this material to heap leach recovery of uranium from a low grade resource. Leaching of the material proved difficult and even under severe acidic conditions and elevated temperatures the best extraction was only 46% and it was concluded that the material would not be amenable to satisfactory extraction under less aggressive heap leach conditions. In addition although some uranium is present as leachable uraninite more than half was thought to be present in more refractory accessory minerals including phosphates. The uranium however is in secular equilibrium. Prior to further mapping and sampling of the anomaly in Year 3 NuPower engaged a consultant to carry out denoising and element ratio imagery of the Arafura airborne radiometric data to enhance the anomaly. The field work on EL24716 confirmed that the anomaly is confined to a highly weathered phosphorite unit within the Red Heart Dolostone where uranium (and its daughter products) have been locally scavenged by the regolith. This downgraded the uranium potential but highlighted the phosphate potential instead. Reconnaissance on EL24724 in Year 3 identified low grade phosphorite mineralisation in Arthur Creek Formation but did not locate Red Heart Dolostone for sampling. Attempts to access a prominent radiometric anomaly in a remote area were unsuccessful. Bore waters were sampled from both tenements and assayed for a broad range of major and trace elements. This has identified potentially blind lead mineralisation in the Arthur Creek Formation and further zinc prospects in the Bonya Schist. A review of open file reports found that CRA had interested significant zones of phosphorite during a drilling campaign to explore for unconformity related U-Cu-P styles of mineralisation at the Patanella Prospect at the northern end of the main radiometric anomaly drilled by Arafura. These data have been provided to a mining consultant for preliminary modeling and samples still available from the Arafura drillholes have been identified for phosphorus assay. The data available suggests that the Patanella Prospect has the potential to host a world-class phosphate deposit and NuPower plans a substantial program of mapping sampling and drilling to test the property.