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 |  | Beatty River 
In June 2004, UEX announced an agreement with Japan-Canada Uranium Company, Limited ("JCU") whereby JCU granted UEX an option to acquire a 25% interest in the Beatty River uranium project ("Beatty River" or the "Project"). Beatty River is located 40 kilometres south of the Shea Creek uranium deposits. At present, COGEMA of Saskatoon, SK, owns a 50.71% interest and JCU owns a 49.29% interest in Beatty River. Under the Agreement, UEX can earn a 25% interest in Beatty River by funding $865,000 in exploration expenditures by December 31, 2008.
COGEMA plans to maintain its 50.71% interest in Beatty River by matching UEX's exploration expenditures. COGEMA, as operator, will utilize its team of experienced geoscientists who have participated in several important uranium discoveries in the Athabasca Basin, including Cluff Lake, Cigar Lake and most recently, Shea Creek. COGEMA's preliminary budget estimate for a 2006 winter exploration program at Beatty River is approximately $450,000, which includes planned programs of 31.5 kilometres of time-domain electromagnetic moving loop surveying, and 54.0 kilometres of DC Resistivity surveying.
Beatty River presently consists of seven claims totaling 6,813 hectares (17,032 acres) The Project was one of the first areas staked when COGEMA resumed exploration in the Western Athabasca in the late 1980's. Airborne geophysical surveys (GEOTEM in 1990) and several ground electromagnetic and magnetic surveys were carried out, which highlighted a number of quality conductors.
Only 22 drill holes were completed within the original historical boundaries of Beatty River, which is a relatively sparse number of drillholes compared to the former size of the property.
The Anne Lake conductive trend is the most attractive target found at Beatty River to date, with a strike length of approximately 10 kilometres. In the 2004 winter program carried out by COGEMA, prior to the completion of the UEX-COGEMA-JCU agreement, drillhole BR-22 intersected an important graphitic structure. The results of BR-22 led to a revised geological and geophysical interpretation, prompting a restaking program in June 2004. Other historical drill holes displayed anomalous clay alteration in the sandstone and basement rocks, which is highly prospective for unconformity-type uranium mineralization as observed in the Athabasca Basin. Drillhole BR-21 displayed uraninite-coffinite mineralization in a fault gouge with values of 873 ppm U3O8 and 500 ppm nickel, with associated anomalous copper, vanadium, and molybdenum values.
The 2005 winter exploration program at the Project consisted of four angled drill holes totaling 1,753 metres. Although each of the holes encountered zones of fractured, brecciated and/or desilicified sandstone, none intersected uranium mineralization. Weakly graphitic basement rocks were intersected in three of the holes; however, the quantity of graphite was insufficient to explain a previously-outlined basement conductor.
Of the holes drilled in 2005, holes BR-23, BR-24, and in particular BR-25, are geochemically of the most interest. In the latter drill hole, elevated boron values and dravite observed in the silicified sandstone suggest the presence of a large hydrothermal cell to the west of the drilling on the BR-2 grid. It is not certain as to the origin of such a cell, but it is noted that hole BR-25 lies in close proximity to the large east-west structure in that area.
COGEMA is confident that a good conductor has been identified in the area, and that significant fluid movement and structural disruption warrants further exploration. Follow- up drilling should attempt to intersect the conductor in close proximity to interpreted structures.
Geophysical surveys, including time-domain electromagnetic and DC Resistivity surveys,are planned for 2006 to better define the location of the conductor, faulting, and alteration at Beatty River. Results from the 2006 surveys will be compiled with existing geological and geophysical data to provide potential targets for drilling in the winter of 2007.
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