lake way – centipede development project pre … · 11-07-2007 · lake way – centipede...

Date: 11 July 2007

JUNE 2007 QUARTERLY REPORT

Pre-feasibility study underway at Lake Way - Centipede

Uranium-thorium mineralisation intersected in IOCG belt, South Australia

New geophysical targets defined in Namibia and drilling commences

Rights issue raises $15.5 million

LAKE WAY – CENTIPEDE DEVELOPMENT PROJECT Pre-feasibility Study

Resource Estimation A modified Indicated and Inferred resource estimate, based on a broader wireframe model, new drilling data and a revised cut-off grade of 150ppm U3O8, is expected to be completed in July 2007. The lower cut-off grade (from 300ppm U3O8 in the previous resource estimate) is based on an escalated operating cost, a conservative recovery estimate of 85%, a long-term price indicator* of US$95/lb U3O8, and an $US/$A exchange rate of 0.85.

Exploration Costeans Approval has been received from the DoIR to excavate exploration costeans 300m long to a depth of 3.5 metres using a Wirtgen continuous mining machine.

The Adelaide-based company Radiation Detection Systems has constructed a prototype continuous grade control system to be fitted to the continuous miner before the excavation. As 90% of the gamma radiation is emitted from the top 15cm, precise grades can be determined during the mining operation, reducing the need for downstream radiometric sorting.

If successful, continuous mining technology has the potential to lower mining costs, increase ore/waste differentiation and considerably reduce operating costs per pound of uranium produced. Initial calculations indicate that the operating cost could be reduced from A$28/lb to A$22/lb.

Metallurgical Test Work Bulk samples were submitted to AMMTEC and ANSTO for comprehensive metallurgical testing. The preferred process route is Resin-in-Pulp (RIP) and this will be the focus of initial ANSTO test work. RIP is expected to have considerable operating and capital expense advantages over the more conventional leach and counter current decantation processing route. Further cost reductions can be expected if a scrubber, rather than mill, can be employed for ore comminution. F

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June 2007 Quarterly Report

Simplified metallurgical flow chart for the RIP uranium recovery process

Trench excavated for bulk metallurgical samples

Carnotite exposed in bulk sample trench

Tailings Management Golders Ltd have completed a first pass options study for the tailings storage facility (TSF).

Environmental Monitoring A weather station has been ordered and will be installed in July. This will meet all Australian standards required for environmental permitting.

Base line radiation surveys have been completed across Centipede and the proposed site of the processing plant – Wiluna South.

Hydrology A hydrological desktop study by Aquaterra is nearing completion, with the initial focus being to determine process water quality and quantity.

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EXPLORATION PROJECTS Australia

Location of Nova Energy’s Australian Projects

Lake Moore – Western Australia (64.4km2)

EL 59/1198 A program of work has been submitted to DoIR to undertake a drilling program to further test the radiometric anomaly at the margin of Lake Moore. Reconnaissance shallow auger drilling intersected 94ppm and 153ppm U3O8 in two of the 12 holes drilled in the previous quarter.

Meekatharra – Western Australia (152km2)

EL 51/1106 RAB drilling during the last year quarter 2006 intersected uranium mineralised calcretes with values up to 101ppm U3O8 over 12m. A follow-up RAB drilling campaign is planned for the next quarter and a program of work has been submitted to DoIR to obtain the required clearances.

Lake Mackay – Western Australia (2,332km2)

ELAs 80/3483, 3484, 3485, 3486, 3519, 3580, 3581, 3582, 3583, 3584, 3585, 3586, 3587, 3588, 3589 Negotiations continued with the Traditional Landowners, the Kiwirkurra people, and their representatives, the Ngaanyatjarra Council. It is hoped that further progress towards a land access agreement will be made in the second half of 2007.

Esperance (Grass Patch) – Western Australia (1,379km2)

ELs 63/1008, 1009, 1010, 1012, 1013, 1014, 1015, 1011 Approvals to undertake a RAB drilling program to test for mineralisation in the channels identified from an airborne EM survey completed earlier this year have finally been obtained. A program will be undertaken as soon as a suitable drill rig can be contracted.

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Gilba Bore – Western Australia (106.4km2) EL 081/1640 A field reconnaissance was undertaken in April 2007. The unconformity between the Palaeoproterozoic basement and overlying Mesoproterozoic Bangemall Basin sediments was located. Of the outcrops examined, no radiometric anomalies were found. Only sectors of the unconformity are exposed and the covered areas require further investigation. Structures extending from the unconformity into the basement are also considered a potential target as they commonly host uranium mineralisation.

Coober Pedy – South Australia (911km2) EL 3437 The Company has completed its first drilling program to evaluate geophysical targets in the Olympic Dam – Prominent Hill corridor. Four holes successfully reached basement at depths of approximately 50 and 121 metres.

Location of the Coober Pedy Tenement, South Australia

The holes targeted northwest to north-northwest trending magnetic lineaments and gravity gradients located in the southern quarter of the EL.

CPNDD 03 was collared on a magnetic ridge in gravity low and intersected granodiorite only. Basement was intersected at 121m depth. From 121m to 140m anomalously high values of barium (around 1,000ppm) were detected. CPNDD 04 was collared on a gravity high coincident with a southeast-trending magnetic lineament. The dominant basement lithology intersected was granodiorite. Within the granodiorite, pegmatitic zones associated with the mineral uranothorite, a thorium and uranium bearing silicate mineral, were identified. These zones are radiometrically anomalous and the following uranium and REE assay results were obtained:

From (m) To (m) Interval (m) U3O8 (ppm) La (ppm) Ce (ppm)

171.4 172.4 1.0 118 190 490 183.3 184.55 1.25 47 10 <50

192.26 192.4 0.14 118 20 <50 Table 1: Significant assays in CPNDD 04

CPNDD 05 was drilled 3.6km further to the northeast of CPNDD 07. Basement rocks comprising granodiorite were intersected and no geochemical anomalous units were found.

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CPNDD 07 reached basement at 80m and intersected significant zones of magnetite alteration in granite (interpreted to be part of the Hiltaba Suite). Drill results to date are highly encouraging and follow-up drilling is being planned. In addition, the Company is completing an in depth study of available information on basement geology and the applicability of advanced geophysical techniques.

Image of total magnetic intensity of EL 3437 and drill hole location (Coober Pedy is

located near the northern edge of the image) Amadeus Basin – Northern Territory (9,325km2)

ELs 25049, 25050, 25051, 25052 ELAs 25045, 25046, 25047, 25048 Granted ELs 25050, 25051 and 25052 cover ground in the Finke sub-basin within the Amadeus Basin. Reconnaissance work completed in the previous quarter suggested that the most prospective parts of the basin are located in the north of the tenement block where Recent cover is present. A land access agreement is being negotiated and a Mine Management Plan has been submitted to the Department of Primary Industry, Fisheries and Mines in the Northern Territory. ELAs 25045 and 25046 have not been approved following an objection by the Central Land Council and are currently in moratorium. Applications for ELs 25047 and 25048 are pending.

Tenement Locations in the Amadeus Basin, Northern Territory

Anomalous Uranium & REE

10 km

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Africa Namibia (1,323km2) Nova Energy has three granted EPLs (3668, 3669, 3670) for Base metals and Nuclear Fuel Exploration, all of which are located in the Namib-Naukluft Park. Approval of Nova Energy’s Environmental Assessment and Management Plan was received on 26 April 2007 from the Ministry of Environment and Tourism. Ground-based exploration commenced shortly after clearance of specific work programs was obtained from the park authorities. Nova has purchased geophysical data covering its Namibian tenements. The data is being reprocessed and interpreted by a geophysicist familiar with the district.

Locations of Nova Energy’s EPLs in Namibia

EPL 3668 Gawib West – 24,747ha (247.7km2) The Gawib West EPL is located about 12km west of Paladin's Langer Heinrich deposit and covers part of the upper Tumas drainage. The Langer Heinrich channel is interpreted to have once flowed directly west into the upper reaches of the Tumas drainage system. A review of the publicly available records at the Geological Survey of Namibia reveal that no historic exploration appears to have been undertaken on ground covered by EPL 3668.

Goniakontes Langer Heinrich

Rossing

Tubas

Tumas, Oryx

Aussinais

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The Company was able to obtain a RC rig at short notice and completed one north-south line of drill holes in the eastern third EPL. A total of 1,268m was drilled in 15 holes. The six most northern holes were drilled to a depth of 100m and did not reach basement. The remaining nine holes intersected basement at depths of about 80m in the north and 37m at the southern end of the line. Lithologies intersected comprised river gravels and sand. The Company plans to drill test other parts of the EPL when a drill rig next becomes available towards the end of July.

Drill rig on EPL 3668, Namibia, June 2007

EPL 3669 Tumas North – 21,781ha (217.8km2) The Tumas North EPL is located about 24km southwest of Swakopmund and covers part of the northern arm of the Tumas drainage system. The drainage may have sourced the uranium anomalous alaskites located to the northeast of the tenement. The tenement may contain buried calcretes that have the potential to host uranium mineralisation. Publicly available records at the Namibian Geological Survey reveal that limited exploration was undertaken in the 1970's and early 1980's on the ground covered by EPL 3669. Some drilling has been undertaken in the eastern part of EPL 3669. Results of the drilling are not all available, but the information at hand suggests that calcretes, with anomalous uranium contents in places, were intersected. The course of the palaeo-Khan river is interpreted to have run through the tenement and the historic drilling appears to have primarily targeted this area. Nova Energy has completed first-pass interpretation of the recently purchased airborne geophysical data which suggests that favourable lithologies that are the focus of alaskite intrusions may extend under cover into the northeastern part of the tenement. Once the interpretation of geophysical data is complete, the Company intends to drill test any targets identified.

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TMI image backdrop showing location of the historic drill lines (black), the interpreted course of the palaeo-

Khan drainage (blue dashed line) and trends of the main basement units (light blue and red lines). Also shown is the Anomaly “A” project of Bannermann Resources.

EPL 3670 Chungochoab – 85,750ha (857.5km2) The geology in this area comprises shallow drainages and scattered outcrops with isolated radiometric anomalies. The drainages flow in a westerly and southerly direction toward the Kuiseb River. A review of previous exploration revealed that an area in the central west of the EPL was explored by ground scintillometer traverses in the late 1970’s to follow up a radiometric anomaly identified in an airborne survey. Calcretes were also noted in the area but the anomalies were never followed up. Another significant anomaly in the northern part of the tenement has been identified by new radiometric data recently purchased by Nova. The area will be re-evaluated by a gamma ray detector cup survey. Orders for the cups have been made and the surveys will commence as soon as the cups are received and field crews can be organised.

Calcrete mineralisation

target

Bannermann Resources Anomaly “A”

4 km

Alaskite target zone

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Radiometric image of northern half of EPL 3670 showing the two locations targeted for

follow-up surveys Guinea (858km2) Nova has four "permis de recherche minière" located in northern Guinea. The permits cover Neoproterozoic sediments that were the focus of a large uranium exploration project managed by Cogema between 1977 and 1981.

A two week field trip was completed in order to locate additional old drill holes, over and above those located in the November 2006 campaign.

Historical data indicates that high-grade uranium mineralisation was intersected in about eight of the holes drilled, albeit over thin intervals between 10 and 80cm. In addition, lower grade mineralisation was obtained in 17 holes over intervals between 30 and 100cm. Chemical assay information is not available and the uranium concentrations are eU (uranium equivalent) from historical radiometric measurements only undertaken by Cogema. The high grade values range from 1.1 to 4.1% eU and the low grade values range from 0.34 to 1.2% eU.

Nova plans to drill test the area at the end of the current rainy season when a drill rig becomes available. Follow-up drilling will focus on a high-grade north-northwest trending shoot, approximately 2km wide and 7km long.

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Location of Nova Energy Project Area in Guinea

Uranium Tenements

Historical diamond drilling results and estimated down hole eU grades at the Domou Prospect and proposed drilling in a 1km square block centred on

the high-grade intersections

Other African Projects In accordance with Nova Energy’s strategy of diversification into jurisdictions that are favourably disposed towards uranium exploration and production, the Company continued to assess exploration opportunities in northern and western Africa.

FINANCE In June 2007 the Company completed a non-renounceable rights issue of one share for every 14 held in Nova Energy at an issue price of $3.80 per share to raise approximately $15.5 million. The rights issue was underwritten by Argonaut Capital and approximately 80% of the issue was accepted by existing shareholders. At the end of the June quarter the Company’s cash reserves stood at $15.63 million. An objection to a stamp duty assessment of $695,000 (which was paid in the March 2006 quarter) is yet to be finally assessed by the WA Office of State Revenue.

CORPORATE The Board is pleased to welcome Mr Jeff Sells, Chief Financial Officer of Oxiana Limited, as a Non-Executive Director. Mr Peter Bowler resigned from his position as Non-Executive Director in order to pursue other interests and the Board thanks him for his contribution to the Company’s performance since its formation.

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For further information contact: Dr Tim Sugden Managing Director Tel: (08) 9321 1411 Email: [email protected] The information in this report relating to Exploration Results and Mineral Resources is based on information compiled by Dr Burkhard Eisenlohr who is a Fellow of the Australian Institute of Mining and Metallurgy and a full time employee of Nova Energy Limited and has sufficient exploration experience for the various styles of uranium mineralisation considered in this report; and Mr Ashley Jones B.Sc (Hons) who is a Member of the Australian Institute of Mining and Metallurgy and a full time employee of Nova Energy Limited and has sufficient experience relevant to assessment of calcrete-type uranium mineralisation to qualify as a Competent Person as defined in the “Australian Code for Reporting of Mineral Resources and Ore Reserves”. Dr Eisenlohr and Mr Jones consent to the inclusion of the information in this report in the form and context in which it appears. * Tradetech’s long term price indicator as at 30 June, 2007 (ref: www.uranium.info)

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lake way – centipede development project pre … · 11-07-2007 · lake way – centipede...

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