UEX Corporation


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Shea Creek

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Introduction

The Shea Creek property is currently the principal advanced exploration property in the Athabasca Basin of northern Saskatchewan. Shea Creek hosts the Kianna, Anne, and Colette Deposits and is one of the ten Western Athabasca Projects currently under option from AREVA, the operator. UEX has earned a 40.0% interest in the ten projects by spending in excess of $24.5 million on exploration and development expenditures in just over three years. UEX has an option to earn an additional 9% interest, and anticipates that it will earn its full 49% interest during the first quarter of 2008, at which time, AREVA and UEX will form a Joint Venture where expenditures will be shared 49% by UEX and 51% by AREVA.

The Shea Creek project is immediately to the south of the past producing Cluff Lake mine center in the western Athabasca Basin. No compliant 43-101 resources have been calculated to date since exploration drilling continues to identify new zones of mineralization within the system. Many of these zones have very high grades often exceeding 5-10% U3O8.

Areva and UEX intend to aggressively pursue advanced exploration and development of the Shea Creek project. AREVA is planning to submit a project description to the federal and provincial regulatory agencies in early 2008 for one or two underground exploration shafts and related test mining facilities. Construction could begin in 2010 based on the outcome of regulatory procedures. As first announced (see UEX News Release, April 10, 2007) AREVA has started the necessary studies for site characterization and base line studies for an exploration shaft. The first proposed shaft has been strategically located between the Kianna and Anne Deposits to provide underground access to both deposits as well as the highly-prospective corridor between them. Each of the proposed shafts will have a vertical depth of approximately 950 metres and an estimated capital cost of $100 million (CDN).

As with other deposits in the region, the full potential of Shea Creek will most likely be realized when underground development is present. The underground access will allow more closely spaced and better oriented drilling which can be completed rapidly, and will facilitate potential future mining development. Given that a significant portion of the best mineralized areas at Shea Creek are basement hosted, large parts of the Kianna and Anne deposits are likely to have better ground conditions and less risk of water inflow than other major deposits in the Athabasca Basin, and consequently may not require freezing of the wallrocks to these mineralized areas during mining.

Geological setting

The deposits which form Shea Creek are distributed along a 2.8 km strike length of the north-northwest trending Saskatoon Lake graphitic conductor. The conductor is exploited by a southwest-dipping, reverse fault that displaces the flat lying unconformity with the overlying Athabasca sandstone by several tens of meters. Areas of clay alteration and chlorite-dravite brecciation occur along and adjacent to fault strands and are associated with uranium mineralization. Depths of the overlying Athabasca sandstone typically range from 700-780 m. As a result of the sandstone depths, drilling is normally completed through the drilling of a master, pilot drill hole from which wedges are drilled to enable close drill hole spacings.

Uranium mineralization

Mineralized areas along the Saskatoon Lake conductor at Shea Creek occur in northwest-trending bends in the trace of the conductive graphitic unit and fault systems, which are discordant to the overall north-northwest trend of lithologies in the local area. These patterns suggest the presence of faults discordant to the overall trend of lithologies may have played a role, and helped control the localization of mineralization.

Mineralization in the Anne, Collette and Kianna deposits comprises three styles and settings:
  • Basement-hosted mineralization found in zones up to 200 metres below the unconformity. Drilling at Kianna has outlined a zone of this type with a strike length of 200 metres and a down-dip extension of 160 metres (e.g. 2005 drill hole SHE-114-11, grading 5.40% U3O8 over 37.7 metres, including 25.46% U3O8 over 4.0 metres). Recently released drill hole results at Anne (2007 drill hole SHE-122-1, which intersected 4.73% U3O8 over 33.7 metres, including 23.21% U3O8 over 3.6 metres) are also of this style
  • Perched sandstone-hosted pervasive and fracture controlled pitchblende bearing mineralization found in discrete zones tens of metres above the unconformity. At Kianna the largest of these pods has a defined strike length of 80 metres and a width of 60 metres (previously announced 2005 hole SHE-114-5, 27.4% U3O8 over 8.8 metres, including 58.3% U3O8 over 3.5 metres). Fracture/fault controlled perched mineralization is also developed within the Anne area, however, intersections can not be correlated between drill holes with the current density of drill information.
  • Unconformity-type disseminated, nodular and massive mineralization in close proximity to the unconformity. At Kianna, the principal zone of this style has a defined strike length of 200 metres and a plan width of 200 metres (e.g hole 2006 drill hole SHE-115-3, grading 12.57% U3O8 over 11.9 metres, including 27.35% U3O8 over 4.2 metres). Much of the mineralization at Anne and Colette are of this style also (e.g. hole SHE-99-2, grading 9.17% U3O8 over 15.7 metres, including 36.37% U3O8 over 2.5 metres). The unconformity mineralization at the Anne Deposit has been traced over a strike length of 250 metres, a plan view width of 100 metres, and is open in all directions.

Mineralization of these styles is open in many parts of the deposits. The zones may be stacked with additional underyling zones successively beneath a zone at or above the unconformity, for example at Kianna, high-grade uranium mineralization has been intersected in multiple zones at depths from 662 metres to 922 metres, a vertical distance of approximately 260 metres. Areas of low grade intersected near the unconformity in widely spaced holes between the deposits suggest the potential for additional mineralized zones in areas which are largely untested, or where historical drill holes did not penetrate sufficiently deeply to test for all mineralization settings. In addition, excellent exploration potential occurs along the extensions of the Saskatoon Lake conductor in southern and central parts of the property, as well as along parallel conductors to the west.

History and ongoing exploration results

In 1969, a predecessor company of COGEMA discovered the Cluff Lake deposits in the western Athabasca Basin, having been led to the area by airborne radiometric anomalies. Mining began in 1980, eventually producing 63 million pounds of uranium.

Exploration for additional resources in the Cluff Lake area began in earnest in 1990. Airborne and ground geophysics at the Shea Creek Project identified a quality conductor (the Saskatoon Lake conductor), which led to the discovery of uranium in 1992 on the second hole (SHE-2). Further drilling along this conductor 2 kilometres to the south discovered the Anne Deposit (discovery hole, SHE-16: 7.3 metres @ 4.21% U, 1994) and eventually, the Colette Deposit (discovery hole, SHE-52: 16.2 metres @ 2.18% U, 1997).

Of the 159 historical drill holes completed by COGEMA at Anne, Colette and the area between the two deposits, 113 encountered uranium mineralization, of which 56 had intersections averaging over 1% U3O8, including 49 intersections averaging 2% U3O8 or higher over a minimum thickness of 1 metre, as shown in Table 1. A number of these historical intersections were of very high grade -- SHE-87: 17.91% U3O8 over 3.9 metres, SHE-96-3: 9.99% U3O8 over 16.3 metres, SHE-99: 10.68% U3O8 over 8.7 metres, SHE-99-2: 9.17% U3O8 over 15.7 metres, and SHE-100-1: 12.92% U3O8 over 6.2 metres.

These historical results, originally presented in "U" or uranium metal in UEX's News Release of March 18, 2004 are presented here in "U3O8", which is higher than U by a factor of 1.18. Subsequent drilling programs in 2004 and 2005 by UEX and COGEMA have encountered additional significant mineralization, including a high-grade intersection of 27.4% U3O8 over 8.8 metres in the Kianna Deposit area, formerly known as the 63B area (see UEX News Releases, July 13, September 14 and October 11, 2005).

Table 1.
Shea Creek Historical Drill Results (1994-2000)
Drillhole Intersections 2% U3O8 or Higher Over 1 metre
(Results Obtained From Gamma Probe)

Hole No.


Area


From

(m)
To

(m)
Length

(m)
Max. Grade
Within the
Intersection

(% U3O8)
Average Grade
Within the
Intersection

(% U3O8)

SHE-16

Anne

716.5

723.8

7.3

42.68

4.97

SHE-16

Anne

753.4

754.4

1.00

13.48

4.20

SHE-38-2

Anne

706.4

710.1

3.7

20.54

5.51

SHE-43

Anne

713.3

717.8

4.5

15.61

2.93

SHE-49

Colette

706.0

708.5

2.5

11.60

2.33

SHE-52

Colette

697.1

714.0

16.9

10.43

2.57

SHE-59

Colette

709.4

714.0

4.6

8.18

4.65

SHE-59

Colette

714.8

716.3

1.5

6.17

2.13

SHE-63-3

N. Anne

720.7

724.5

3.8

16.27

2.61

SHE-65

Colette

734.6

740.0

5.4

9.55

3.26

SHE-79

Colette

714.4

717.6

3.2

26.55

6.17

SHE-82

Anne

733.6

735.5

1.9

11.35

3.48

SHE-87

Anne

708.1

712.0

3.9

41.82

17.91

SHE-88

Anne

751.3

761.0

9.3

10.01

3.53

SHE-91

Colette

706.2

710.3

4.1

6.14

2.08

SHE-94

Anne

739.5

741.3

1.8

3.94

2.36

SHE-94-1

Anne

707.9

716.6

8.7

7.38

2.27

SHE-94-1

Anne

741.7

743.0

1.3

19.28

6.10

SHE-94-1

Anne

743.4

745.3

1.9

26.59

6.09

SHE-94-3

Anne

711.7

717.4

5.7

8.85

2.31

SHE-94-3

Anne

720.1

721.9

1.8

5.09

2.10

SHE-94-4

Anne

740.7

742.3

1.6

10.81

3.09

SHE-94-5

Anne

714.7

722.0

7.3

27.45

4.12

SHE-94-6

Anne

720.8

724.1

3.3

19.51

6.14

SHE-95-1

Anne

718.5

723.6

5.1

20.57

3.68

SHE-95-1

Anne

745.5

748.1

2.6

17.0

4.54

SHE-95-1

Anne

768.1

769.4

1.3

11.19

4.22

SHE-95-1

Anne

773.6

774.7

1.1

9.62

2.57

SHE-95-3

Anne

716.4

726.9

10.5

83.01

7.20

SHE-95-3

Anne

761.0

769.0

8.0

11.32

2.26

SHE-96-3

Anne

708.9

725.2

16.3

70.8

9.99

SHE-96-3

Anne

739.3

745.9

6.6

7.03

2.16

SHE-96-3

Anne

782.8

785.3

2.5

8.60

2.06

SHE-96-4

Anne

753.7

756.1

2.4

19.39

5.05

SHE-98

Anne

704.6

713.2

8.6

13.7

3.02

SHE-99

Anne

701.8

710.5

8.7

89.0

10.68

SHE-99-1

Anne

710.6

716.0

5.4

12.93

3.72

SHE-99-2

Anne

693.6

709.3

15.7

61.78

9.17

SHE-99-3

Anne

709.15

718.45

9.3

47.09

3.82

SHE-99-3

Anne

734.25

736.25

2.0

4.19

2.35

SHE-100-1

Anne

715.05

721.25

6.2

48.16

12.92

SHE-100-1

Anne

751.05

761.25

10.2

21.17

3.22

SHE-101

Anne

751.55

752.75

1.2

6.56

2.60

SHE-101-2

Anne

733.9

746.7

12.8

23.03

3.02

SHE-101-4

Anne

732.9

739.2

6.3

16.27

3.36

SHE-102-2

N. Anne

713.8

716.6

2.8

42.28

8.09

SHE-102-7

N. Anne

712.1

716.3

4.2

7.38

2.78

SHE-102-10

N. Anne

724.45

727.95

3.5

14.29

4.20

SHE-102-11

N. Anne

699.25

701.85

2.6

12.06

2.50


UEX and COGEMA's 2004 fall drilling program at Shea Creek was centered at and between the Anne Deposit, and the Colette Deposit. Both deposits lie along the 25 kilometre long Saskatoon Lake Conductor, which is thought to extend the full length of the Shea Creek Property. The 2004 drilling program, the first carried out at the property since 2000, was highlighted by the continued high ratio of mineralized holes in this relatively under-explored area of the Athabasca Basin. Of the 12 holes completed in 2004, 10 were mineralized with 8 of those intersecting multiple zones of uranium mineralization.

On July 13, 2005, UEX announced the discovery of high-grade uranium mineralization in hole SHE-114-5, the fifth unconformity impact from 2004 pilot hole SHE-114. SHE-144-5 intersected 27.4% U3O8 over 8.8 metres, including 58.32% U3O8 over 3.5 metres, at a point approximately 30 metres above the unconformity. The unconformity was intersected at 714.3 metres along the hole. This intersection represents the most significant uranium mineralization, and with the highest grade, ever encountered at Shea Creek. Hole SHE-114-5 is located in the Kianna Deposit area, formerly 63B area, 600 metres northwest of the Anne Deposit and 1,600 metres southeast of the Colette Deposit in a relatively untested section of the Shea Creek corridor.

Hole SHE-114-5 also intersected significant uranium mineralization approximately 100 metres below the unconformity in the basement rocks, including 1.08% U3O8 over 2.2 metres and 5.48% U3O8 over 1.8 metres within a strongly argillitized fault/breccia zone from 812.0 to 826.0 metres.

Later in the 2005 program, hole SHE-114-11 intersected significant intervals of both high-grade elevated sandstone-hosted mineralization and high-grade, deep, basement-hosted uranium. High-grade, elevated sandstone-hosted uranium mineralization was intersected in between 678.5 and 692.2 metres, 22.0 metres above the unconformity, grading 5.83% U3O8 over 13.7 metres, including 8.89% U3O8 over 8.3 metres, which includes 17.05% U3O8 over 3.5 metres. The same hole intersected high-grade, deep basement-hosted uranium mineralization between 816.1 and 853.8 metres at a depth of 101.9 metres below the unconformity, grading 5.40% U3O8 over 37.7 metres, including 7.03% U3O8 over 26.6 metres, which includes an interval of 10.02% U3O8 over 14.5 metres, which also includes 25.46% U3O8 over 4.0 metres.

In 2006, a diamond drilling program was carried out at Shea Creek over the Kianna Deposit, using two drill rigs. Early in the 2006 program, the second rig tested a high-priority geophysical target located approximately 2 to 3 kilometres to the west of the Colette Deposit with two vertical holes.

At the Kianna Deposit, high-grade uranium mineralization has been intersected in multiple zones at depths from 662 metres to 922 metres, a vertical distance of approximately 250 metres - located in sandstone high above the unconformity, at the unconformity, and below the unconformity in basement rocks, with unconformity depths ranging from approximately 710 to 760 metres. To date, the mineralization at the Kianna Deposit has been traced over a strike length of 200 metres and a width of 150 metres, and remains open in all directions.

See Table 2 below for a list of significant mineralized intersections reported from the Kianna Deposit in 2006, and for comparative purposes, the 2004-2005 Kianna Deposit drilling results. Uranium grades are calculated from gamma probe logging.

TABLE 2.
Summary of 2004-2005-2006 Kianna Deposit Drill Results
All Uranium Intersections Calculated from Gamma Probe Logging
Note that true widths of mineralized intervals have not yet been determined

2006 Drilling Results

Hole

Total Depth of Hole (metres)

Depth to Unconformity (metres)

From (metres)

To (metres)

Length (metres)

Avg. Grade Within the Intersection (% U3O8)

SHE-115-10

998.0

723.4

667.7

669.9

2.2

1.27

 

 

 

681.3

683.6

2.3

1.04

 

 

 

718.0

723.9

5.9

1.27

 

 

 

825.6

841.0

15.4

9.85

 

 

including

828.8

841.0

12.2

12.36

 

 

including

829.9

840.0

10.1

13.87

 

 

including

837.2

840.0

2.8

26.17

 

 

 

855.6

870.4

14.8

1.01

 

 

including

856.8

857.3

0.5

8.24

 

 

including

863.0

863.4

0.4

9.71

 

 

 

893.3

895.3

2.0

1.56

 

 

 

922.0

925.7

3.7

0.44

SHE-115-9

965.0

732.3

686.0

695.1

9.1

3.68

 

 

including

686.7

687.4

0.7

11.45

 

 

including

688.1

688.8

0.7

20.88

 

 

 

822.2

844.4

22.2

2.44

 

 

including

827.7

833.7

6.0

6.83

 

 

 

913.4

921.7

8.3

0.41

SHE-115-8

1010.0

727.6

661.7

668.6

6.9

6.86

 

 

including

662.3

664.4

2.1

20.59

 

 

 

721.9

726.4

4.5

1.96

 

 

 

794.65

798.95

4.3

1.08

 

 

 

843.65

865.45

21.8

1.19

 

 

including

856.25

862.95

6.7

2.96

 

 

 

898.2

902.2

4.0

10.32

 

 

including

899.9

901.7

1.8

21.14

SHE-118-3

977.0

737.7

731.2

738.3

7.1

1.43

SHE-118-2

902.0

745.3

743.2

745.7

2.5

0.19

SHE-118-1

917.0

731.6

718.0

727.6

9.6

2.69

 

 

including

721.9

723.1

1.2

11.10

 

 

 

864.1

878.3

14.2

0.55

SHE-118

880.0

711.4

703.5

712.1

8.6

5.62

 

 

 

737.5

739.4

1.9

0.71

 

 

 

762.9

765.4

2.5

0.56

SHE-115-7

943.0

723.3

720.3

724.4

4.1

0.94

 

 

 

814.2

816.6

2.4

0.63

 

 

 

817.3

823.8

6.5

1.03

 

 

 

832.4

835.5

3.1

1.46

SHE-115-6

974.0

745.6

702.7

710.9

8.2

2.25

 

 

 

730.2

741.3

11.1

2.96

 

 

 

773.4

774.5

1.1

2.48

 

 

 

793.9

795.2

1.3

2.93

 

 

 

820.2

828.9

8.7

2.42

 

 

 

870.3

875.5

5.2

0.72

SHE-115-5

959.5

735.2

731.5

736.4

4.9

12.74

 

 

 

791.9

796.3

4.4

3.77

SHE-115-4

935.0

758.5

745.8

765.6

19.8

3.56

SHE-115-3

1015.0

743.5

735.0

746.9

11.9

12.57

 

 

 

847.5

852.3

4.8

0.53

 

 

 

892.2

897.1

4.9

1.04

SHE-115-2

980.0

737.5

730.7

742.8

12.1

1.20

 

 

 

769.9

772.3

2.4

1.70

 

 

 

847.1

852.0

4.9

2.84

SHE-115-1

956.0

734.8

659.9

666.4

6.5

0.42

 

 

 

728.25

737.75

9.5

0.50

 

 

 

781.35

782.35

1.0

2.52

 

 

 

911.0

916.7

5.7

3.63

Previous 2004-2005 Drilling Results

SHE-115

845.0

718.0

716.1

720.0

3.9

0.48

SHE-114-17

989.0

729.3

718.8

721.3

2.5

0.98

 

 

 

724.5

727.0

2.5

1.06

 

 

 

881.8

890.2

8.4

3.20

SHE-114-16

914.0

716.3

 

 

Weakly mineralized

SHE-114-15

989.0

714.4

895.1

919.0

23.9

0.29

SHE-114-14

1016.0

718.3

712.7

717.5

4.8

0.45

 

 

 

925.9

933.7

7.8

0.57

SHE-114-13

936.0

715.9

810.0

817.0

Massive pitchblende veins in the basement. Hole lost – not probed

SHE-114-12

926.5

713.8

682.8

688.4

5.6

1.81

 

 

 

713.1

716.8

3.7

2.08

 

 

 

834.4

841.2

6.8

1.37

SHE-114-11

934.0

714.2

678.5

692.2

13.7

5.83

 

 

 

710.3

713.7

3.4

1.43

 

 

 

789.9

791.3

1.4

2.04

 

 

 

800.0

802.4

2.4

1.05

 

 

 

816.1

853.8

37.7

5.40

SHE-114-10A

804.0

728.4

726.4

732.5

6.1

1.15

SHE-114-10

 

 

Hole lost – not probed

SHE-114-9

890.0

720.1

677.0

697.0

20.0

5.88

 

 

 

709.2

719.2

10.0

1.48

 

 

 

803.9

805.4

1.5

1.71

 

 

 

808.5

812.9

4.4

1.02

 

 

 

825.7

827.5

1.8

1.09

 

 

 

829.9

832.5

2.6

1.64

 

 

 

840.7

841.9

1.2

1.38

SHE-114-8

889.5

715.8

835.7

843.6

7.9

5.81

 

 

 

853.4

861.8

8.4

4.38

SHE-114-7

800.0

722.5

665.6

679.7

14.1

7.73

SHE-114-6

747.0

715.3

Mineralized - hole lost – not probed

SHE-114-5

866.0

714.2

677.8

686.6

8.8

27.40

 

 

 

814.4

816.6

2.2

1.08

 

 

 

821.2

823.0

1.8

5.49

 

SHE-114-4

884.0

732.5

723.6

729.7

6.10

1.10

 

 

 

794.8

796.0

1.2

1.26

 

 

 

796.8

801.2

4.4

1.27

SHE-114-3

835.0

752.7

748.9

752.9

4.0

1.06

SHE-114-2

863.0

735.7

731.2

735.8

4.6

1.71

SHE-114-1

850.0

720.8

680.4

687.9

7.5

1.36

 

 

 

806.9

807.6

0.7

1.71

 

 

 

809.3

810.4

1.1

2.60

SHE-114

795.0

713.9

684.0

686.0

2.0

3.26

 

 

 

713.2

715.2

2.0

0.69



Maps

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:Show image 'Map 1 - Kianna Deposit Area' in New Window:
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Map 1 - Kianna Deposit Area
76 KB, approx. 15 seconds at 56.6Kbps
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:Show image 'Map 2 - Colette Deposit Area' in New Window:
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Map 2 - Colette Deposit Area
81 KB, approx. 16 seconds at 56.6Kbps
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:Show image 'Map 3 - Anne Deposit Area' in New Window:
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Map 3 - Anne Deposit Area
71 KB, approx. 14 seconds at 56.6Kbps
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:Show image 'Map 4 - South of Anne Deposit Area' in New Window:
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Map 4 - South of Anne Deposit Area
74 KB, approx. 15 seconds at 56.6Kbps
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:Show image 'Kianna Deposit 2007 Drilling Section 1' in New Window:
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Kianna Deposit 2007 Drilling Section 1
85 KB, approx. 17 seconds at 56.6Kbps
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:Show image 'Kianna Deposit 2007 Drilling Section 2' in New Window:
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Kianna Deposit 2007 Drilling Section 2
58 KB, approx. 12 seconds at 56.6Kbps
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:Show image 'Kianna Deposit Section 1 Location Map' in New Window:
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Kianna Deposit Section 1 Location Map
99 KB, approx. 19 seconds at 56.6Kbps
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:Show image 'Kianna Deposit Section 2 Location Map' in New Window:
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Kianna Deposit Section 2 Location Map
99 KB, approx. 19 seconds at 56.6Kbps
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:Show image '2006 Kianna Deposit Drilling' in New Window:
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2006 Kianna Deposit Drilling
165 KB, approx. 32 seconds at 56.6Kbps