UraniumSA makes unusual uranium discovery near Whyalla, South Australia

UraniumSA has discovered a unique uranium deposit in South Australia. The find, near Whyalla on South Australia’s Eyre Peninsula, is favourable to in-situ leaching extraction of uranium and is in an area never previously explored for uranium.

“The sediment hosted uranium mineralisation is in a geological setting distinctly different to that of conventional sediment-hosted systems worldwide,” UraniumSA’s Managing Director, Russel Bluck, explained. “The discovery remains open across and along strike. We are not aware of any similar in-situ leachable deposits in similar geological settings anywhere in the world.

“The rock strata is in a marine setting and significantly, is at shallow depth and in flat bed-style deposits. This would make it ideally suited to a low cost, in-situ leaching (ISL) operation if developed into a mine.”

Located on the Mullaquana tenement, just south of the deep water coastal port of Whyalla, it hosts grades up to 0.015% equivalent uranium oxide (eU3O8). It has average grades of 0.010% – the cut-off grade for existing ISL deposits in Australia and hard rock uranium mines in Namibia. Bluck said early indications suggested the eventual boundaries of the discovery, which is at depths of only 45-60 m – could be exceptionally large as the two main discovery holes are 1 km apart.

“Its potential size, its location, grade and/or anomalous indications in every hole and accessibility to infrastructure, are very favourable, and are extremely encouraging for further exploration,” Bluck said.

The discovery was confirmed in five holes drilled since November 26 by UraniumSA at Mullaquana after the company – frustrated by the bottleneck of rig availability currently plaguing Australia’s heated resources sector – made a decision to buy and import its own drill rig from the US. The most significant intersections – 0.010% eU3O8 over 1.92 m thickness – were found in the first drill hole, MRM-001 and drill hole MRM-004, collared 1 km to the west and which reported the same grade over 1.11 m. The remaining three holes completed to date encountered anomalous uranium values over narrower, less significant intersections.

The mineralisation is contained in the Tertiary Pirie Basin and hosted by sand and claystone facies of the marginal marine Kanaka Beds. The holes were completed along two east-west traverses ~600 m apart, with a hole separation of ~600-1,000 m along traverses. The system is open in all directions.

“On the basis of existing information, the prospective area may extend for some 12 km to the north and 5 km to the south of the present drill holes,” Bluck said. “We are continuing exploration drilling at 1 km centres to define the size extent of the low grade mineralisation, and to search for high grade developments within that envelope. While the geology of the system is largely unknown, the lateral continuity of the host rocks and uranium anomalism is unusual – and highly encouraging for future exploration.

“Significantly, as we own our own rig, we now have the flexibility to consider whether to intensify and expand drilling programs throughout Mullaquana or relocate the rig to our previously intended next target, a palaeodrainage system within the Tarcoola project area, further north. “We would be hopeful of making that decision within the next six to eight weeks.”

Away from the present drill holes, the exploration potential is continuing identification of large areas of laterally continuous low grade mineralisation contained within a host sequence which is permissive for ISL extraction.

Bluck said the company’s excitement about the discovery was reinforced by a comparison of Mullaquana’s early sediment hosted uranium indications with its industry peers in Australia and overseas. “A 0.010% eU3O8 lower cutoff is widely used in the evaluation of sediment hosted uranium deposits,” he said. “One current such project is South Australia’s Oban sediment-hosted uranium deposit being evaluated for development by Curnamona Energy. In hard-rock uranium deposits, cutoff grades presently in use range from 0.030% eU3O8 (Marathon Resources’ Mount Gee prospect in SA) to as low as 0.010% eU3O8 (Albidon Limited’s Gwabe prospect in Africa). This gives us a strong level of confidence about this project’s future potential.”

In response to questions from industry and professional peers the company has provided some background to this discovery, in particular the significance of the grade encountered.

In an established mining operation, or one at an advanced stage of evaluation, the cutoff grade has a clear and defined economic meaning which is determined by the specific characteristics of that individual deposit. In general terms, the cutoff grade of a particular operation is the grade below which it is not economically feasible to exploit that mineralisation. As noted in the Company ASX release of December 12, uranium deposits from a diverse range of geological setting and geographic locations are presently using 0.01EU% as a cutoff for their economic evaluations. It is in this context that in evaluating results from exploration of its sediment hosted uranium exploration plays the Company considers that:

1. Material which has a uranium content in excess of 0.005 eU% (equivalent to 50 ppm or eUppm) but less than 0.01eU% (equivalent to 100ppm or eUppm) is anomalous and has exploration significance and requires technical attention. However, unless it has a negative impact on previously announced results, it does not warrant an announcement to market.

2. Material which exceeds 0.01eU% (equivalent to 100ppm or eUppm) requires serious technical consideration and analysis, and if it occurs over a significant width and within a host sequence with characteristics which could make it permissive for ISL operations, an announcement to market is required.

The use of down-hole gamma probing for the evaluation of uranium resources is a well established and industry standard technique. The technique has a number of limitations including the contribution of non-uranium materials to the result and the reliability of the grade correlation algorithms.

1. There are a range of materials which have the potential to contribute to the measured gamma count and therefore lead to an overestimation of grade. The main contributors to the count rate are uranium itself, potassium, thorium, heavy minerals containing these elements and radon gas, and in marine settings glauconite and phosphate minerals. The company has the following procedures in place to evaluate the possibility for error from these sources in the course of routine exploration:

 The gamma probe is run twice in each hole and the results of the two runs compared to determine the count rate stability of significant peaks and to check for drift or shift in values or locations. Particular attention is paid to impervious boundaries identified in the geological logging as sites for potential radon gas accumulation or leakage. In the drilling completed to date at Mullaquana the gamma logs have been stable and repeatable. No sharp peaks have been located at either major or minor impervious boundaries and the profiles have been reproducible where re-logged, both factors indicating that radon gas is not a significant contributor to the measured response.

 Grab samples of sand units in and about gamma peaks are panned down, the concentrates examined for heavy minerals and the composition of the clastic fragments checked. To date at Mullaquana, no heavy minerals have been seen and the clastic fragments have predominantly been mature quartzose materials with few composite lithic fragments or ironstone.

 Gamma response peaks are checked against the logged geology for indications of apatite (phosphate) associated with the limestone and for visible glauconite. To date, the limestone has been reflected by a negative gamma response. Glauconite, while frequently significant elsewhere within the target Kanaka Beds, is not a significant component in the area being explored, and in the holes reported it does not correlate directly with gamma peaks.

UraniumSA considers that the above procedures, while not absolutely definitive, provide a sound basis for it to conclude that the significant gamma responses reported are not caused by either radon gas, heavy minerals, glauconite or apatite. This may not be the case across the entire project area.

2. The gamma probe in use by the company has been calibrated at the PIRSA test facility in Adelaide. During the field work a standard three-point correlation and its resulting algorithm was used. Examination of the raw data and resulting values by the consulting geophysicist found poor statistical reliability for the correlation at low grades. Following a comprehensive analysis of the equipment and the calibration data the geophysicist was able to provide a correlation algorithm for the company equipment which provides a very high degree of confidence in the grade conversions. The statistical reliability measures of the algorithm are:

r2 = 0.9999999976 (an r2 of 1.0 represents a perfect correlation)

axis intercept = 0.0000046568 eU% (an intercept of 0.0 is a perfect solution).

The results released to market are based on this statistically sound algorithm and are considered to be an accurate representation of the eU% grade of these initial intersections.

3. It is not known if the mineralisation is in radiometric equilibrium. At an appropriate time, selected drill holes will be logged with a pfn tool to determine this issue.

Considering the geological setting, the uranium mineralisation at Mullaquana is associated with an apparent reduction-oxidation interface that transgresses the Miocene sequence stratigraphy, and with carbonaceous coarse grained sands within the Eocene sequence.

The characteristics of the mineralisation are consistent with a sediment hosted reduction-oxidation front style of mineralisation. There are no indications that heavy minerals, radon or other materials make a significant contribution to the gamma responses measured and reported to the market.