Roll over icons to start

P + 0

ANNUAL REPORT 2010

Skip Navigation Links
Home
Overview
Management Discussion and Analysis
Sustainable Development
Corporate Governance Statement
Directors' Report
Financial Report
Additional Information
List of Abbreviations
Shareholder Reporting Timetable
Corporate Directory
Skip Navigation LinksManagement Discussion and Analysis > Review of Operations > Queensland

queensland

Summit Resources (Aust) Pty Ltd (SRA), a wholly owned subsidiary of Summit Resources Ltd (Summit), operates the Isa Uranium Joint Venture (IUJV) as well as the Mount Isa North Uranium Project. These areas cover approximately 1,459km2 and host a number of uranium deposits and resources including the Valhalla and Skal deposits.

In January 2009 Paladin completed the takeover of Fusion. This added Fusion’s Valhalla North Project uranium resources, including Honey Pot and Duke Batman, on 457km2 of prospective ground to the suite of Queensland uranium properties.

ISA URANIUM JOINT VENTURE

Summit Resources (Aust) Pty Ltd 50% and Manager
Mount Isa Uranium Pty Ltd 50%

The IUJV covers ground containing the Valhalla and Skal uranium deposits 40km north of Mount Isa in Queensland. Participants in the Joint Venture are SRA and Mount Isa Uranium Pty Ltd (MIU), each holding a 50% interest with SRA as manager.

MIU is a wholly owned subsidiary of Valhalla Uranium Ltd (VUL), a formerly listed public company and now a wholly owned subsidiary of Paladin. Following Paladin’s successful takeover of VUL in 2006 and Paladin’s acquisition of 82.05% of the issued capital in Summit, Paladin’s effective participating interest in the IUJV is now 91.03%.

Ground subject to the IUJV covers 17km2 at Valhalla and 10km2 at Skal. These two areas lie within a much larger holding of contiguous tenements of 1,916km2 held 100% and managed by SRA and Paladin.

Preliminary Assessment

Mineralogical investigations and preliminary metallurgical testwork programmes have succeeded in developing a process flowsheet for the treatment of the Valhalla material which, together with the current resource model, was used as the basis for an internal project assessment. The study was conducted primarily as a basis for determining resource requirements for a viable project and to provide some focus for exploration and further investigations.

The study identified a number of areas where project economics can be improved particularly with respect to mining and processing costs. Exploration efforts are now focused on increasing the mineable resource base, in close proximity to Valhalla, to satisfy this production criteria.

Valhalla Uranium Deposit

The Valhalla uranium deposit is located 40km north-west of Mount Isa on Exploration Permit for Minerals (EPM) 17514. Previous drilling by Queensland Mines Ltd in the 1960’s, and SRA in the 1990’s and 2000’s, established a combined Measured, Indicated and Inferred Resource of 56Mlb of U3O8 grading 0.14%. Substantial widths of high grade uranium mineralisation in albite-carbonate-hematite breccias and mylonites as well as altered mafic rocks have been intersected in the latest drilling at Valhalla. The deposit is hosted within basalts and basaltic sediments of the Eastern Creek Volcanics, trends north–south and is approximately 1,100m in strike length.

The Phase 2 resource drilling programme at Valhalla, including 44 RC and diamond holes totalling 11,703m, was completed for the year and Summit announced a new JORC compliant resource in October 2009. The drilling showed positive results at the Valhalla South deposit and the deeper portion of the Valhalla main deposit and an updated resource is expected during the September 2010 quarter. In addition, a significant number of bulk density determinations have been undertaken. All of this information has been incorporated into the resource model.

The current Mineral Resource estimate for the Valhalla uranium deposit is tabulated below and is quoted with a cut-off grade at 230ppm U3O8 for comparison to the previous Resource estimate, individual Mineral Resource figures are quoted on a 100% of project basis.

Updated Valhalla Mineral Resource (at 230ppm U3O8 Cut-off)
MtGrade ppm
U3O8
Tonnes
U3O8
Mlb
U3O8
Measured Resources12.6683310,54923.2
Indicated Resources18.5390016,68036.8
Total Measured & Indicated31.1987327,22960
Inferred Resources5.28594,4949.9

(Figures may not add due to rounding)

The updated resource represents an 3.6% increase in total contained metal when compared to the previously announced total resource of 67.5Mlb and a 9% increase in Measured and Indicated Resource category metal content (up from 54.6Mlb U3O8).

The main Valhalla deposit now has strike length in excess of 1,100m. The mineralisation extends from surface to a depth of over 650m and is structurally controlled with a characteristic southerly plunge. Valhalla South is located approximately 600m along strike to the south-east of the main mineralised zone and has a strike length of at least 400m.

Odin Uranium Prospect

During the year, 25 RC and diamond holes for 4,424m were drilled at the Odin prospect, approximately 500m to the north of Valhalla with promising results returned. Odin is regarded as a ‘Blind’ target, having no appreciable surface radiometric response and was initially identified from the extensive ground magnetic survey undertaken previously. Odin has since been used to enhance the targeting for other blind deposits using a variety of techniques including Mobile Metal Ion (MMI) analysis, radon surveys and auger drilling. Sufficient drilling is expected to be completed in the September 2010 quarter to enable a resource estimate to be undertaken.

Skal Uranium Deposit

The Skal uranium deposit is located 32km north of Mount Isa city on EPM 17519. In July 2009, a 24 hole drilling programme including 3,216m of RC and diamond drilling was completed. The drilling was designed to test additional resource potential at Skal East, as well as depth extensions at Skal South.

At Skal East, located approximately 300m east of Skal North and South, drilling had previously identified a new uranium mineralisation zone in north-east trending albites along a strike length of 250m. The centre of the mineralisation is up to 30m thick narrowing to the north and south. A number of holes planned for the extension drilling at Skal South were also completed.

A new resource estimation for the Skal deposits was completed in October 2009 and is detailed below. The resource dataset comprises both geochemically assayed grades and downhole gamma logging derived grades following application of appropriate calibration factors. The resource now includes a maiden estimation of Indicated category material.

Skal (all deposits) Mineral Resource at 250ppm U3O8 Cut-off
MtGrade ppm U3O8Tonnes
U3O8
Mlb
U3O8
Indicated Resources4.35752,4585.4
Inferred Resources8.44914,1299.1

(Figures may not add due to rounding)

A drill programme has now been planned to both infill and extend this area as well as add depth and continuity extensions to all mineralised zones. It is expected that the resource estimation following this drilling, which will allow for additional re-classification of the Skal resources to higher categories, will be completed in the December quarter of 2010.

MOUNT ISA NORTH URANIUM PROJECT

Summit Resources (Aust) Pty Ltd 100% and Operator

The project is located 10 to 70km north and east of Mount Isa and contains numerous uranium anomalies, most of which still have to be investigated thoroughly.

Exploration continues on Summit’s 100% owned Mount Isa North Project where Summit holds 1,356km2 of granted tenements that are prospective for uranium, copper and base metals. The tenements are centred on the city of Mount Isa. The project includes the Bikini, Watta and Anderson uranium deposits as well as numerous other uranium prospects.

An initial drilling programme of 56 holes for 7,217m of RC and diamond drilling was completed during the year. This followed detailed geological and geophysical groundwork previously completed at the Bikini deposits, which include the Woomera and Mirrioola prospects to the north and south of Bikini. Follow-up drilling at Bikini is expected to be completed late in 2010 with an updated resource estimation to follow. A significant ground mapping programme at the Andersons deposit has identified a number of additional mineralised zones and a limited number of RC holes had previously been planned to test these targets however drilling of these holes has been delayed due to higher priority targets. Other prospects, including Spring Creek, were scout drilled and will be followed up during the next year.

Regional prospectivity mapping is on-going and is expected to identify additional prospects for follow-up work throughout the year.

VALHALLA NORTH PROJECT

Paladin 100%

The Valhalla North Project (acquired as part of the takeover of Fusion Resources Ltd) is located on two tenements totalling 457km2, situated 40 to 75km north of the Valhalla deposit. The geological setting is similar to the Summit/Paladin projects to the south where albitised basalts with interbedded metasediments are mineralised along east-west and north-south structures in Eastern Creek Volcanics.

Narrow, relatively high grade zones of mineralisation at Duke-Batman have been drilled over a strike length of 600m. Recent ground mapping and radiometric and magnetic surveys over the area have significantly improved the understanding of this deposit. The drilling programme undertaken in the June 2010 quarter, of 12 holes for 2,093m, did not extend the mineralisation significantly but did identify a coherent high grade core to the deposit. This information will be incorporated into an updated resource estimation expected late in the September 2010 quarter.

A programme of 4 holes was completed at the Joker prospect, 5km to the south of Duke-Batman, on a previously identified 100m long albitised basalt zone adjacent to the Gunpowder road. The best intercept was 10m at a grade of 333ppm U3O8 from a depth of 38m down hole. A number of ground surveys and mapping studies, as well as heli-borne radiometric and magnetic surveys, were undertaken in the area with the results from these being incorporated into regional prospectivity maps.

The Honey Pot deposit has a strike length of over 1.4km and consists of a well defined 5 to 10m wide mineralised albite zone of moderate grade (300-1000ppm U3O8). A drilling programme of 24 holes for 3,222m between Honey Pot and the Sunshine prospect to the south has confirmed previous results and appears to have closed off the deposit to both the north and south.

RESOURCE STATUS MOUNT ISA REGION - ALL PROJECTS

The total JORC Resources under Summit and Paladin management in the Mount Isa region are now 66.3Mlb U3O8 Measured and Indicated Resources and 45.1Mlb U3O8 Inferred Resources. Of this 60.3Mlb U3O8 Measured and Indicated Resources as well as 39.8Mlb U3O8 Inferred Resources (which includes the Fusion Mineral Resources) are attributable to Paladin. 58% of the Mineral Resources are located at Valhalla; the rest are distributed over the Bikini, Skal, Andersons, Watta, Duke Batman and Honey Pot ore bodies.

Details are as follows:-

Individual JORC compliant Mineral Resource figures for the Mount Isa area quoted on 100% basis.
DepositMeasured ResourcesIndicated ResourcesInferred ResourcesPaladin Attribution
Cut-off
ppm U3O8
MtGrade ppmt U3O8MtGrade ppmt U3O8MtGrade ppmt U3O8
Valhalla23012.783310,54918.590016,6805.28594,49091.00%
Skal2504.35752,4858.44914,13091.00%
Bikini25010.15175,20082.00%
Andersons23021,0502,10082.00%
Watta2304.24101,72082.00%
Duke Batman2500.57803881.66301,020100%
Honey Pot2502.67001,800100%
Total12.783310,54923.383819,52634.160020,460
Total Resource Attributable to Paladin11.68339,603
(21.1Mlb)
21.2583817,809
(39.2Mlb)
29.960318,063
(39.8Mlb)

(Figures may not add due to rounding)