EXPLORATION PROJECTS

Oban Project

Summary
The Oban uranium mineralisation is hosted by coarse-grained sands that formed part of an ancient river flood plain system, which now lies buried roughly 80 metres below the current land surface. Its geological setting is very similar to the sand-hosted situ recovery Beverley and Honeymoon uranium mines. As such it is amenable to in situ recovery (ISR) extraction methods, that offer the advantage of low capital and low operating costs and no surface disturbance. Over the past two years Curnamona Energy has completed 385 drillholes at the Oban deposit,  based on which it has estimated an Inferred Resource of 8.2 million tonnes of uranium mineralisation at an average grade of 260 ppm eU3O8 (applying a grade thickness cutoff of 0.015 metre % eU3O8). This equates to an estimated total of 2,100 tonnes of eU3O8. Curnamona Energy plans to construct an ISR field trial plant in order to determine the critical recovery parameters necessary to convert the uranium resource to an ore reserve.

History of Exploration
Marathon Petroleum Australia completed more than 150 drillholes in the area in the early 1980’s and can be credited with the discovery of Oban, with a best result of 3 metres grading 0.12% eU3O8. Paladin Resources Limited carried out confirmatory drilling in the late 1990’s, but discontinued in the face of low uranium prices and a hostile political climate.

Curnamona Energy commenced drilling with its own drill rig in 2006, and very soon confirmed the encouraging uranium grades encountered by the earlier explorers. Curnamona Energy then embarked on a systematic drill out of the highest grade areas on 40x40 metre spaced drilling. Curnamona Energy’s drilling over the past twelve months at Oban has outlined an area of more than 2 square kilometres of potentially economic sand hosted uranium mineralisation (defined by the 0.05 m% eU3O8 contour). A resource estimate has now been completed based on these drilling results

Geology
The Oban uranium mineralisation is hosted by a horizontal lignitic, pyritic and carbonaceous lower sand member of the Eocene Eyre Formation at depths of between 80-90 metres. It is separated from the land surface by impervious clayey sediments of the Namba Formation and Recent surficial deposits. In overall shape it appears to following the trend of a sinuous local palaeochannel that has been carved into the bedrock.

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Resource Estimate
An Inferred Resource* of uranium mineralisation has been estimated in conformity with the JORC code as follows :

• 8.2 million tonnes of uranium mineralisation at an average grade of 260 ppm eU3O8 (applying a grade thickness cutoff of 0.015 metre % eU3O8)
• Estimated to contain 2,100 tonnes of eU3O8

The resource estimate is based on 385 vertical rotary mud holes generally 40 metres apart in strongly mineralized areas and more widely spaced in outlying areas. There is good correlation of mineralisation between drillholes within the deposit, but the mineralisation drops off sharply at the margins. All holes were geophysically logged using a calibrated gamma logging tool.  Equivalent uranium grades, expressed as % eU3O8, are assigned to each logged interval of 0.05 metres using standard formulae and correction factors. A bulk density of 1.9 tonnes/cubic metre has been adopted assuming an average porosity of 30% in predominantly quartz sands of SG 2.67.

The resource estimate has specifically excluded any mineralised intercepts less than 0.3 metres thick and with grades of less than 0.01 % eU3O8 over more than 0.3 metres thickness, as these are deemed to be not economically feasible to extract.  Intervals above the 0.01 % eU3O8 cutoff are cumulated to provide an intercept thickness, average grade, and GT (grade thickness product) for each hole. 

On the basis of present knowledge of the geology of the Oban deposit, Curnamona Energy believes that the uranium mineralisation at Oban has reasonable expectations of being extracted economically by ISR methods. The Mineral Resource currently has an Inferred status principally due to lack of definitive uranium recovery test data.

*The Mineral Resource stated here has been compiled in the accordance with the guidelines defined in the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (The JORC Code, 2004 Edition). It is based on a resource estimation report prepared by Mr Mark Randell, General Manager of Curnamona Energy Limited who has had more than twenty years experience in uranium exploration, is a member of the Australasian Institute of Mining and Metallurgy, and who qualifies as a Competent Person under the JORC Code. Mr Randell’s Mineral Resource Estimate report may be viewed by clicking on the following link : Mineral Estimation Report.pdf.

ISR Leach Trial
Owing to various technical uncertainties associated with the recovery and processing of the sand-hosted uranium mineralisation at Oban, it was decided to carry out an initial test using a small scale processing plant in an in situ recovery field trial. The design for this plant, which utilises ion exchange resins for uranium extraction, was completed in the second half of 2009. The plant is projected to cost at least $3 million, including site works.

PIRSA have approved the operation of the field recovery trial, however, before committing to the substantial outlay for the construction of the trial plant, the Company decided to carry out additional test work to reduce the project risk. This work included:

1. Prompt Fission Neutron (PFN) downhole logging, which established that the uranium is in equilibrium.
   
2. Diamond coring to obtain representative samples of the uranium mineralisation to carry out recovery tests using various resins (work in progress). Crucially, this will allow the extraction efficiency of the proposed resins to be tested for the saline ground water conditions at Oban.
   
3. Training Company drill crews to drill, case and grout monitor and production wells. At the end of 2009, 17 monitor wells and 4 injection wells in the first production pattern had been completed by the crew. This in house skill will be invaluable in the future as it becomes necessary to routinely drill holes for the production well fields.

All of the monitor boreholes have been logged, and some have returned ore-grade intersections outside of the current resource. This is encouraging for the expansion of uranium resources in the immediate vicinity of Oban.

Positive test results from the field recovery trial will lead to construction of a larger plant capable of commercial production at a rate up to 200 tonnes per annum over a mine life of at least ten years based on presently estimated resources. Given the excellent prospects for discovering more uranium mineralisation at Oban, it is likely that mine life will be able to be extended or uranium production rates will be increased in future.