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The Black Lake Uranium Project ("Black Lake", or the "Project") is located in the Athabasca Basin area of northern Saskatchewan near Stony Rapids, SK, and as of December 31, 2006
is owned 87.2% by UEX and 12.8% by AREVA subsidiary COGEMA Resources Inc. ("COGEMA"), of Saskatoon, SK. UEX is operator of the Project, which is 30,381 hectares (75,071 acres) in size.
Black Lake was the site of a new uranium discovery in hole BL-18 during the 2004 fall reconnaissance drilling program. Hole BL-18 discovered unconformity-type uranium mineralization in the sandstone, immediately above the unconformity at a vertical depth of 310.5 metres (see UEX News Release, October 12, 2004). Composited geochemical analyses from this intersection average 0.694 % U3O8 over 4.4 metres between 310.5 and 314.9 metres. Maximum grade in this interval is 1.96% U3O8 over 0.5 metres between 313.3 and 313.8 metres.
UEX considers Black Lake an integral part of its exploration portfolio in the northern rim of the Athabasca Basin. The Project is staked over the Platt Creek Shear Zone, a major NNE-trending fault parallel to the Black Lake Fault, which has been found to be coincident with a graphitic basement conductor having a strike length of at least 20 kilometres. Major faults or shear zones like that of Platt Creek and associated basement graphitic conductors are known to be important factors in the formation of unconformity-type uranium deposits.
Exploration History
In 1979-1980, predecessor companies of Cameco Corporation ("Cameco") discovered the presence of a linear graphitic conductor within what is now the northern part of the Project. In 1980, a drilling program along the conductor in the Raibl Lakes area intersected a graphitic horizon that reportedly carried up to 1400 ppm U3O8 over a 15 centimetre interval. In 2001, Pioneer Metals Corporation ("Pioneer") located the core, re-logged and sampled those holes. Two of the holes (ERL-4B and ERL-5) intersected faulted/brecciated graphitic pelite below the unconformity with elevated values of uranium, nickel, arsenic, and cobalt. The best result was 500 ppm U3O8 over 0.14 metres intersected in ERL-4B. Another radioactive interval from the basement of ERL-4B returned average values of 236 ppm U3O8, 274 ppm nickel, 2490 ppm cobalt and 5823 ppm arsenic over 0.6 metres.
Following the discovery of Cigar Lake in 1981, exploration focus shifted away from the northern rim of the Athabasca Basin and eventually the property was allowed to lapse. In 1995, Uranerz Exploration and Mining Ltd. ("Uranerz"), a German uranium explorer, staked the property and after a boulder sampling survey and geophysical survey drilled two holes in the southern part of the claim group in March 1998. Hole BL-02 encountered up to 0.42% U3O8 in a crush breccia immediately below the unconformity. Later in 1998, the exploration assets of Uranerz were purchased by Cameco Corporation and no further exploration occurred until 2000, when Cameco carried out a geophysical survey between the Raibl Lakes area and the two 1998 drillholes. The survey confirmed that the basement conductor intersected in the Raibl Lakes area continued for at least another 18 kilometres to the south and was the same one intersected by Uranerz in 1998.
In 2001, under the terms of an option agreement with UEM Inc., a company owned equally by Cameco and COGEMA, Pioneer began exploration on the Project and detailed the strike and character of two parallel conductors named the Western and Eastern Conductors. Two areas that contained interpreted breaks across the conductorsbelieved to represent intersecting fault structureswere selected as drill targets. One of the holes, Hole BL-03 tested the abrupt end of strong conductivity associated with the Eastern Conductor and encountered a wide structural zone with strong brittle fracturing and faulting, exhibiting elevated values of boron (up to 2,200 ppm in selected samples) and magnesium (up to 0.583%) indicating the presence of fracture dravite in the sandstone. Just below the unconformity, a radioactive, hematized and limonitized interval contained anomalous uranium (205 ppm U3O8 over 0.5 metres) and elevated base metal values. A graphitic pelitic gneiss with up to 25% graphite was intersected below this mineralized interval.
Exploration by UEX Corporation
2003 Winter Exploration Program
Exploration in the winter of 2003 by UEX at Black Lake consisted of 2,085 metres of diamond drilling in five holes. These included two holes (BL-05, BL-08) drilled to follow up Pioneer's 2001 hole BL-03, which had intersected significant alteration and faulting in the sandstone column along a probable splay of the Platt Creek fault system. The 2003 holes confirmed both the presence, and significant size of the fault-related alteration zone, which here extends for up to 300 metres above the basal Athabasca unconformity and is associated with widespread bleaching and abundant dravite (magnesium-tourmaline) veinlets. Dravite is common in alteration zones developed above, and lateral to, unconformity-style uranium deposits in the Athabasca Basin. In the Black Lake holes, dravite concentrations observed exceed those associated with many known deposits. The presence of anomalous radioactivity in the basement in hole BL-05 (2560 ppm U3O8 from 308.6 to 309.1 metres in altered graphitic gneiss) within this alteration zone represents a high priority target for follow up drilling to test for McArthur River or Cigar Lake type targets.
2004 Winter Exploration Program
A total of 66.2 line kilometres of Transient Electromagnetic ("TEM") geophysical surveying was carried out to detail the up to 20 kilometre-long conductor defined by reconnaissance TEM surveys by Cameco. Two parallel conductors, the Western and Eastern Conductors, were detailed by the TEM and ground magnetic geophysical survey during March 2004. These are the southwestern extensions of conductors detailed as part of a winter 2001 TEM survey and drill tested by holes BL-03 through BL-08.
Within the strike of the Eastern Conductor several priority drill targets were recommended within an area approximately 1,800 metres long. The results showed that this anomaly may represent a wide zone (up to 150 metres) of strong conductivity, likely caused by graphite, associated with an area of weaker conductivity, which could represent a local increase in weathering and/or faulting. Also of significance is a discrete and relatively narrow magnetic low that appeared to be coincident with the Eastern Conductor, a type of magnetic anomaly that is indicative of pelitic rocks in the underlying basement.
Two holes totaling 970 metres of diamond drilling were completed.
Hole BL-10 was drilled to a depth of 503 metres and tested the Eastern conductor 1.6 kilometres southwest along strike of holes BL-03 and BL-05. The upper portion of the sandstone is moderately to strongly bleached with numerous moderately to strongly friable sections consisting of rubble and unconsolidated sand with significant core loss locally. The middle and lower sections of sandstone are generally weakly to moderately bleached. Certain pathfinder elements were detected in systematic and selective sandstone samples, including a selective sample at 356.1 metres that carried 1,230 ppm arsenic. A radioactive section just below the unconformity returned 295 ppm U3O8 over 1.05 metres as well as elevated values of arsenic, cobalt and nickel. Basement consists of biotite-feldspar gneisses with graphitic gneiss from 407.6 to 415.3 metres and 436.6 to 466.9 metres containing 5% to 10% graphite as very thin bands and stringers along foliation and fractures and locally as coatings and shears along fractures. Local sections are strongly graphitic and brecciated with up to 20% graphite as massive aggregates, sheets and bands.
Hole BL-11 tested the Eastern conductor 200 metres southwest along strike of holes BL-03 and BL-05. A major fault zone over 20 metres wide was intersected from 199.4 to 221.8 metres, within which the sandstone showed strong bleaching and the appearance of dravite in veins and fractures. The fault zone exhibited highly fractured, broken core with numerous sections strongly desilicified and locally argillized with significant core loss throughout. The interval is very strongly bleached and argillized locally to white sandy clay. Local sections show well developed brecciation with angular reddish brown sandstone fragments in a strongly desilicified and locally argillized matrix and light blue dravite common along fracture surfaces and in veins up to 2 centimetres wide infilling fractures. Sampling of these brecciated zones returned low uranium values (0.12 to 1.36 ppm uranium) but are highly anomalous in boron (up to 1,340 ppm B) and magnesium (up to 0.323% MgO).
A narrow section just below the unconformity with strong pervasive hematization from 318.93 to 320.8 metres was radioactive throughout the interval. Sampling of this radioactive section returned 452 ppm U3O8 over 1.87 metres with elevated values of nickel, cobalt and arsenic.
The basement consists of moderately to strongly graphitic gneisses from 333.3 to 354.5 metres containing 3% to 5% graphite as very thin wisps and stringers along foliation and fractures. Local sections are strongly graphitic and brecciated with up to 50% graphite as massive aggregates, sheets and bands.
2004 Summer Exploration Program
The 2004 summer exploration program consisted of 3,812 metres of diamond drilling.
Hole BL-18, the seventh hole of an 8-hole program, encountered unconformity-type uranium mineralization in the sandstone, immediately above the basal Athabasca unconformity at a vertical depth of 310.5 metres. Composited geochemical analyses from this intersection average 0.694 % U3O8 over 4.4 metres between 310.5 and 314.9 metres, including 0.848 % U3O8 over 3.3 metres between 311.0 and 314.3 metres, and 1.086 % U3O8 over 1.5 metres between 312.8 and 314.3 metres. Maximum grade in these intervals is 1.96% U3O8 over 0.5 metres between 313.3 and 313.8 metres. Under the supervision of Sierd Eriks, P. Geo., UEX's project geologist and a qualified person as defined by N.I. 43-101, core was split, half core from each interval sealed in sample bags, and submitted to the Saskatchewan Research Council in Saskatoon, SK for analysis. After preparation, uranium and base metal concentrations were determined using fluorimetry and ICP analysis.
Holes BL-18 and BL-19 targeted an area where significant faulting and highly prospective sandstone alteration including dravite, had been previously intersected above the Eastern conductor in the northeastern portion of Black Lake. Several widely-spaced hole locations, the sites of holes BL-12 to BL-17, drilled 0.4 to 2.2 kilometres southwest of BL-18, were of a reconnaissance nature, testing the Eastern and Western conductors, which strike southwest for at least 12 kilometres. These interpreted discrete conductors lie parallel to each other, between 200 and 600 metres apart.
The discovery hole BL-18 was chosen upon a recommendation by David Rhys, M.Sc., P.Geo. in consultation with other members of UEX's exploration team, to test an area 70 metres to the west of the Eastern Conductor, where hole BL-11 had encountered favourable alteration and anomalous boron concentration that were interpreted to increase to the west. BL-18 was also planned to test a theory that the Eastern and Western conductors are in fact the edges of one wide conductive unit. BL-18 did encounter massive graphite between the two interpreted discrete Eastern and Western conductors, which suggests that future diamond drilling should explore the area between the conductors, considering the mineralization present in the hole.
Uranium mineralization in BL-18 predominately occurs as pervasive, dark grey impregnation of the basal Athabasca sandstone with pitchblende stringers, beginning at 310.5 metres, which continues to the unconformity with basement rocks at 314.9 metres. Uranium minerals are interpreted to be coffinite and pitchblende by initial visual determinations. In a manner comparable to known deposits in other parts of the Athabasca Basin, pervasive red hematization in the sandstone occurs immediately above the mineralized intersection, and alteration-related bleaching of the paleoweathering profile has removed the normally developed oxidized red zone in the basement rocks beneath the mineralization. The BL-18 mineralized intersection also contains highly anomalous concentrations of up to 0.77% arsenic, 0.41% copper, 0.19% lead and 0.42% nickel, which are characteristic elements associated with unconformity-type uranium deposits in other areas of the Athabasca Basin.
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The disseminated style of mineralization, lack of faulting and the presence of probable coffinite in the BL-18 intersection suggest that it may represent a peripheral, lower grade style of mineralization to a more typical, and higher grade mineralizing system. Major deposits in the Athabasca Basin, such as McArthur River and Cigar Lake, are generally developed over strike lengths of less than 1 kilometre, comprising low grade mineralization surrounding a much smaller high grade core where the bulk of the mineralization is contained. By comparison, the discovery hole at the McArthur River deposit, MAC-196, intersected distal low grade mineralization comprising 0.5% U3O8 over 0.9 metres prior to the discovery of the main high grade core to the P2 North orebody.
Hole BL-19, drilled 400 metres to the northeast of BL-18, and holes BL-16 and BL-15, drilled 400 and 800 metres southwest of hole BL-18 all intersected variable degrees of dravite veining and alteration in the Athabasca sandstone column accompanied by brittle faulting, and locally developed pyrite alteration, the most significant of which was intersected in hole BL-19. UEX is awaiting complete geochemical results for these holes. With previous drill holes BL-03, 05, 08 and 11 in this area, these collectively extend the area affected by dravite-bearing faulting to 1.2 kilometres along a north-northeast trending strike that is developed above basement graphitic conductors, and which is open to the northeast and southwest. The mineralized intersection in BL-18 lies immediately to the grid west of these holes.
Holes BL-12, 13, 14 and 17 were drilled 0.4 to 2.2 kilometres southwest of the BL-18 discovery, as part of an ongoing systematic drill testing of the conductor system present at Black Lake. Graphitic conductors were intersected in all holes with the exception of BL-19. With the new discovery, the exploration potential of these conductors has been enhanced since unconformity deposits frequently occur in a series of zones along such graphitic features. Further testing is planned for future programs, since only very widely-spaced holes have been completed to date in these parts of the property.
2005 Winter Exploration Program
The 2005 winter program included 14,043 metres of diamond drilling in 30 holes, as well as ground and airborne geophysical surveys. The diamond drilling program, using two drill rigs, was intended to determine the extent of the unconformity-type uranium mineralization encountered in hole BL-18 in 2004 and to continue reconnaissance exploration of the graphitic conductors which extend along strike for approximately 20 kilometres.
An 11-hole step-out drilling program, totaling 4,645 metres, tested the extent of the uranium mineralization intersected in BL-18 in all directions, with holes spaced 12.5 metres apart. Although favourable graphitic basement rocks were intersected, only hole BL-32, located 12.5 metres grid west of BL-18 intersected uranium mineralization immediately above the unconformity in an interval from 313.9 to 315.3 metres that averaged 0.16% over 1.4 metres, including 0.27% U3O8 over 0.5 metres.
The other ten step-out holes did not encounter significant uranium mineralization or alteration in the overlying sandstone. Also, a fault system has yet to be found in the immediate vicinity of BL-18. Such a fault system could be a conduit along which mineralization was forced laterally along the unconformity from its source, an unknown distance away. The disseminated style of mineralization and lack of faulting in the BL-18 intersection suggest that it may represent a lower-grade style of mineralization peripheral to a higher-grade mineralizing system.
The step-out drilling grid needs to be expanded at hole BL-18 in order to locate the source of the uranium mineralization, which appears to be further away than originally thought. Geochemical analytical data have been received and are presently being interpreted, to help direct exploration in the vicinity of BL-18.
A second drill was dedicated to reconnaissance drilling as part of the ongoing systematic drill testing of the interpreted 20 kilometre-long Black Lake conductive zone. Nineteen holes totaling 9,398 metres, tested the Eastern Fault Zone as well as several of the best moving loop survey defined conductors. The Eastern Fault Zone is interpreted to be a secondary, parallel fault, or "splay", associated with the regional Platt Creek Fault Zone, which transects the Property. The Eastern Fault Zone is comprised of several individual, steeply east-dipping faults.
BL-23 was intended to pierce the unconformity on Line 118N approximately 160 metres east of the point where uranium mineralization was intersected in BL-18. This is also in the vicinity of the Eastern Fault Zone, which in hole BL-05 to the north (Line 120N) was found to be mineralized just below the unconformity. A major fault zone was intersected just above the unconformity at 309.0 metres and, as is characteristic of the Eastern Fault Zone, the minerals dravite, pyrite and siderite were found to be present along fractures on the margin of the fault. This assemblage of minerals is indicative of hydrothermal alteration typically associated with unconformity-type uranium mineralization in the Athabasca Basin. The hole also encountered unconformity-type uranium mineralization in the sandstone immediately above the unconformity, in a narrow interval from 307.9 to 308.0 metres, which averaged 0.28% U3O8 over its 0.10 metre length. The combination of a major fault zone, hydrothermal alteration in the sandstone, a strongly graphitic and brecciated basement immediately below the unconformity, and uranium mineralization indicate that the required processes for the emplacement of an unconformity-type uranium deposit typical of the Athabasca Basin were active in the vicinity of hole BL-23.
Thirteen holes targeted on the Eastern Fault Zone, primarily to the north of hole BL-23 in areas only accessible during the winter, showed similar, favourable structural and geochemical characteristics, although only weak uranium mineralization was intersected.
BL-43, located 5.4 kilometres to the south of hole BL-23, tested a secondary moving loop survey defined conductor, interpreted to be the southern extension of the Eastern Fault Zone. The hole intersected three separate, major fault zones. As in the hole BL-23 area, siderite, pyrite and dravite were also present along fractures in the vicinity of the faults. In the basement, the rocks encountered were granitic rather than pelitic and no graphite was intersected. However, drilling to the north has shown that the Black Lake conductive zone is an assemblage of interbedded, steeply dipping pelitic and granitic rocks. The basement rocks to the east of where BL-43 intersected the unconformity may be pelitic rocks, as the magnetic data suggest. Therefore, follow-up drilling of the interpreted down-dip projection of each fault encountered by hole BL-43 is warranted. The area is only accessible during the winter and is a high priority target for Winter 2006 drilling.
Four drill holes targeted on the Western Conductor did not intersect favourable environments for uranium mineralization.
All samples were analyzed at Saskatchewan Research Council Geoanalytical Laboratories by ICP, with additional uranium analyses by fluorimetry. The technical information in this document has been compiled and reviewed by Sierd Eriks, P. Geo., a qualified person as defined by National Instrument 43-101.
Moving loop electromagnetic surveys detected at least one discrete conductor on most of the lines surveyed. The Western and Eastern conductors, which are mapped more precisely by the moving loop survey method, are shown to lie within or near the edges of the Black Lake conductive zone as defined by the MEGATEM survey data. The moving loop data indicate that the Western Conductor is much more conductive than the Eastern Conductor. A discrete conductor was also detected in a second, parallel magnetic low, lying to the northwest of the Black Lake conductive zone, which may be a second, as yet untested corridor of basement graphitic metapelites.
Gravity measurements were made along each of the moving loop survey lines. The gravity survey appears to map the Eastern Fault Zone.
A deep-penetrating, airborne electromagnetic MEGATEM survey totaling 1,476 line kilometres was completed during 2005, providing blanket coverage for Black Lake. The final data set has been received and interpretation is underway.
2005 Summer/Fall Exploration Program
A $1.5 million exploration program of diamond drilling, and geophysical and geochemical surveys commenced in July 2005 at Black Lake. The program concluded in October 2005. Eighteen holes were completed totaling 8,701 metres.
Significant uranium mineralization was encountered in two holes along the Eastern Fault Zone. In hole BL-56, located approximately 200 metres south of hole BL-18, mineralization was intersected from 319.9 metres to 322.5 metres, grading 0.22%% U3O8 over 2.9 metres (calculated from geochemical analysis). Hole BL-64, located approximately 600 metres south of BL-18, intersected unconformity-style uranium mineralization similar to that found in hole BL-18, from 338.75 metres to 340.75 metres, grading 0.45% U3O8 over the 2.0 metre interval, including 0.66% U3O8 over 0.5 metres, from 340.25 to 340.75 metres (calculated from geochemical analysis). All core samples were analyzed at Saskatchewan Research Council Geoanalytical Laboratories by ICP, with additional uranium analyses by fluorimetry.
Both of the mineralized holes, and many other holes drilled along the Eastern Fault zone over several kilometers of strike length, encountered faulting with pervasive dravite, pyrite, chlorite and illite alteration and anomalous uranium, lead and boron enrichment in the sandstone up to tens of metres above the unconformity. Together with favorable graphitic basement rocks that were intersected in all of the 18 holes drilled during the program, the anomalous alteration and geochemistry continues to underscore the prospectivity of this fault zone.
2005 Summer/Fall Geochemical Survey
An MMI geochemical sampling program was carried out on the northern Black Lake grid to seek anomalous responses from potential buried mineralization. 551 samples were collected at 25 metre spacing, and analyzed at SGS Laboratories of Toronto, ON. The MMI survey defined three multi-element anomalies. UEX plans to integrate the results of the MMI survey with existing geological and geophysical data to assist in prioritizing targets for its 2006 drilling programs.
2005 Summer/Fall Airborne Geophysical Surveys
To complement the 2005 airborne MEGATEM survey, an airborne Falcon Gravity Gradiometer survey was completed late in 2005 to assist in identifying favorable structures and alteration in the sandstone. Gravity data can be used to identify structural zones and areas of near-surface alteration which are common signatures of uranium mineralization at depth. The radiometric data may be used to identify possible radioactivity and alteration in the near surface.
2006 Winter Exploration Program
A total of 16,651 metres in thirty-nine (39) diamond drill holes were drilled during the 2006 winter program. Five drill holes were abandoned due to poor ground conditions. The thirty-four completed drill holes tested the Eastern Fault Zone and other prospective parts of the Property.
Black Lake Winter 2006 Exploration Results
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Black Lake
North Winter 2006
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The majority of the holes drilled along the Eastern Fault Zone demonstrated sandstone structure and alteration indicative of a prospective setting for uranium deposition, along with graphitic basement rocks, but did not encounter significant uranium mineralization. However, a previously-unknown mineralized reverse fault, or basement "wedge" was intersected in hole BL-82. In the Athabasca Basin, the presence of a mineralized basement "wedge" is considered to be an important geological feature for potential uranium deposition having formed a structural trap for mineralizing hydrothermal fluids.
Hole BL-82: 0.50% U3O8 over 3.3 metres, including 1.6% U3O8 over 0.7 metres, was drilled to follow-up a zone of anomalous radioactivity encountered in the basement in hole BL-80. The sandstone units of hole BL-82 showed promising bleaching, fracturing, and dravite and pyrite alteration.
Two unconformities were encountered in hole BL-82, the first at 267.4 metres. Uranium mineralization was intersected within a brecciated zone 6.05 metres below the first unconformity in the lower half of the basement "wedge", grading 0.50% U3O8 over 3.3 metres from 273.45 to 276.75 metres, including 1.6% U3O8 over 0.7 metres from 274.45 to 275.15 metres. Below the second unconformity, at 300.84 metres, to the end of the hole at 423.06 metres no significant mineralization was encountered.
UEX is encouraged by the presence of the mineralized "wedge" in hole BL-82, which further confirms a prospective geological setting for uranium mineralization in that area of the Property. Due to poor ground conditions as a result of unusually warm winter weather, mineralization in hole BL-82 could not be followed-up within 200 metres along strike to the northeast. Further follow-up drilling of this target is planned for winter 2007.
All samples were analyzed at Saskatchewan Research Council Geoanalytical Laboratories by ICP, with additional uranium analyses by fluorimetry. The technical information in this document has been compiled and reviewed by Sierd Eriks, P. Geo., a qualified person as defined by National Instrument 43-101.
Ground Geophysics
Moving loop electromagnetic ("EM") surveys were carried out to provide in-fill to previous EM surveys. The Winter 2006 survey detected at least one discrete conductor on most of the lines surveyed confirming the conductive trends previously defined by surveys. These and previous EM survey results will assist in the selection of future drilling targets along the Black Lake conductive trend.
Maps
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