INCA Project - June 2010

Mineralisation at INCA, which is located 40 km inland from the coastal town of Swakopmund has characteristics of both metasomatic and magnetite (calc-silicate) skarn types which is distinct and different from the known lower grade alaskite hosted uranium mineralisation being mined at Rossing and on the projects controlled by other companies in the district and also the higher grade Rossing South discovery of Extract Resources which in part exhibits some similarities to the INCA mineralisation.

Although discovered by Reptile in December 2007, the initial drilling returned a downhole intercept of 115 metre at 229 ppm eU3O8 from 14 metre in diamond drill hole ADM02 which is typical of the wide intersections of around 200 ppm as commonly found in alaskites.

Reptile’s technical team had determined that a grade closer to 400 ppm is required for a viable hardrock mining operation and therefore did not pursue this project until later when it was recognised that uranium mineralisation may well be controlled by later alteration systems and not necessarily only with the granites. RC drilling was then undertaken over an approximate 2 by 2 km area on a nominally 100 metre square grid to a vertical depth of 100 metre.

This drilling delineated an area of 300 by 500 metre within which a number of holes contained 400 ppm U3O8 or better close to the surface and which was deemed prospective and have potential for an open-cut mining operation. Reptile then set about drilling out this potential pit area on a 50 by 50 metre grid in order to delineate resources down to a nominal depth of 100 metre. While this programme was underway it was decided to deepen two holes in the northern portion of the grid to test an airborne electromagnetic (AEM) anomaly at depth.

This drilling led to the discovery of the INCA Deeps mineralisation with hole INCR139 returning 1,734 ppm U3O8 over 20 metre from 206 metre associated with massive magnetite. This hole ended in mineralisation due to excessive amounts of water curtailing the RC drilling but testing of the AEM anomaly had successfully discovered a zone of mineralisation towards the north that is tens of metre thick located approximately 200 metre below surface.

The mineralisation appears to be at least partly structurally controlled and occurs within a partly overturned fold or syncline. There is a 20 to 70 metre thick crystalline marble unit within the metamorphic package which, for all intent, is totally unaffected by the alteration associated with the uranium and iron mineralisation and occurs below the mineralisation. This marble unit is being used as a footwall marker and all previously drilled holes that finished above the marble marker are being deepened to intersect it. Where the mineralisation has not been intersected in the 50 metre spaced holes on the southern and western margins of the deposit, the hole spacing is being reduced to 25 metre.

The conceptual/initial mine and production scenario that DYL has modelled is to combine ore from the Tubas Red Sand project with that from INCA to produce around 1,000 to 1,500 tonne per annum of U3O8 at a feed grade of +400 ppm. It was estimated that an initial resource of 8,000 to 10,000 tonne would suffice to fund this development with drilling continuing with a view to increasing the resource as regional holes indicate a much larger zone of alteration and mineralisation is present at INCA.

Intensive RC and diamond drill programmes at INCA through 2009 and early 2010 led to the release of the Resource Estimate reported JORC Code as given in Table 1.

Table 1: Omahola Project - JORC Code Resource Estimates

Category	Cut-Off Grade	Tonnes	Grade (eU3O8 ppm)	Mlbs (eU3O8)	Tonnes (eU3O8)
INCA ESTIMATE
Indicated	200	6,000,000	392	5,000,000	2,300
Inferred	200	10,000,000	402	9,000,000	4,066
INCA TOTAL *		16,000,000	400	14,000,000	6,366
TUBAS RED SAND ESTIMATE **
Measured/Indicated	100	3,172,500	168	1,172,668	532
Inferred	100	10,674,200	158	3,710,600	1,685
TUBAS RED SAND TOTAL		13,846,700	160	4,883,268	2,217
OMAHOLA TOTAL		29,846,700	287	18,883,268	8,583

* Figures have been rounded

** Cut-off grade lower due to 'free digging' nature of sand from surface and positive beneficiation results

HQ diamond drillcore – altered granitic host rock with black magnetite, dull green skarn minerals and yellow-green secondary uranium mineralisation (uranophane and beta-uranophane).

An initial Mineral Resource estimate, in accordance with the JORC Code, has been provided to RUN by The MSA Group of South Africa for the INCA and Tubas Red Sand (TRS) uranium deposits which together form the Omahola Project. See Figure 1 for deposit locations and Table 1 for details of the Mineral Resource estimate.

Figure 1: South to north section showing main rock types, alteration and mineralisation.

The INCA deposit consists of Indicated and Inferred Minerals Resources totalling 16,000,000 tonnes at 400 ppm eU3O8 for 6,366 tonnes (14 Mlbs) eU3O8, and the TRS deposit consists of Measured, Indicated and Inferred Resources totalling 13,846,700 tonnes at 160 ppm eU3O8 for 2,217 tonnes (4.9 Mlbs) eU3O8. Therefore the combined Mineral Resource estimate for the Omahola Project is 29,846,700 tonnes at 287 ppm eU3O8 for 8,583 tonnes (18.9 Mlbs) eU3O8.

The combined initial Mineral Resource estimate is in line with RUN’s expectations and serves to underpin its objectives of conducting a Pre-Feasibility Study (PFS) on the Omahola Project. In February 2010, SNC Lavalin was awarded a contract to conduct the PFS, which is currently scheduled to be completed in October Quarter 2010.

Ongoing drilling at INCA, following on from that used in the initial INCA resource estimate, includes reverse circulation (RC) holes and diamond core tails on select holes. The core samples will be used for additional metallurgical testwork.

Drilling has progressed within and around the initial resource area. Results from new drilling within the resource grid area will serve to improve the confidence and potentially expand the initial JORC Code resource estimate, while results from drilling outside and around the initial resource area are expected to increase the overall resource.

Figure 2: INCA drill hole map showing JORC Resource grid area relative to larger footprint of mineralisation.

The larger, 4 km² area (as shown in Figure 2) and beyond is now being investigated further by systematically deepening existing holes, to what is now a well established footwall marble marker unit, and infill drilling closer to the detail resource grid.

The Initial JORC Code resource estimate at INCA of 16 M tonnes at 400 ppm eU3O8 for 6,366 tonnes (14 Mlb) eU3O8 is contained in a grid area of approximately 500 x 500 metres (Figure 2 – green outline).

Ongoing drilling has expanded the main area of uranium mineralisation to approximately 1,500 x 500 metres, plus additional areas scattered across 4 km².

Outstanding drill intercepts outside the current JORC Code resource area include:

11 m at 2,907 ppm eU3O8 from 39 m in Hole AM1 9200 11.100
13 m at 1,586 ppm eU3O8 from 44 m in Hole AM1 9200 11.072
24 m at 1,178 ppm eU3O8 from 40 m in Hole INCD15

Expanded JORC Code resource anticipated in September Quarter.

Data from the on-going drill programme will be incorporated into the next iteration of the Mineral Resource estimate in accordance with the JORC Code scheduled to be complete during the September Quarter.

In addition to ongoing drilling, a combination of airborne electromagnetic and gravity survey anomalies has provided both shallow and deep drill targets to the immediate north and south, which could lead to potential extensions of the known mineralised area.

Drill rigs at INCA

Shown in Figure 1 is a south to north section looking west depicting the mineralised envelopes. The main zone which contains extensive +500 ppm U3O8 zones will hopefully drive an open-pit down to levels where the high-grade INCA Deeps mineralisation starts.

Taking into consideration that many holes remain to be deepened to the marble ‘footwall’ marker and others remain to be drilled to infill the grid to the minimum spacing of 50 by 50 metre the model is a ‘work in progress’, but as information flows the model is becoming more robust.