Annual Report ERL 46 to ERL 55 Bigrlyi Project period ending 17 November 2008

Abstract

The Bigrlyi project comprises ten granted Exploration Retention Licences (ERL's 46 to 55 inclusive) located 390 kilometres (by road) northwest of Alice Springs. The project is a Joint Venture between Energy Metals Limited with 53.3% (operator), Valhalla Uranium (a subsidiary of Paladin Resources Ltd) with 41.7% and Southern Cross Exploration NL with 5%. Uranium mineralisation was discovered at Bigrlyi by a joint venture managed by Central Pacific Minerals (CPM) in 1973. In the period 1974 to 1982 the project was subject to several major drilling campaigns, with some 413 holes (total 37,500m) completed. Subsequent to 1982 CPM completed metallurgical testing and resource calculations, with a global resource of 809,000 tonnes at 3.43 kg/t U3O8 for 2,770 tonnes of contained U3O8 delineated at Bigrlyi (note that these resources are not JORC 2004 compliant). Field activities conducted in the period 1983 to 2004 were limited to maintenance of the core shed. In May 2005 Energy Metals acquired a 53.3% interest in, and assumed management of, the Bigrlyi project through the purchase of the interests of CPM and Yuendumu Mining Company NL. In September 2005 Energy Metals listed on ASX after raising $3m, primarily to fund exploration at Bigrlyi. In October 2005 the Bigrlyi Joint Venture approved an interim Exploration Program and Budget for 2005 designed to reactivate exploration at Bigrlyi after a 23 year hiatus. Activities completed to 17 November 2005 included environmental assessment of the project, rehabilitation of the core shed (including removal of degraded percussion samples and pulps) and installation of appropriate radiation monitoring procedures. Re-assaying of uranium (and vanadium) anomalous drill core also commenced towards the end of the period. Activities undertaken in the period 18 November 2005 to 17 November 2006 included reestablishment of the exploration camp, validation of historic drilling and assay data, conversion of historic data to digital format, survey of historic drill holes and lease boundaries, re-assaying of historic drill core, calculation of initial (JORC 2004 compliant) resources for the project, completion of an aboriginal heritage survey over the project area and completion of shallow drilling programs (58 holes for 1,173m). Exploration undertaken in the following period 18 November 2006 to 17 November 2007 included: 1) Significant infrastructure additions to the Bigrlyi exploration camp, 2) Completion of 4,506m of RC and 4,053m of diamond drilling in 37 holes in 2006, 3) Completion of 42,827m of RC and 11,172m of diamond drilling in 279 holes in 2007, 4) Collar survey of new holes, 5) Assaying of core and RC chips for U and V, 6) Completion of down hole gamma probing, 7) Calculation of JORC compliant resource estimate in March 2007, 8) Completion of an initial economic study based on the March 2007 resource estimate This major drill program (RC and diamond) was designed to increase the resource base at Bigrlyi and commenced in April 2007.The program continued until the end of the field season (mid-December 2007).Exploration undertaken in the current reporting period 18 November 2007 to 17 November 2008 included: 1) Infrastructure additions to the Bigrlyi exploration camp, 2) Completion of 42,827m of RC and 11,172m of diamond drilling in 279 holes in 2007, 3) Completion of 15,413m of RC drilling and 972m of diamond drilling in 96 holes in 2008, 4) Collar survey of new holes, 5) Assaying of core and RC chips for U and V, 6) Completion of down hole gamma probing,

7) Calculation of updated JORC compliant resource estimate in March 2008, 8) Metallurgical testwork, focussed on leach parameters and acid consumption, 9) Completion of an updated scoping study based on the March 2008 resource estimate, 10) Helicopter EM survey. The drilling program (RC and diamond), designed to infill and extend the current resource base and for metallurgical testwork, at Bigrlyi commenced in September 2008 and continued until the end of the field season (mid-December 2008). Expenditure for the current reporting period was approximately $4,076,770. Progressive improvements were made to the Bigrlyi base camp in the 2008 year including development and increased storage capacity of the core shed, further accommodation installed emphasis on safety equipment (e.g. firefighting equipment) and increased focus on OH and S requirements. In early 2008 resource estimation was undertaken by independent geological consultants Hellman and Schofield, incorporating the results from the 274 holes drilled in the 2007 field season, to build on the previous Bigrlyi resource announced in March 2007. The resources were estimated using ordinary kriging by Hellman and Schofield Pty Ltd ('H and S') and are shown at a 500ppm U3O8 lower cut-off grade. At a cut-off grade of 500ppm U3O8 the Bigrlyi resource now totals 23.4 million pounds (lbs) of U3O8 and 43.7 million lbs of V2O5, representing a 64% increase in uranium and a 168% increase in vanadium compared with the March 2007 resource of 4.53Mt at a grade of 1,437ppm for 14.3 million pounds U3O8.