Geology & Resources

The Kayelekera Project is a sandstone-hosted uranium deposit associated with the Permian Karoo sediments and is hosted by the Kayelekera member of the North Rukuru sediments of the Karoo.  The mineralisation is associated with seven variably oxidised, coarse grained arkoses, separated by shales and chocolate-colored mudstones.  Uranium mineralisation occurs as lenses within these arkose units, the lowest of which is at a depth of approximately 130m.

Following the completion of the initial phase of the final drill out of the Kayelekera orebody to the west of the current pit, an updated resource estimation has been undertaken and is detailed below. It is expected that the final phase of drilling will commence during July and will be followed by a resource and reserve update.

Mineral Resources for the Kayelekera deposit quoted at a 300ppm U3O8 cut off grade:

Resources have been depleted for mining to the end of March 2010

At the end of March 2010 an additional 308,289t at a grade of 956ppm U3O8 for a total of 295t (0.65Mlb) U3O8 were contained in ROM stockpiles. While the majority of the overall resource increase is attributed to the substantial increase in Inferred category material (up 63.0% to 3,433t U3O8) there has still been a small (6%) increase in Measured and Indicated category metal content. The resource increase is primarily due to the inclusion of wide spaced drilling undertaken on the western margins of the existing resource. It is expected that the resource definition drilling due to commence in July will convert a substantial portion of the Inferred category resources located in the western portion of the orebody into Measured and Indicated resources. At this time, as there has been negligible change in Measured and Indicated Mineral Resources, an updated Ore Reserve estimation is not warranted. The Mineral Resource estimate is based on downhole gamma radiometric logging using appropriately calibrated and validated gamma probes to produce equivalent U3O8 grades. This methodology is the same as that used for mining grade control and resource estimation at both Kayelekera and Langer Heinrich.

Ore Reserves

Economic analysis on this Resource has indicated a break-even cut-off grade of 400ppm. This is unchanged from the previous Resource due to a number of contributing factors including the changing dynamics of selling price, use of RIP processing and reagent costs.

Ore Reserve at 400ppm U3O8 Cut-off

Compared to the previous Ore Reserve of 25.1Mlb announced in 2007 (also reported at a 400ppm U3O8 cut-off), the new 2008 Reserve estimate outlined herein represents a 17% increase in contained U3O8.

The cost parameters used in the reserve estimation are now well developed and include contracted schedules for such items as reagents and contract mining, and as such their inclusion can be reasonably justified. The revenue rate used in the estimate was US$60/lb.

The 2008 Reserve suggests an increase in mine life of 1½ years to 9 years at the annual design production rate after year 1 of 3.3Mlb U3O8 when the Inferred material occurring within the pit design is included. Processing of marginal ores at the end of mine life is expected to add an additional 3 - 4 years to the mine life.

The 2008 drilling has also shown that the mineralisation is not yet fully delineated, particularly in the north-west and west, and thus potential exists to easily identify additional resources with future drilling which is expected to provide for in-pit extensions.