UEX Corporation - Shea Creek Project

Shea Creek Project

Introduction

The Shea Creek property is currently the principal advanced exploration property in the western Athabasca Basin of northern Saskatchewan. The Shea Creek Project is a joint venture agreement between AREVA Resources Canada Inc. ("AREVA", 51% interest) and UEX Corporation ("UEX", 49% interest), with AREVA acting as project operator. Shea Creek hosts the Kianna, Anne, and Colette Deposits and is the most advanced of the ten Western Athabasca Projects from which UEX has earned a 49% interest from AREVA. 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 uranium grades often exceeding 5-10% U₃O₈.

The Shea Creek property is located approximately 700 km north-northwest of the city of Saskatoon and approximately 20 km east of the border with the province of Alberta, and lies 13 km south of the formerly producing Cluff Lake mine site. It consists of 19,581 hectares (196 km²) in 11 mineral dispositions which are registered to AREVA. It can be accessed year round by all-weather, maintained gravel Provincial Highway #955, which passes through the property. A gravel airstrip located to the northeast of the former Cluff Lake mine site is maintained by AREVA and provides year round access for passenger aircraft, as do several large lakes which allow float-plane access. Field operations are currently conducted from the former Cluff Lake mine camp, 9 km due north of the Shea Creek property.

Acquisition and Ownership

UEX acquired its interest in the Shea Creek property through an option agreement ("the Agreement") which was signed in March 2004. Under the Agreement, UEX was granted an option to acquire a 49% interest in certain properties in the Western Athabasca Basin including Shea Creek from COGEMA Resources Inc. ("COGEMA"), the predecessor to AREVA, by funding C$30 million in exploration expenditures over an 11 year period. Under the terms of the Agreement, UEX granted AREVA a royalty in an amount equal to US$0.212 per pound of future uranium in concentrate produced from the Anne and Colette Deposits, to a maximum total royalty of US$10.0 million payable by UEX. UEX received confirmation from AREVA that the total amount of UEX's expenditures on AREVA's Western Athabasca Projects exceeded C$30.0 million as of December 31, 2007 (see January 11, 2008 news release), fulfilling the terms of the Agreement well ahead of the maximum 11 year period.

Shea Creek: Regional Setting

Shea Creek: Claim Map

Shea Creek: Infrastructure

Exploration History and Methodologies

The western portions of the Athabasca Basin were initially explored in the 1960s as exploration activities expanded outward from the established Beaverlodge uranium district utilizing airborne radiometric (scintillometer) surveys. Following airborne radiometric surveys carried out in the late 1960s, ground prospecting and then follow-up drilling located the Cluff Lake deposits. Production from the Cluff Lake deposits commenced in 1980 and operations continued until 2002. Total production from the Cluff Lake mine site amounted to 64.2 million lbs U₃O₈ at an average grade of 0.92% U₃O₈, from several deposits.

Despite its proximity to Cluff Lake, systematic exploration on the Shea Creek property did not commence until 1990 apart from limited surface work and geophysical surveys. That year, Amok Limited ("Amok") acquired a single mineral permit which covered much of the Shea Creek area, and conducted an airborne GEOTEM electromagnetic and magnetic survey over the project area which identified the presence of conductive north-northwest trending zones within basement rocks underlying the Athabasca sandstone sequence. The airborne survey was followed-up in 1991 and 1992 with ground electromagnetic ("EM") surveys on several northeast-oriented lines which verified the position and better outlined the conductors identified by the initial airborne survey. Based on these surveys, Amok re-staked the area, reducing the mineral permit area to 12 individual claims, most of which now comprise the Shea Creek property. Amok drilled several of the EM conductors in 1992, intersecting narrow intervals of uranium mineralization immediately beneath the sub-Athabasca unconformity in northern parts of the property, as well as promising alteration. In 1993 ownership of the property was transferred to COGEMA Resources Inc. ("COGEMA"). COGEMA continued exploration by drilling to the north along the same conductive basement unit, now known as the Saskatoon Lake Conductor, which was associated with the initial mineralized intercept. Significant uranium mineralization was identified in 1994. Between 1994 and 2000, COGEMA drilled more than 95,000 m in 156 drill holes, which resulted in identification of two deposits, Anne and Colette, distributed along with other mineralized intercepts over a three kilometre long strike of the Saskatoon Lake Conductor.

In March 2004, COGEMA (since 2006 named AREVA Resources Canada Inc. or "AREVA") and UEX signed the option agreement. Drilling recommenced funded by UEX, and between 2004 and 2008, approximately 66,154 m of drilling in 138 diamond drill holes was completed under management by AREVA. The drilling programs during that period resulted in the discovery and partial delineation of the Kianna Deposit between the Colette and Anne Deposits, and discovery of new areas of mineralization along the prospective corridor between Anne and Colette (e.g. Colette South, Kianna South).

Drilling Methods

Due to the greater than 600 metre depths to the target area, drilling is generally conducted by penetrating overburden with HW diameter casing followed by HQ coring to 400 metres depth. The holes are typically completed by reducing to NQ-sized core (48 mm core diameter) which is the typical core size for testing mineralization at target depths. Since 1999, directional drilling utilizing wedge cuts from a master (pilot) drill hole have been completed in areas where closely spaced drill holes are required to define mineralization, reducing the overall required quantity of coring required, and allowing controlled drilling of deep targets. As is standard practice in uranium exploration, downhole radiometric geophysical probing surveys are performed from the bottom of the hole up through the drill string at the completion of each drill hole.

Drill Hole Traces on the Northern Shea Creek Property

Drilling in Areas Outside the Northern Shea Creek Property

Geological Setting

The Shea Creek property is in the western Athabasca Basin of northern Saskatchewan. The property is underlain by two dominant lithologic elements: (i) metamorphic basement rocks of Archean and Proterozoic age, which are overlain by (ii) 400 to 800 metres of flat-lying to shallow-dipping, post-metamorphic quartz sandstone of the late Proterozoic Athabasca Group. Basement rocks in the western Athabasca area that underlie the Shea Creek region comprise Proterozoic orthogneiss and paragneiss of the Lloyd Domain, which forms part of the Rae Structural Province.

On the Shea Creek property, basement lithologies trend north-northwest and dip moderately to shallowly west-southwest. Basement rocks comprise an alternating sequence of granitic gneiss, diorite gneiss, and pelitic gneiss (Kareen Lake Assemblage) which is affected by amphibolite grade metamorphic assemblages. The latter includes the Saskatoon Lake Conductor, a graphite-bearing pelitic gneiss unit which is spatially associated with uranium mineralization. This pelitic gneiss unit in the northern Shea Creek property, where most mineralization discovered to date is developed, is 40 to 80 metres thick and comprises a graphite-rich pelitic gneiss base, with alternating garnet-rich gneiss and aluminous, locally graphitic pelitic gneiss above. The pelitic gneiss is surrounded in its hangingwall and footwall by garnetiferous granitic gneiss.

The gneiss sequence at Shea Creek was affected by at least two dominant periods of deformation prior to the deposition of the Athabasca sandstone:

Penetrative syn-metamorphic deformation which occurred in at least two phases (D1 and D2), comprising early layer parallel gneissosity (S1) which dips west-southwest, and a second phase, possibly progressively developed S2 foliation. S2 is axial planar to minor, dominantly southwesterly verging folds of S1, and frequently transposes S1 foliation resulting in a composite S1-S2 fabric.
Development of northeast-trending, right-lateral/oblique lower amphibolite to greenschist grade mylonitic shear zones (D3), which include the major Beatty River Shear zone at the southern end of the Shea Creek property, and numerous, parallel northeast-trending second and third order narrow dextral mylonitic shear zones developed to the north which offset the Saskatoon Lake Conductor.

Regional relationships and geochronology suggest that D1 and D2 occurred during the 1950-1900 Ma Tahlston orogeny, while formation of D3 dextral regional shear zones occurred in several phases during regional transpressive deformation potentially related to the Hudsonian orogeny between 1900 and 1740 Ma. Offsets associated with the D3 shear zones may have a fundamental, pre-mineralization control on the later position of development of uranium mineralization.

The folded basement sequence was eroded and then unconformably overlain by flat-lying, quartz arenite dominated Athabasca Group sandstone between 1769 and 1500 Ma. Below the unconformity at base of the sandstone, regional clay alteration affects the uppermost tens of metres of the basement gneiss sequence defining a probable paleoweathering profile.

Post-Athabasca faulting is localized along the pelitic gneiss unit that is host to the Saskatoon Lake Conductor as a series of southwest dipping, carbonaceous reverse faults that are concentrated along graphitic gneiss (R3 fault) at the base of the unit. These result in a 20 to 50 metre southwest side up zone of distributed displacement of the unconformity, which in the sandstone column is manifested by a broad, open monoclinal fault-related fold. Individual fault surfaces are often localized along foliation-parallel, probably D3 age, reverse shear zones in the pelitic gneiss, and are developed as a combination of semi-brittle stylolitic shear zones and clay gouge-field faults. The semi-brittle, stylolitic fault surfaces extend into the basal Athabasca sandstone where they locally overprint mineralized chlorite-matrix breccias, indicating that this fault activity may have coincided with, and locally outlasted, alteration related to uranium mineralization.

Post-Athabasca faulting also includes local remobilization of the steeply dipping, northeast-trending mylonites which offset the pelitic gneiss unit by further right-lateral displacement, and a series of east-west to east-northeast-trending low displacement faults with apparent left-lateral shear sense. These northeast- and east-west-trending, steeply dipping fault sets coincide with areas of highest grade uranium mineralization at the unconformity, and are host to, or control underlying uranium mineralization in basement rocks. Their activity, and probable interaction with active foliation-parallel R3 reverse faults, may have generated structural permeability and extensional settings for the focus of uranium mineralization. In addition, the stylolitic fabrics and reduced assemblages along the R3 faults suggest a phase of syn-tectonic fluid flow which, if coeval with uranium mineralization, may have been the reduced fluid source that reacted with oxidized fluids from the Athabasca Basin to form the stationary redox fronts in which uranium mineralization is localized.

The Athabasca sandstone is affected to the north of the Shea Creek property by the Paleozoic age Carswell structure, a circular, probable meteorite impact structure which results in uplift and significant disruption of basement rocks. It is here that the past-producing Cluff Lake uranium deposits have been exposed at surface near the disrupted Athabasca unconformity surface. No effects of the Carswell event are present in the Shea Creek area.

Geological Setting of the Shea Creek Property

Geology of the Northern Shea Creek Property

Uranium Mineralization

Uranium mineralization on the Shea Creek property is of the unconformity-associated uranium deposit type, which is spatially related to the sub-Athabasca unconformity in the region. These are generally interpreted to result from interaction of oxidized diagenetic-hydrothermal fluids with reduced basement rocks and/or with reduced hydrothermal fluids along faults extending upward toward the unconformity in the underlying basement below.

Uranium mineralization identified to date on the Shea Creek property lies in northernmost portions of the property, comprising the Anne, Kianna and Colette Deposits and intervening mineralization between the deposits. These deposits occur along an approximately three kilometre strike length of the north-northwest trending pelitic gneiss unit that is host to the Saskatoon Lake Conductor. The deposits occur at depths of 650 to 800 metres below current surface and beneath the thick sequence of overlying Athabasca Group sandstone. Within this corridor, drilling has been focused in two areas in which semi-continuous mineralization has been traced at the unconformity: i) the Colette and Colette South areas, over a 0.7 km strike length, and ii) the Kianna to Anne Deposit areas, over a 1.1 km strike length. The area between the Kianna and Colette deposits, termed the "58B" area, has only been sparsely tested by drilling along its 1 km strike length, and high potential remains for discovery of additional mineralization in this area. Elsewhere on the property, drilling is limited and widely spaced, but mineralization has locally been intersected 2 km southeast of the Anne Deposit.

Three styles of mineralization are developed within these mineralized domains, based on their position with respect to the Athabasca unconformity, and overall morphology. They comprise:

Unconformity-hosted uranium mineralization
This is the most widespread style of mineralization identified to date. It forms shallow-dipping zones that are developed in the lowermost Athabasca sandstone immediately above the sub-Athabasca unconformity, or straddling the unconformity and extending downward for several metres into the underlying basement gneisses. The mineralization typically is elongate in plan view, occurring at the unconformity over a 40 to 150 metre lateral width along the trace of the northeastern margins of the pelitic gneiss unit where it intersects the unconformity, and extending over parts of the footwall granitic gneiss. Mineralization in high grade areas may comprise massive, nodular or blebby pitchblende +/- coffinite +/- yellow uranium-silicates in a hematite-clay matrix. In lower grade areas, unconformity-hosted mineralization may be disseminated in chlorite-clay-dravite alteration. The mineralization of all grades is often associated with, and occurs within, chlorite-dravite dissolution breccias in the basal sandstone.
Basement-hosted mineralization
This is the second most extensive style of mineralization, occurring in several portions of the Anne Deposit, in a large zone at Kianna, and in the Colette South area. Basement-hosted mineralization is developed mainly in granitic gneiss up to 200 metres below the sub-Athabasca unconformity, and immediately beneath, and up to 180 metres below, the pelitic gneiss unit and associated R3 faults. The mineralization is variable in style and morphology, and is associated with areas of intense white to pale green clay-chlorite alteration. Basement mineralization can be either concordant or discordant in style, with the two styles often occurring together or branching off one another. Concordant basement mineralization, which occurs in the southern Anne and South Colette Deposit areas, forms dominantly shallow to moderate west-southwest lenticular zones that are parallel or subparallel to gneissosity in the granitic gneiss. This mineralization style may form stacked zones that are separated from, or splay off, unconformity-hosted mineralization, and which often follow southwest-dipping fault surfaces or lithologic units. Where present, a garnet-amphibolite gneiss ("metabasite") subunit may be preferentially mineralized. Discordant basement mineralization, which is best developed in the main Kianna basement zone and in the northern Anne Deposit, is defined by steeply-dipping, easterly-trending mineralized zones of disseminated, nodular and locally massive replacement style pitchblende +/- coffinite +/- hematite +/- uranium silicates, and by sets of pitchblende +/- quartz +/- clay veinlets. Core reorientation suggests that the veinlets trend east-northeast with moderate to steep northerly dips parallel to the discordant zones. Interaction between concordant and discordant mineralization styles forms oreshoots within basement mineralization that plunge moderately to shallowly to the west-southwest.
Perched mineralization
This is the least voluminous of the three mineralization styles. It comprises flat-lying to shallow southwest dipping lenses of disseminated to massive pitchblende-coffinite-hematite-clay mineralization that are developed in Athabasca sandstone up to 60 metres above the sub-Athabasca unconformity. Perched lenses may occur stacked above unconformity mineralization with no associated faulting, or may occur along, or at the termination of, southwest-dipping faults where they project upward into the Athabasca sandstone from pelitic gneiss below.

Where best developed and of the highest grade, all three mineralization styles may be vertically stacked on top of one another. These stacked, better developed areas of mineralization may be localized in areas where steeply dipping, discordant east-west to northeast-trending faults interact with, and intersect the foliation-parallel faults at the unconformity, creating zones of high dilatancy and structural permeability. Pre-Athabasca basement structural architecture may play an important role in localizing these higher grade areas. In areas where the Saskatoon Lake Conductor is offset by northeast-trending dextral mylonitic shear zones, faults localized along the conductor may step and splay as they link across the area of offset. In addition, the older shear zones may be remobilized and host, or control, adjacent mineralization. Basement mineralized zones may be mantled by sheeted sets of quartz and quartz-dravite veins, although pre-mineralization veins associated with mylonites are also evident.

Mineralization is associated with extensive clay alteration which affects the lower sandstone and extends downward into the basement rocks. Principal clay minerals are illite, chlorite, kaolinite, and dravite. An early phase of illitization is commonly evident, while kaolinite is generally paragenetically late. Extensive areas of chlorite-clay-dravite matrix breccias occur along the unconformity in the basal sandstone column, and are spatially associated with unconformity-hosted mineralization. The presence of pitchblende fragments in breccia and the overprinting of the breccia matrix by pitchblende-coffinite assemblages, indicate a syn-mineralization timing which was probably also coeval with reverse faulting along the R3 structures. In basement rocks, clay alteration envelops mineralized zones and outlines their general morphology. Modeling of clay alteration therefore forms an important targeting tool. An extensive northeast-trending and steeply-dipping clay alteration zone at Kianna is open to the east and west and contains unbounded mineralization to the north, providing significant room for the expansion of Kianna basement mineralization, and the potential for additional parallel basement zones.

Geology of the Anne and Kianna Area	Kianna Deposit: North-South Cross Section
Anne Deposit: Section 6750N	Anne Deposit: Section 6875N

Geology of the Colette Area

Colette South: Section 8670N

Colette Deposit: Section 9200N

Shea Creek Mineralization Photographs

Anne Basement Mineralization: SHE-096-03, 763 m	Anne Basement Mineralization: SHE-095-03, 768 m
Kianna Basement Mineralization: SHE-115-11, 864 m	Kianna Unconformity Mineralization: SHE-115-03, 745 m
Kianna Unconformity Mineralization: SHE-122-1, 717 m	Kianna Perched Mineralization: SHE-115-05, 680 m

Drilling Results

Drilling on the northern Shea Creek property has resulted in the intersection of numerous significant areas of uranium mineralization associated with the three kilometre corridor hosting the Anne, Kianna and Colette Deposits. No historical or current N.I. 43-101 complaint resources are available for these deposits, although the proposed drilling programs in 2009 are intended to advance the deposits towards this objective.

Drill holes generally have dips of 75° or steeper which generally cross the flat-lying lenses of unconformity-hosted and perched mineralization styles at a high angle that is close to, or at true thickness. Mineralized intercepts of discordant basement mineralization have more complex morphology, and in most cases the true thickness of intercepts are as yet undetermined although these discordant basement zones can contain combinations of steeply dipping vein-like mineralization which occurs at shallow core axis angles to many drill holes, in combination with foliation parallel, shallower dipping components which may form oreshoots.

In the Anne Deposit, some of the more significant drilling intercepts occur in areas of mineralization which straddle the unconformity and extend downward continuously into the underlying basement, forming broad areas of basement mineralization beneath. A significant zone of mineralization of this style, which occurs in the north central portions of the deposit, includes the following intercepts which are largely basement hosted:

4.411% U₃O₈ over 14.9 m, including 20.898% U₃O₈ over 2.9 m in hole SHE-095-03;
5.419% U₃O₈ over 19.0 m, including 29.200% U₃O₈ over 3.4 m in hole SHE-096-03;
3.315% U₃O₈ over 25.1 m, including 16.866% U₃O₈ over 4.0 m in hole SHE-100-01;
4.206% U₃O₈ over 36.0 m, including 13.703% U₃O₈ over 6.5 m in hole SHE-122-01, including 23.171% U₃O₈ over 3.5 m, and 3.512% U₃O₈ over 8.5 m; and
3.642% U₃O₈ over 20.5 m, including 11.407% U₃O₈ over 6.0 m in hole SHE-122-05.

Other significant mineralized intercepts at Anne are more clearly basement or unconformity hosted. Best intercepts occur in two areas, the first as part of the zone of mineralization represented by the intercepts mentioned above, and a second area in south central portions of the deposit. Basement mineralization in southern parts of the Anne Deposit is mainly of the concordant basement style, while in the north mineralization represents a combination of the concordant and discordant styles for which true thickness is generally undetermined. Significant intercepts in these higher grade areas that are generally at, or close to, true thickness, include the following:

11.607% U₃O₈ over 6.0 m, including 23.964% U₃O₈ over 2.9 m and 34.694% U₃O₈ over 1.9 m in hole SHE-087 (unconformity mineralization);
10.027% U₃O₈ over 8.4 m, including 34.149% U₃O₈ over 2.3 m and 60.601% U₃O₈ over 1.2 m in hole SHE-099 (unconformity mineralization);
5.649% U₃O₈ over 17.9 m, including 14.547% U₃O₈ over 6.5 m in hole SHE-099-02 (unconformity mineralization);
3.244% U₃O₈ over 9.0 m, including 10.159% U₃O₈ over 2.0 m in hole SHE-088 (basement mineralization);
4.553% U₃O₈ over 3.9 m, including 7.925% U₃O₈ over 2.2 m in hole SHE-094-01 (basement mineralization);
5.740% U₃O₈ over 2.8 m, including 14.089% U₃O₈ over 0.9 m in hole SHE-094-06 (basement mineralization);
1.044% U₃O₈ over 19.8 m, including 5.511% U₃O₈ over 1.7 m in hole SHE-095-03 (basement mineralization);
3.639% U₃O₈ over 7.5 m, including 16.954% U₃O₈ over 0.6 m in hole SHE-100-01 (basement mineralization); and
3.569% U₃O₈ over 4.0 m, including 6.661% U₃O₈ over 1.5 m in hole SHE-122-04 (basement mineralization).

Over the 400 metre distance between the Anne Deposit and the Kianna Deposit to the northwest, only 31 drill holes have been completed which are variably, but generally widely, spaced. Drilling suggests that at least low grade uranium mineralization is continuous at the unconformity between the two deposits in this area, but several intersections may represent additional, as yet undefined higher grade zones. Intercepts of unconformity-style-mineralization include 3.662% U₃O₈ over 5.3 m in hole SHE-102-02, 11.114% U₃O₈ over 3.6 m in hole SHE-123-06, and 5.198% U₃O₈ over 3.3 m hole SHE-123-07, which form the core of an as yet not fully defined zone approximately 150 metres southeast of the Kianna Deposit. Significant basement intercepts lie beneath this zone in an east-northeast trending zone of clay alteration, and include 4.841% U₃O₈ over 3.5 m in hole SHE-123-02, for which the true thickness and extent of mineralization are currently unknown.

The Kianna Deposit contains stacked perched, unconformity and basement mineralization which lie in an east-northeast trending corridor corresponding with a large zone of basement clay alteration. The perched mineralization in the deposit forms at least two pods, including one high-grade pod which has plan view dimensions of approximately 60 by 30 metres, and contains intercepts that are at close to true thickness in this lens which include:

20.721% eU₃O₈ over 10.2 m, in hole SHE-114-05;
7.367% U₃O₈ over 9.5 m in hole SHE-114-07;
4.637% eU₃O₈ over 22.2 m, in hole SHE-114-09;
4.580% eU₃O₈ over 15.3 m, in hole SHE-114-11; and
8.420% eU₃O₈ over 12.6 m in hole SHE-115-18.

Beneath the perched mineralization, mineralization at Kianna forms a high-grade lens that lies above the basement mineralization. Significant intercepts, which are close to true thickness, occur over a 70 metre (north-south) by 150 metre (east-west) area in plan view, include:

9.335% U₃O₈ over 12.2 m over 4.3 m in hole SHE-115-03;
2.547% U₃O₈ over 19.0 m in hole SHE-115-04;
7.827% U₃O₈ over 7.2 m, including 20.360% U₃O₈ over 2.7 m in hole SHE-115-05;
2.227% U₃O₈ over 10.6 m in hole SHE-115-06;
6.297% U₃O₈ over 7.9 m in hole SHE-118; and
2.275% U₃O₈ over 11.5 m in hole SHE-118-09.

The most significant extensive mineralization at Kianna occurs in an east-northeast trending zone of basement-hosted mineralization which extends to at least 200 metres below the unconformity and has a strike length of approximately 180 metres as defined to date. Significant intercepts in this zone are listed below. The true thickness of many of these intercepts is unknown; some are drilled at shallow angles to mineralization.

3.578% U₃O₈ over 11.8 m and 5.776% U₃O₈ over 6.5 m in hole SHE-114-08;
4.093% U₃O₈ over 45.0 m, including 18.073% U₃O₈ over 6.0 m in hole SHE-114-11;
4.382% U₃O₈ over 7.8 m, including 20.023% U₃O₈ over 1.5 m in hole SHE-114-17;
6.268% U₃O₈ over 3.5 m, including 40.086% U₃O₈ over 0.5 m in hole SHE-115-01;
3.643% U₃O₈ over 4.5 m, including 30.418% U₃O₈ over 0.5 m in hole SHE-115-05;
1.059% U₃O₈ over 15.0 m, and 2.206% U₃O₈ over 7.5 m in hole SHE-115-08;
1.840% U₃O₈ over 22.0 m, including 15.193% U₃O₈ over 1.5 m in hole SHE-115-09;
8.581% U₃O₈ over 15.0 m, including 24.346% U₃O₈ over 2.5 m in hole SHE-115-10;
3.731% U₃O₈ over 10.0 m, including 22.322% U₃O₈ over 1.5 m in hole SHE-115-15A;
2.188% U₃O₈ over 9.5 m, including 7.951% U₃O₈ over 2.5 m in hole SHE-118-08; and
19.244% U₃O₈ over 1.0 m in hole SHE-118-15.

The high-grade intercept in hole SHE-114-17 listed above is an isolated, largely open intercept which may form a separate, and new east-northeast trending zone to the north of the main zone of basement mineralization, or could be linked southward in a drilling gap to the main zone.

Only 18 drill holes have been completed in the one kilometre strike between the Kianna and southern Colette Deposits in this area. The best intercepts in the area are present around drill hole SHE-58B, which is located 600 metres north-northwest of Kianna and 400 metres southeast of the Colette South area. In addition to intersecting 8.8 m of lower-grade unconformity-hosted mineralization, SHE-58B intersected multiple mineralized intervals in the basement, including 2.213% U₃O₈ over 2.6 m, that also included 6.732% U₃O₈ over 0.7 m; the true thickness and orientation of mineralization are unknown. Overall style and alteration intensity suggest a high potential for further basement mineralization in this area, which is open in all directions. The closest drill holes to hole SHE-58B are of the SHE-103 and SHE-104 series 50 to 200 metres to the northwest and southeast, which have locally intersected both unconformity-hosted (e.g. 0.242% eU₃O₈ over 28.2 m in hole SHE-103-01) and basement-hosted (0.470% eU₃O₈ over 5.8 m in hole SHE-104-03) mineralization. This area remains a high priority for future exploration.

The northwestern portions of the prospective corridor at Shea Creek contain the Colette Deposit. Colette contains two components: unconformity-hosted style of mineralization distributed over a 0.5 kilometre strike length, and at its southeastern end, stacked concordant zones of basement mineralization along a 250 metre strike length which have recently been identified and are largely open downdip. Similar to other parts of Shea Creek, the best intercepts at the unconformity lie in two east-northeast trending corridors at the southeastern and northwestern ends of the Colette Deposit associated with discordant faults, and include:

1.432% U₃O₈ over 12.2 m, including 2.916% U₃O₈ over 5.6 m in hole SHE-045;
2.342% U₃O₈ over 16.8 m, including 4.294% U₃O₈ over 7.8 m and 7.547% U₃O₈ over 2.7 m in hole SHE-052;
4.099% U₃O₈ over 6.6 m, including 6.493% U₃O₈ over 3.9 m in hole SHE-059;
1.732% U₃O₈ over 11.9 m, including 3.476% U₃O₈ over 4.6 m in hole SHE-065;
1.122% U₃O₈ over 11.0 m in hole SHE-078; and
1.517% U₃O₈ over 8.9 m in hole SHE-091;

Significant basement intercepts in the southern area of dominantly concordant basement mineralization include:

0.907% eU₃O₈ over 10.8 m, including 3.91% eU₃O₈ over 1.2 m in hole SHE-111-02;
0.582% eU₃O₈ over 16.2 m and 2.458% U₃O₈ over 1.0 m in hole SHE-111-05;
3.227% U₃O₈ over 8.0 m, including 12.380% U₃O₈ over 0.5 m and 23.934% U₃O₈ over 0.5 m in hole SHE-111-06;
1.429% U₃O₈ over 6.0 m, and 0.633% U₃O₈ over 4.5 m in hole SHE-111-11; and
0.879% U₃O₈ over 11.5 m, including 4.810% U₃O₈ over 1.0 m in hole SHE-111-12.

Gold Mineralization

In addition to uranium, Shea Creek mineralization locally contains high gold grades, although the morphology and true thickness of areas which are high in gold content are as yet undetermined. These frequently, but not always, occur in areas of higher grade uranium mineralization, and can be present in both unconformity and basement mineralization. Significant gold-bearing intercepts include 20.79 g/Tonne Au over 2.40 m in drill hole SHE-087, 14.02 g/Tonne Au over 3.30 m in hole SHE-115-03, 13.75 g/t Au over 2.50 m in hole SHE-079, 9.70 g/t Au over 3.50 m in hole SHE-102 and 5.95 g/t Au over 5.70 m in hole SHE-115-04. Higher grade uranium mineralization is not consistently gold-enriched, however. Future work to establish patterns of gold distribution is- recommended, especially to identify if any consistent local gold-enriched domains can be identified which might enhance the value of parts of the deposit.

Future Exploration and Development

The Shea Creek property is highly prospective for the discovery of additional uranium mineralization. Several levels of exploration potential are apparent. In known deposits, potential exists to expand the dimensions of high-grade pods between, or outward from previous drill holes. Exploration potential exists for step-out drilling into open areas of mineralization, for example to expand the Kianna basement zone, and to test open mineralization down dip in the Colette area. Gaps in drilling along the main prospective corridor between Anne and Kianna, and between Kianna and Colette, also show high potential for new discoveries of mineralization both at the unconformity and in basement rocks. In these areas, planned modeling of the distribution and intensity of clay alteration in basement rocks, as well as the structural setting of local areas as exploration proceeds, will aid in targeting new zones of basement mineralization. In both the prospective three kilometre corridor in the north, and other areas to the south along the Saskatoon Lake Conductor, potential may exist for significant areas of basement mineralization which have little or no expression at the unconformity, such as is seen at the Eagle Point and Millenium Deposits in the eastern Athabasca Basin.

Elsewhere on the Shea Creek property, exploration is at early stages with little or no drilling and targets are mainly geophysical (EM conductors and resistivity). Prospective areas of low resistivity, with similar signatures to the area around the Anne, Kianna and Colette Deposits, occur along the Klark Lake Conductor in northwestern parts of the property. Low resistive zones lying between the Saskatoon Lake and Klark Lake Conductors also form prospective targets that could represent alteration along discordant fault zones. Expansion of resistivity surveys to other parts of the property is proposed to identify other low resistivity targets.

As with other deposits in the region, the full potential of Shea Creek will most likely be realized when underground development is present. 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 hosting these mineralized areas during mining.

AREVA and UEX intend to pursue advanced exploration and development of the Shea Creek Project with the development of one or two underground exploration shafts and related test mining facilities. AREVA has started the necessary studies for site characterization and base line studies for an initial exploration shaft. The proposed shaft location is 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.

DC Resistivity Map of the Northern Shea Creek Property