Ongolo & MS7 Alaskite Deposits - December 2011

Summary

The Ongolo and MS7 Alaskite deposits are seen as the main source of ore for the planned Omahola Project Processing Plant, which conceptually comprises a plant located close to the Ongolo deposit treating a blend of primary ore from the Ongolo and MS7 deposits and the INCA uraniferous magnetite deposit (Figures 1 and 6).

Current JORC Resources at Ongolo and MS7 comprise:

• Ongolo Deposit     20.5 Mt at 400 ppm U₃O₈ for 18 Mlbs U₃O₈ at 250 ppm cut-off.
• MS7 Deposit            5.4 Mt at 470 ppm U₃O₈ for 5.6 Mlbs U₃O₈ at 250 ppm cut-off.

The Omahola Project Resource base totals 40.7 Mt at an average grade of 413 ppm U₃O₈ for 37 Mlbs U₃O₈ (Table 1).  The resources at both MS7 and Ongolo are expected to increase as ongoing drilling continues to deliver encouraging results which will be confirmed by chemical assay.  High level pit optimisation exercises on Ongolo and MS7 deposits have commenced, in order to enhance the effectiveness of the next phase of targeted exploration drilling.
 

Background

Evaluation of the potential of alaskites in the northern part of EPL 3496 commenced in late 2007.  Five RC drill holes and one diamond core hole were drilled in the initial programme.  Downhole radiometric logging returned extensive 100+ ppm eU₃O₈ values typical for such alaskitic material in the area, as reported by other explorers with adjoining tenements.  Secondary uranium mineralisation was also developed in sands and calcrete within a broad plain south-southwest from the outcrop areas.  With the discovery of the higher grade INCA uranium mineralisation, drilling in the Ongolo area was put on hold in early 2008.

As the intensity of the INCA drilling was reduced early in 2010, drilling recommenced at Ongolo and was immediately successful.  High grade uranium intersects were made with discovery hole ALAR13 returning chemical assays of 89 metres at 400 ppm U₃O₈ from 128 metres.

There followed an intensive drill campaign with Phase 1 completed in March 2011 to allow for a maiden JORC Resource estimate to be completed by Coffey Mining Pty Ltd (Coffey) (ASX 12 May 2011).  Phase 2 drilling continued through to mid-September 2011 with an updated resource estimate being announced in early November (ASX 7 November 2011).

Ongolo Alaskite Deposit

Uranium mineralisation at Ongolo is hosted by alaskitic granite, which occurs as voluminous masses and sheeted intrusive dykes, within the metasedimentary Khan Formation (Figure 2).

Mineralisation comes to within 20 metres of surface and underlies a broad, flat gently sloping sheetwash plain, thinly veneered by alluvial and aeolian sands.  The host rocks are mostly pelitic gneiss with variable but significant pyrite/pyrrhotite content, which may be important if sufficient to be recovered to support locally generated sulphuric acid production.  The primary uranium mineral is uraninite, and where present at grades of greater than 500 ppm, is marked by the presence of significant visible smokey quartz (Figure 3).

The updated Indicated and Inferred Mineral Resource estimate was completed by Coffey, tripling the maiden JORC Compliant Resource to 20.5 Mt at 400 ppm U₃O₈ for 18 Mlbs U₃O₈ at a 250 ppm cut-off.  Approximately 73% of the 18 Mlbs resource (13.2 Mlbs) is classified in the Indicated category (Figure 4).

Background Information on Ongolo Resource

The Ongolo deposit was discovered by RUN in April 2010, approximately 12 kilometres NE of its INCA deposit.  A decision was taken in November 2010 to add the deposit to the Omahola Project and infill drilling to JORC Compliant standard commenced a month later.  A maiden JORC Indicated and Inferred Mineral Resource estimate for the Deposit was completed by Coffey and announced on 12 May 2011. The Resource totalled 6.9 Mt at 410 ppm for 6.2 Mlbs U₃O₈ at a 275 ppm cut-off (based on 2010 drill data).

The 2011 data was merged with the 2010 data giving a drillhole database for the updated estimation consisting of 342 RC and 18 diamond holes totalling 71,081 metres. The drillholes were typically drilled at 60° towards 135°.

The method used to obtain estimated grades within the mineralised zones for U₃O₈ was block Multiple Indicator Kriging (MIK).  A SMU of 5 metre x 5 metre x 3 metre was selected to simulate the anticipated mining selectivity. SMU corrections were applied to the estimate to report expected recoverable resources.

By count, approximately 20% of the composites used in the estimate were sourced from chemical data and 80% from factored radiometric assays.  However, as the high-grade regions of the drilling were typically character assayed by chemical methods, approximately 65% of the resource metal endowment was sourced from chemical assay methods.

The deposit is still open along strike and down-dip in some areas. From regional geology it is believed that the uraniferous alaskites are within the Khan formation and mineralisation usually seems to be concentrated when these alaskites come into contact with the Rossing and Chuos formations, with a marble unit acting as an impermeable layer (Figure 5 and 6).

The MS7 alaskite discovery was made in May 2011.  The prospect is located approximately 2 kilometres to the west of the Ongolo deposit (Figure 6).  From regional geology it is believed that the uraniferous alaskites are within the Khan formation and mineralisation usually seems to be concentrated when these alaskites come into contact with the Rossing and Chuos formations, with a marble unit acting as an impermeable layer and localising higher grade mineralisation (Figures 5 and 6).

Coffey provided the company with an interim JORC Inferred Mineral Resource totalling 2.3 Mlbs based on drilling to mid-September (ASX 13 October 2011).  Subsequently a further 80 RC and 5 diamond holes for 14,766 metres were added to the resource database which now comprises 207 RC and 7 diamond drillholes for a total of 38,350 metres (Figure 7).  The main mineralised zone now extends about 800 metres along the strike and is up to 400 metres wide and is open to depth below 200 metres. Drill spacing is 50 metres by 50 metres to 100 metres by 100 metres.

The estimation method for the maiden resource was by Ordinary Kriging (OK), however the updated resource estimate was calculated using Multiple Indicator Kriging which was also used in the recent Ongolo deposit upgrade. 

Approximately 30% of the composites used in the MIK estimate were chemical XRF-Fusion assays and 70% from factored radiometric data.  Importantly, approximately 60% of the total metal endowment at MS7 is underpinned by the chemical assays.
 

Approximately 60% of the 5.6 Mlb Resource (3.3 Mlbs) is classified in the Indicated category (Figure 7). The higher grade Inferred Resource, at 540 ppm U₃O₈, reflects high grade intersections that are open to depth (to the north) and which will be targeted for infill and extensional drilling in the New Year.