COMPANY GEOLOGICAL RATIONALE

Curnamona Energy‘s exploration areas lie in the Lake Frome region of northeastern South Australia, which is a broad topographic depression bounded to the west, south and east by the Flinders, Olary and Barrier Ranges respectively (Figure 1). During the middle Tertiary period roughly 20-40 million years ago, the climate in this part of Australia was quite humid, and several major rivers flowed northwards from the Olary Ranges in broad incised valleys often several kilometres wide. As the climate changed the river valleys became choked with sand of the Eyre Formation and eventually they were buried beneath tens of metres of clay of the Namba Formation deposited in a vast ancient lake occupying all of the northeast corner of SA and beyond, that was a pre-cursor to Lake Frome and Lake Eyre. Three of these ancient buried river valleys, named the Yarramba, Lake Namba and Billeroo Palaeovalleys by geologists, have been recognised from drillholes in the southern Lake Frome region.

Figure 1 Click to Enlarge

After burial, water continued to move through sands within these palaeovalleys, following the hydrological gradient from south to north. This water carried oxygen and minute amounts of dissolved uranium that was weathered from the exposed uranium rich bedrock at the margins of the Lake Frome region. The uranium thus introduced into the palaeovalley drainage systems remained in solution for as long as dissolved oxygen was retained. This situation is chemically termed oxidising conditions. Where these oxidised solutions came into contact with decaying leaf litter and woody debris while migrating through the palaeochannel sands, free oxygen was consumed. When all the oxygen has been used up the chemical condition is termed reduced. The uranium, no longer able to remain in solution, immediately became deposited in the porous sandy host sediments. The oxygen progressively destroyed the organic trash and the oxidation front over extended time tended to move slowly down the palaeovalley carrying the uranium with it, producing a characteristic roll front (Figure 2). Within the Curnamona Energy exploration area, the highly saline oxidising waters are generally moving in a northward direction down the palaeovalleys. Consequently it is likely that the process of uranium dissolution and precipitation is still continuing in the palaeovalley sands until the present day with potentially continual upgrading of the uranium mineralisation.

Figure 2 Click to Enlarge

The process of formation of roll front uranium deposits as described above is well known from earlier discoveries in the Tertiary basins of Wyoming, USA. As a consequence the geologically analogous Lake Frome region was explored in the 1960s and 1970s for similar styles of secondary uranium deposits and when the palaeovalley drainage systems were discovered they quickly became the focus of attention. Several significant discoveries were made at this time, including the Beverley deposit, which is currently being mined by in situ leach methods, and the Honeymoon deposit within the Yarramba Palaeovalley. Several other uranium prospects were also discovered including the East Kalkaroo and Yarramba deposits, and the more distant Oban deposit in a northern tributary, and the Goulds Dam deposit in the Billeroo Palaeovalley (Figure 1 & Figure 3).

Figure 3 Click to Enlarge

Southern Cross Resources’ Honeymoon uranium deposit is of most significance for Curnamona Energy’s exploration because it lies in the Yarramba Palaeovalley roughly 18 km upstream (south) from the tenement boundary. It occurs at a depth of 100-120 metres in the basal sand, the lowest of three sand members that are separated by clay layers in the Eyre Formation (Figure 4).

Figure 4 Click to Enlarge

Recent drilling by Southern Cross Resources has confirmed a resource of approximately 4,000 tonnes of uranium at Honeymoon, with an in-ground value of A$230 million at current uranium prices. According to Southern Cross Resources management development of the Honeymoon deposit has been delayed, pending an improvement in the uranium price.

Field leach trials have established that the Honeymoon deposit can be extracted from surface by in situ leach technology, which is currently successfully employed at the Beverley uranium mine. The in situ leach extraction process for uranium does not involve any major physical disturbance to the environment, as in a normal mining operation. Solution mining is a closed system method in which a weak chemical leach solution is sent down injection wells to dissolve the uranium from the hosting sands and the resulting solutions are then pumped to the surface via production wells where the uranium is chemically extracted (Figure 5). The leach solution is then chemically reconditioned and recirculated through the wellfield and process plant in a continuous closed cycle of leaching and uranium recovery until production falls below economic levels. The method has been used very successfully at Beverley and has been endorsed by Government research organisations as meeting acceptable environmental standards. The uranium in solution is in relatively low concentrations and care is taken to ensure it is not mixed with waters in other parts of the palaeochannel aquifer.

Figure 5 Click to Enlarge

SUMMARY OF EXPLORATION PROJECTS

The basement rocks of the Curnamona Craton are relatively enriched in primary uranium, evidenced by several hard rock uranium deposits, namely the worked out Radium Hill Mine and small historical mines and occurrences in the Mount Painter area. As they weather the basement rocks are an ideal source of uranium for palaeochannel uranium deposits. Confirmation that the geological process of leaching of uranium from the bedrock concentration of uranium in Tertiary sand deposits has occurred is seen in the profitable Beverley uranium mine and significant uranium resources at Honeymoon and Goulds Dam. Notably, the Honeymoon deposit occurs 18 km upstream from Curnamona Energy’s exploration area boundary in the Yarramba Palaeovalley. The Brooks Dam and Yarramba prospects being investigated by Southern Cross Resources in the Yarramba Palaeovalley lie even closer to the tenement boundary and indicate that uranium has been migrating downstream towards Curnamona Energy’s exploration areas.

The prime uranium exploration areas managed by Curnamona Energy are some 60 km along the Yarramba Palaeovalley and 30 km along the Lake Namba Palaeovalley and their associated tributaries. Both areas are poorly explored, mainly because they were largely bypassed by the uranium exploration phase of the late 1960s and early 1970s. During the period 1980-82 exploration briefly revived and the downstream continuation of the Yarramba Palaeovalley became recognised just before activity ceased. Since that time the prospective areas have mainly been held by major companies whose primary focus has been on basemetal exploration.

In addition to the main palaeovalleys, Curnamona Energy also has access to extensive tracts of ground that are known to contain widespread sheet sands within which are poorly defined tributary palaeovalley systems. Promising roll front style uranium mineralisation was discovered more than thirty years ago within these sands at the Oban prospect in the northern portion of Curnamona Energy’s exploration area in an interpreted tributary of the Yarramba Palaeovalley. Other palaeovalley tributaries draining from likely high uranium bedrock sources in the north of the area are virtually unexplored.

It is important to note that the exploration methodology of mud drilling and gamma ray downhole logging normally employed to locate concentrations of radioactive minerals in the palaeovalley sands is well proven and has been shown to be extremely effective in the discovery of uranium deposits in the Lake Frome region. Consequently the largest proportion of Curnamona Energy’s initial two year exploration budget will be spent on such exploration activities.

Another important factor that makes palaeovalley uranium discoveries in the Lake Frome region an attractive exploration proposition is their proven amenability to in situ leach mining methods (Figure 4), with attendant cost and environmental benefits. At Beverley this mining method is being very successfully applied, while at Honeymoon field leach trials have confirmed that the process is feasible, with extraction rates of 70% achieved.

Having regard to all of the above factors, Curnamona Energy intends to focus its initial exploration effort on exploring for Honeymoon style uranium deposits in poorly tested sections of the main Yarramba and Lake Namba Palaeovalley drainage systems as described in more detail below.

Yarramba Palaeovalley drainage system

Mongala section

Oban prospect

Yantawena tributaries

Lake Namba Palaeovalley drainage system