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Exploration and discovery of blind breccia pipes - the potential significance to the uranium endowment of the Arizona Strip District, Northern Arizona

Exploration and discovery of blind breccia pipes - the potential significance to the uranium endowment of the Arizona Strip District, Northern Arizona

Eugene D. SpieringVP Exploration

Eugene D. SpieringVP Exploration

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Northern Arizona Strip Uranium DistrictThe Last Hard Rock Uranium Producer in the U.S.

• 1000 sq miles in Colorado Plateau Province of NW Arizona

• From 1980 to 1990, Energy Fuels Nuclear produced 19 million lbs of U3O8 from 7 breccia pipes

• Average grade of 0.64% U3O8 places these deposits among the highest grade in the U.S.

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Why the last hard rock uranium producer in the in the US?

High grades and small mines• Short development time: 3yrs from

discovery to mining • Small footprint: mine complex < 20 acres• Easy reclamation: waste pushed back in

mine shaft and surface reclaimed

Exploration and development is quickProduction is clean and economical

Reclamation can be nearly perfect

Economical • High Grades , no ground water• Excellent rock conditions• “Cookie Cutter” permitting, mine

design and development

Reclaimed Hack Canyon MineReclaimed Hack Canyon Mine

Reclaimed Pigeon MineReclaimed Pigeon Mine

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scale0 5

miles

Historically defined reserves and resources of 27 million pounds U3O8 in 15 breccia pipes

(1.8 million lbs U3O8 per pipe)

Northern Arizona Strip Uranium Deposits

6 Barren

PIGEON 5.7 /1

HERMIT 0.5 /1

FINDLAY 0.5 /2

KANAB 3.9 /2

EZ GROUP 4.5 /4

HACK 9.5 /3

ARIZONA 1 1.3 /1

PINENUT1.4 /1

Reserves/productionM lbs U3O8 / # pipes

6 under exploration

7 Mineralized

A-1GUMP

A-20

PEACE

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Arizona Strip Stratigraphy

Moenkopi Fm.

Toroweap Fm.

Hermit Shale

Esplanade Ss.

Kaibab Ls.

Coconino Ss.

Depth (ft)0

500

1000

1500

2000 The Permian section is visible near the Hack Canyon Mine

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Breccia Pipe Morphology

Moenkopi Fm.

Toroweap Fm.

Hermit Shale

Esplanade Ss.

Kaibab Ls.

Coconino Ss.

Depth (ft)0

500

1000

1500

2000

Collapse Cone (due to depletion of evaporites In Pt and Pkh)

Pipe Throat (area of breccia displaced downward in the pipe-200ft-500 ft)

Hermit Benches (bounded by ring fractures)

Pipe-in-Pipe (secondary collapse adds 300-500ft additional vertical displacement-post mineral)

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Breccia Pipe Mineralization

Moenkopi Fm.

Toroweap Fm.

Hermit Shale

Esplanade Ss.

Kaibab Fm.

Coconino Ss.

Depth (ft)0

500

1000

1500

2000

Pyrite Cap (py after marcasite) <50 ft thickCoconino Ss dominant breccia hosted U mineralizationRing fracture hosted U mineralization

Coconino Ss acts as conduit for U mineralization and host as Ss dominant breccia in pipe

U source is believed to be volcanic ash of the Late Triassic Chinle Formation transported by groundwater in the Coconino Ss. (Ludwig and Simmons,1992)

• U occurs as pitchblende. • Calcite and gypsum are cementing

minerals. • Trace elements include Cu, As, Ni,

Pb, Zn and Ag.

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Surface geological mapping and surface TEM defines a target

Shallow drilling locates the pipe throat within collapse cone

Breccia Pipe Exploration

Moenkopi Fm.

Toroweap Fm.

Hermit Shale

Esplanade Ss.

Kaibab Fm.

Coconino Ss.

Depth (ft)0

500

1000

1500

2000

Deep drilling guided by borehole TEM defines the orebody

Down-hole Gamma-Ind-Neutron and Dev logs (Strata Data, Casper Wyo.) allow dry hole definition of lithologic dominance and sulfides in breccia

15-20 foot spot core taken at 200’ intervals gives lithologic control for log correlations

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Kanab N.Kanab N.

Kanab S.Kanab S.

PigeonPigeonClearwaterClearwater

HermitHermit Findlay Tank N.Findlay Tank N.

Findlay Tank S.Findlay Tank S.

OllieOllie

Breccia Pipe Surface Expression

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Sunshine Breccia Pipe - Barren

Some pipes collapse too much• One of the largest vertical

displacements of breccia in pipes of the northern district

• Outcrops of Upper Triassic Shinarump ss visible in the center of a collapse cone in near the top of at Pkfm

• < 1200 feet of vertical displacement

• Drilled to a depth of 1,580 feet – barren

• Favorable Coconino Ss dominant breccia horizon has probably dropped to into the Redwall Ls. and well below economic potential.

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0

500

1000

1500

2000

Depth (ft)

Blind Pipe Geometry

Other pipes don’t reach the surface

• Blind pipes may potentially be larger deposits

• Hack 2 (7 million lbs U3O8) did not reach the surface and is the largest deposit ever found in the district

• Absence of subsequent internal collapse may stop upward growth and prevent downward displacement of the mineralization.

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Hack 2 Pipe

• Unbrecciated upper Kaibab outcropping at surface.

• Located within a mile wide area of evaporite-depleted Toroweap and Kaibab section.

A Blind Breccia Pipe• Discovered in 1979 by Western

Nuclear.

• Fe staining in Coconino and altered Hermit shale in Hack Canyon.

• Alteration including secondary gypsum and other sulfates at Coconino/Hermit contact.

1000

Scale (ft)

5000

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Gump Pipe

AA

A’A’

AA A’A’

Well defined and dated upper limit of stoping

• 4000 ft diameter collapse cone

• Pipe throat did not reach the surface.

• Stoping terminated in late Permian.

• Bimodal sandstone filled pipe throat prior to evaporite dissolution

• Dome centered over the pipe throat

• Drilled to a depth of 2240 feet

• Pipe in pipe (secondary collapse) scattered U mineralization to TD

2000 ft

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Kanab N&S

Peace

ClearwaterRock

EZ 2

EZ 1

Lost Calf

Arizona 1

Findlay Tank1& 2Hermit

L. RobinsonJune

OllieGump

Benchmark

Pinenut

Water Canyon

WhatDB

Pigeon

Red Ant

RimSunshineHack 3,2,1

scale0 5

miles

First extensive test of airborne time domain EM on the Strip

Arizona Strip Airborne VTEM Survey

• Geotech Airborne surveyed 422 square miles

• 150 m line spacing

• 30 m AGL

• Most known pipes detected

• > 200 high to mod. priority anomalies with similar signatures

Exploring for Blind Pipes

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A-1 Anomaly

• Beautiful geophysical anomaly at A-1 but no collapse cone or throat visible at the surface

Drill Hole A-1-01• First shallow drill hole encountered 15 ft of massive gypsum in upper Toroweap section.

• Subsequent drilling defined a blind pipe 500 ft to the north

1000

Scale (ft)

5000

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A-1 VTEM Response – Plan and Section

500

1000

1500

Depth (ft)

1000 (ft)

Scale (ft)

500

Conductivity Depth Slice 1217-1414 ft

NS

2D Conductivity Section

Inversions and depth slices by Condor Consulting, Denver Colorado using the raw VTEM data

Moenkopi Fm.

Toroweap Fm.

Hermit Shale

Esplanade Ss.

Kaibab Fm.

Coconino Ss.

Hermit Shale Breakthrough

Kaibab Ls Breakthrough

Intense Breakthrough

A1 Pipe

Red is conductive

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A-1 Pipe

A New Blind Pipe0

500

1000

1500

2000

Depth (ft)

No secondary pipe in pipe structure evident

No structure within 500 ft of the surface-undepleted evaporite section in the Harrisburg

Sulfides cementing small clast ls dominant bx at base of Pkfm.

Disseminated sulfides near Pc/Ph contact above the pipe throat.

Hole A1-31 intercepted 28’ av. 0.58% eU3O8 at 1046’ and 4’ av. 0.45% at 1119’ in upper Hermit

Hole A1-30 still in large clast Hermit dominant breccia at 1500’

Small clast dissolution breccia in Toroweap.

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SURVEY LOCATION MAP

Breccia Pipe VTEM Response 150usec Conductivity

Gump Model AreaCondor depth slices

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Scale (mile)

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• A-1 blind breccia pipe discovered on first VTEM anomaly drilled (First new mineralized breccia pipe identified in 18 yrs)

A-1

Mineralized pipe discovered at A-20 second VTEM anomaly drilledA-20-1: 34.5 ft @ 0.37% incl. 6.5 ft @ 0.63% U3O8

A-20A-21

A-18

• Drilling at A-18 and A-21defined probable pipe structures with up to 40 ft of closure in the upper Kaibab horizon.

Ollie

Gump

• 2 known pipes: Gump and Ollie

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AIRBORNE VTEM SURVEY – Gump Model 17-25 m

All depths in meters

Pipe Center

Watch Depth Arrow

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AIRBORNE VTEM SURVEY – Gump Model 25-34 m

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AIRBORNE VTEM SURVEY – Gump Model 55-68 m

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AIRBORNE VTEM SURVEY – Gump Model 120-143 m

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AIRBORNE VTEM SURVEY – Gump Model 169-199 m

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AIRBORNE VTEM SURVEY – Gump Model 243-273 m

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AIRBORNE VTEM SURVEY – Gump Model 273-319

Sulfide cap conductivity anomaly?

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AIRBORNE VTEM SURVEY – Gump Model 319-371 m

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AIRBORNE VTEM SURVEY – Gump Model 431-500 m

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AIRBORNE VTEM SURVEY – Gump Model 580-673 m

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Toroweap

Hermit Shale

Esplanade Sandstone

Kaibab Ls

Moenkopi

Redwall Limestone

Supai Sandstone

Chinle

Moenave

Vertical Scale (ft)

0

1000

2000

3000

4000

CARBONIFEROUS

CARBONIFEROUS32.3 pipes /100 sq mi

JURASSIC

JURASSIC No outcropping pipes

EDS 08

TRIASSIC

TRIASSIC 0.3 pipes /100 sq mi

Rim

Hermit Mine

Kanab N MineRunEZ 1&2

PERMIAN

PERMIAN 5.1 pipes /100 sq mi

Arizona 1 MineA-1

Ollie

Hack 2 Mine

Collapse Breccia Pipe

SW NE

Coconino SsCoconino Ss

Uranium Mineralization

Breccia Pipe Density

The USGS Open File Report (OFR-89-550) shows the mapped locations of 1,296 pipes in the Grand Canyon region

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Breccia Pipe Density Log-Log Plot

1000

10000

0.0001 0.001 0.01 0.1 1 10 100

Breccia Pipes / 100 Square Miles

Cum

ulat

ive

Thic

knes

s (fe

et)

4000

2000

6000

8000T/Jurassic

T/Triassic

T/Permian

T/Carboniferous

How many mineralized pipes in the N district?

What is the potential of the N district?

1000 square miles in the northern district X 12 pipes/100mi2= 120 pipes

120 pipes X 1.8 million lbs/pipe = 216 million lbs

= 108 tons U3O8/sq. mile

@ 3,200 feet of sedimentary cover (Lower Toroweap horizon) ~ 12 pipes per 100 square miles

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USGS AZ Strip Uranium Endowment Estimate (Circular 1051)

From: US Geological survey Circular 1051; The 1987 Estimate of Undiscovered Uranium Endowment in the Solution-Collapse Breccia Pipes in the Grand Canyon Region of Northern Arizona and Adjacent Utah

Based on the Hack–Pinenut Control Area, favorable Areas A and “Ab” were given a calculated mean endowment of 112.4 tonsU3O8 per square mile.

• All of the northern district is included in this category

• The same endowment was given to the southern Arizona Strip district.

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A New Phase of Exploration in a Mature District

Conclusions• Airborne VTEM has identified most known pipes and 200 high and moderate

priority conductive anomalies with a similar geophysical response

• Many of these anomalies could be blind pipes

• If just ½ of the anomalies are mineralized pipes, the northern district could attain the USGS endowment estimate of 112.4 tons / sq. mile

• Although individually pipes are small deposits, collectively they may represent more than 200 million lbs U3O8 in the northern district alone

• The southern district could have a similar endowment

• A single mine can produce from several pipes and collectively, the breccia pipes of northern Arizona Strip could achieve a “large” deposit status on a world scale.

• High Grades , no ground water, excellent rock conditions and “cookie cutter”permitting, mine design and development may also rank the Arizona breccia pipes among some of the world’s most economical ore deposits.

33NYSE Alternext: QMM / TSX-V: QTANYSE Alternext: QMM / TSX-V: QTA

ACKNOWLEDGMENTS

Co-authors: Patrick Hillard and Joe InmanJudy Pratt and the geological staff of Quaterra Resources Geophysical Consultant – Ken SweetGeological Consultants – James Vroman, Art Renfro, Tom McCandlessManagement and Shareholders of Quaterra Resources

Our many service suppliers and contractors:Drilling - Barbie Drilling Co., Williams, AZLogging - Strata Data Inc., Casper WYAirborne Geophysics - Geotech Ltd., Aurora, ONData Processing – Condor Consulting, Denver, COStaking - All Points North, Elko NV and Kenny Redd, Kanab, UTBorehole and surface TEM - Zonge Engineering, Tucson, AZ

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