EL 10176 and EL 24371 Nabarlek Project Annual report period 1 September 2008 to 31 August 2009

Abstract

Nabarlek Project is a uranium exploration project covering exploration licences (EL's) 10176 and 24371 for a total area of 383.8 km2 and located approximately 250 km east of Darwin. Cameco Australia Pty Ltd (Cameco) was granted the tenements on 1st September 2004. In early December 2006 a Joint Venture agreement was signed between Cameco and Uranium Equities Limited (UEL) to conduct exploration for uranium on the Nabarlek Project. EL 24372, which originally formed part of the project, was surrendered in September 2008. The exploration program for 2008 included drilling of 85 reverse circulation (RC) holes for 7,475 m, 532 aircore (AC) holes for 8,101 m, an airborne radiometric and magnetic survey by UTS at U40/42 for 321 line kilometres, a test VTEM survey by Fugro of 35.8 line kilometres on four lines, and downhole geophysical logging of selected holes from N147 and SMLB by Borehole Wireline and Geoscience Associates Australia. The RC drilling program at N147 was designed to test for extensions to the uranium mineralisation within Oenpelli Dolerite, first identified by QML in 1989. 19 RC holes for 2,737 m were drilled on the N147 prospect with the best uranium mineralisation intersection in 2008 being from NAR6318 with 28m at 0.145 % U3O8 from 112 to 140 m with a maximum grade of 0.63 % U3O8 from 120 to 121 m. Modelling of the dolerite hosted uranium mineralisation at N147 has interpreted four stacked en-echelon lenses trending east-southeast, dipping to the north and plunging to the west (Dorling 2009). The mineralisation occurs close to and is orientated sub-parallel to the intrusive contact of the Oenpelli Dolerite with the Mamadawerre Sandstone. Drilling appears to have closed off mineralisation to the east and west along strike of the mineralisation. The drilling conducted to date is sufficient to provide an outline of mineralisation, but is insufficient to provide an accurate resource calculation. Six RC drill holes for 804 m at SMLB were designed to follow up historical drilling of weak uranium mineralisation associated with the Boundary fault, a southeast trending reverse fault structure with 75 m offset, to the northwest of the Nabarlek Mine Lease. Best results were intersected in NAR6384 with 21 m at 510 ppm U3O8 from 94 to 115 m within chloritised schists of the Cahill Formation. The results of the drilling indicate weak mineralisation is associated with the footwall schists in the basement fault wedge. The prospect has not been upgraded and no further work in the vicinity is recommended. 48 RC holes for 2,798 m were drilled on a grid (400 m x 200 m grid) southeast of N147 and at 6 RC holes for 414 m at Coopers to the east of N147, through the sandstone unconformity and into basement rocks, to test for geochemical and alteration vectors that may indicate potential for uranium mineralisation. A southeast corridor on trend of the Nabarlek Shear is interpreted to represent the most prospective area for uranium mineralisation potential. The best result was intersected in NAR6345 of 134 ppm U3O8 from 48 to 52 m in chlorite schist, proximal to an interpreted fault in the magnetics. Regional RC drilling was conducted at MuddyWaters and Bus Stop testing Tempest conductive features. No results above expected background uranium values were returned. The nature of the conductive targets remains unexplained. Aircore drilling was concentrated in a corridor to the southeast and northwest of the Nabarlek Mine Lease, along key structures in areas not covered by sandstone; and in areas of anomalous Tempest conductive features to better target the RC drilling. The drilling was conducted to test for geochemical and alteration vectors within the regolith and transported cover that may indicate potential for uranium mineralisation. Aircore drilling in the Coopers area intersected significant uranium mineralisation within Oenpelli Dolerite with NAA6406 returning 0.12 % U3O8 and other holes in the area returning anomalous uranium. The proximity of the Tip fault and other structures in the area together with the widespread uranium anomalies in the aircore drilling indicates that the Coopers area is prospective for mineralisation, and further work is required.