For personal use onlyto impose sector-specific new taxes on Australia’s mining industry. Despite...

annual report2010

ABN 61 119 966 353

For

per

sona

l use

onl

y

NORTHERN URANIUM LIMITED I ANNUAL REPORT 2010ii

For

per

sona

l use

onl

y

1NORTHERN URANIUM LIMITED I ANNUAL REPORT 2010

contentscorporate directory 1

chairman’s letter 2value drivers 4

highlights 09/10 6our plan 7

review of operations 8projects

uranium 10

rare earths 16

phosphate 22

board of directors ̀ 24

corporate directoryShare Registry:

Security Transfer Registrars Pty Ltd 770 Canning Highway

Applecross WA 6153

PO Box 535 Applecross WA 6953

Telephone: +61 8 9315 2333 Facsimile: +61 8 9315 2233

ASX Code: NTU

Solicitors: Wright & Cooney

Level 1, 103 Colin Street West Perth WA 6005

Auditors: Stantons International Pty Ltd

Level 1, 1 Havelock Street West Perth WA 6005

Bankers: Bank of Western Australia

(Bankwest)

Directors: Kevin Schultz

Non-Executive Chairman

George Bauk Managing Director/

Chief Executive Officer

Adrian Griffin Non-Executive Director

Colin McCavana Non-Executive Director

Company Secretary: Simon Storm

Registered Office: Unit 10, Level 2,

12-14 Thelma Street West Perth WA 6005


Email: [email protected] Website: www.northernuranium.com.au

ABN 61 119 966 353

1

For

per

sona

l use

onl

y

NORTHERN URANIUM LIMITED I ANNUAL REPORT 20102

chairman’s reportThe 2009-2010 year was one of significant operational and corporate development for Northern Uranium and its shareholders.

At the end of the calendar year 2009 the Company faced the negativity of weaker uranium and

financial markets and this was exacerbated in 2010 by attempts by the Federal Labour Government to impose sector-specific new taxes on Australia’s mining industry.

Despite such negativity Northern Uranium succeeded in raising the necessary capital for its exploration programs, gaining results that highlighted the strength and quality of the Company’s assets. As a consequence we are now seeing heightened interest in the Company, including from some significant Chinese and Australian companies and investment groups.

Operationally, the most significant achievement during the year was the discovery of uranium mineralisation in the first drilling program since the 1980s on the Gardiner-Tanami project. This 10,000km2 uranium exploration project straddling the Western Australia Northern Territory border in northern Australia is widely recognised as one of a very limited number of readily accessible areas in the world with geological characteristics appropriate for the discovery of a high-grade unconformity related uranium deposit.

Rapid growth in world demand for carbon free electricity has provided a strong market for the development of nuclear power over the past 10 years and it now contributes 15% of world electricity supply. It is forecast that uranium demand could potentially double by 2030, due to the large number of nuclear reactors under construction, while uranium supply will be challenged by increasing cost, time to develop and the uranium price. The market is likely to

most reward companies with deposits grading in the upper quartile of all deposits found.

The Gardiner-Tanami area has been compared authoritatively with the Athabasca Basin in Canada, which hosts the world’s highest grade uranium deposits, and is also compared geologically with the Alligator Rivers region in the Northern Territory which hosts Australia’s largest operating uranium mine, the Ranger mine.

The French global nuclear group Areva NC, through its wholly owned subsidiary Afmeco Mining and Exploration Pty Ltd (Afmex), is the operator of the Gardiner-Tanami project under a Strategic Alliance Agreement and shares Northern Uranium’s vision of discovering large, high grade, high value uranium deposits in the area.

With its background of exploration success in the Athabasca Basin, Canada, Areva brought a ‘whole of project’ approach to the Gardiner-Tanami area, favouring the use of geophysical, and geological programs as the means of generating targets with the highest potential for success. As reported in the Review of Operations, results to date have confirmed the prospectivity of the Gardiner-Tanami project area and the validity of Areva’s and the Company’s exploration strategies.

During the year Northern Uranium further expanded its uranium exploration targets in the Gardiner-Tanami area by securing a farm-in agreement with Manhattan Corporation Limited (ASX:MHC). The agreement provides Northern Uranium with an exclusive right to earn a 60% interest in Manhattan’s Gardner Range Project which adjoins the Gardiner-Tanami project, enabling the historical uranium prospects “The Don” and “Deva” to be included in Gardiner-Tanami exploration programs.

New drilling targets have now been outlined at Soma, Mt. Mansbridge and in the Gardner-Range Joint Venture area, specifically near the historical Don prospect, and the process of obtaining statutory approvals for the drilling to commence is well advanced.

For

per

sona

l use

onl

y


To date the Company’s uranium exploration programs have been restricted to granted tenements which are mostly in Western Australia. An area of tenements more than twice the size of the area explored by the Company to date is expected to be granted in the Northern Territory in 2011. These tenement applications cover a number of known uranium occurrences that were discovered in the 1970s and 1980s but are practically unexplored with the modern methods being used by the Company and Afmex.

During the year the Company announced significant discoveries of quartz-vein hosted xenotime mineralisation (a source of rare earths) in the Browns Range Dome area of the Gardiner-Tanami Project. The Company’s interest in rare earths was in part fuelled by an announcement by the Chinese Government that it had restricted the annual export of some rare earths and prohibited exports of heavy rare earth elements (HREE). HREE are of immense strategic importance in a world embracing green technology and China has traditionally supplied about 95% of the global rare earths market. The announcement of export restrictions has heightened the need for additional sources as firming demand causes a tightening in supply and higher prices. Preliminary studies of the distribution of rare earth elements in the xenotime mineralisation at Browns Range highlight the unusually high concentrations of HREE.

Following the Browns Range discoveries the Company signed an agreement which provides an option to purchase an additional nearby project with similar geological characteristics and potential, the John Galt prospect. The Company’s interest in HREE has been supported by the high value nature of its discoveries, and the strong market environment for the HREE product suite it has identified. The 2010/11 exploration program will include a targeted HREE component, alongside the uranium focus.

The Company has a strategic phosphate portfolio in the Northern Territory in the Georgina and Amadeus sedimentary basins close to road and rail infrastructure. Phosphate offers excellent potential

with strong growth forecast through a growing global population.

During the year the Board was pleased to announce the appointment of a new Managing Director, Mr George Bauk. Mr Bauk brings significant and highly relevant experience to the Company, and increases the depth and capacity of the executive team as it ramps up its uranium and HREE exploration activity. The Company now has an excellent team with a wealth of experience in all facets of the mineral industry in a diverse range of commodities globally. The team’s strong operational experience places it in an excellent position to develop the Company’s exploration portfolio through resource identification, feasibility studies and project development.

In August 2010, Northern Uranium signed a Letter of Intent regarding an equity funding proposal with Jiangsu Eastern China Non-Ferrous Metals Investment Holding Co. Ltd (an affiliate of major Chinese mining group East China Exploration & Development Bureau). While the proposed transaction was later terminated in favour of other funding options, it showed the heightened interest in Northern Uranium and its assets, and has supported improved share price performance.

Subsequently, the Company successfully raised $9.5 million through a share rights issue. It means Northern Uranium will head into the coming year in a strong cash position, with a well funded exploration program and capacity to capture further growth opportunities.

Mr Kevin Schultz Chairman October 2010F

or p

erso

nal u

se o

nly


value drivers

Uranium – Rapid growth in world demand for carbon free

electricity has provided a strong market for the

development of nuclear power over the past

10 years and it now contributes 15% of world

electricity supply.

Our Project The Gardiner-Tanami Project targets high grade

unconformity related uranium of the Alligator

Rivers and Athabasca Basin type. The value to

shareholders is in a successful discovery and

the graph illustrates the positioning of all the

unconformity related uranium deposits on a grade

and tonnage curve.

Unconformity Type Uranium Deposits

Rare Earths – The Rare Earth Industry has strategic importance in

the ‘Age of Technology’ as Rare Earths are critical

in many applications including hybrid vehicles,

computers, mobile phones, wind turbines to name

a few. Currently over 95% of the world production

of Rare Earths comes from China. In the past nine

months we have seen Rare Earth prices increase

by on average 300% due largely to the Chinese

Ministry of Commerce cut in approved export quota

of rare earths by over 70% from the previous year.

Our Project– Through exploration success and project acquisition,

Northern Uranium has developed a high value

Heavy Rare Earth portfolio at Browns Range and

John Galt. The two key aspects of the portfolio are

the high proportion of Heavy Rare Earths which

are the most valuable per kilo as illustrated in the

table and the style of mineralisation which has

the potential for simple processing. The value to

shareholders is the successful discovery of a rare

earth deposit within our portfolio.

Northern Uranium will create shareholder value through successful exploration and development of high quality resources. Northern Uranium has built a portfolio of projects in commodities with high growth potential.

US$/Kg of REE projects

John Galt/Browns Range (Australia)

Thor Lake/Nechalacho (Canada)

Hoidas Lake (Canada)

Nolans Bore (Australia)

Kvanefeld (Greenland)

Cummins Range (Australia)

Mt Weld (Australia)

Baotou (China)

Mountain Pass (USA)

Ghurayyah (Saudi Arabia)

Strange Lake (Canada)

0 10 20 30 40 50 60 70 80 90

Dubbo Zircon (Australia)

For

per

sona

l use

onl

y

5NORTHERN URANIUM LIMITED I ANNUAL REPORT 2010 5

For

per

sona

l use

onl

y

highlights 09/10

Uranium • Primaryuraniummineralisation(pitchblende)

and clay alteration common to unconformity-

related uranium deposits intersected in three

holes out of five at Soma A1 target.

• ExpansionoftheGardiner-TanamiProjectarea

through Farm-in and Joint Venture Agreement

with Manhattan Corporation which includes

The Don Prospect with a historical intersection

of 0.44m @ 1.5% U3O8.

Rare Earths

• DiscoveryofhighvalueHeavyRareEarth

Elements at Browns Range including rock chips

assaying 7.95% Total REE and Yttrium.

• Acquisitionoftheoptiontoacquirethe

John Galt HREE Project.

Corporate

• AppointmentofMr.GeorgeBaukas

Managing Director.

• Completionof$7mofcapitalraisingsthrough

placement and rights issues during 2009/10.

Over the past year we have completed a number of uranium exploration programs and developed a rare earth portfolio:

For

per

sona

l use

onl

y

our plan 10/11

Uranium • Undertakedrillingofthe12kmstrikelength

identified around the Don and Soma areas,

commencing in the December Quarter.

• Continuetomapandextendstrikelength

potential on the WA side of the tenement

package.

• UnlocktheNTtenementpackagethrough

the granting of the licenses post completion

of negotiation of the Deed of Exploration.

Rare Earths • Completegroundbasedgeologicalprogram

on the Browns Range Project.

• Undertakecharacterisationtestingonthe

Browns Range Project in December Quarter.

• CommencedrillingprogramatBrowns

Range in 2011.

• SeekgrantingofJohnGalttenement

to commence exploration activities in

March Quarter.

In 2010/11 we intend to grow the company through successful exploration of our existing projects and search for business development opportunities to enhance our portfolio.

Corporate • CompletecapitalraisingduringDecember

Quarter to ensure we have the appropriate

funding to develop our portfolio.

• Determinestrategyforthephosphateportfolio

including JV partners and/or first stage

exploration program in the first half of 2011.

• Searchforacquisitionstoenhancethecurrent

portfolio with priority on advanced projects to

complement existing portfolio.


For

per

sona

l use

onl

y

NORTHERN URANIUM LIMITED I ANNUAL REPORT 20108 NORTHERN URANIUM LIMITED I ANNUAL REPORT 20108

review of operations

In 2009 the Northern Uranium-Afmex alliance

completed the first drilling program at the project,

following two years of geophysical surveys and

other drill target definition activities. The drilling

program, which commenced during the

September Quarter at the Mt. Mansbridge South

and Soma uranium target areas, concluded with

a total of eight holes completed for 1,547 metres

of diamond drilling.

Significant results from Mt. Mansbridge South,

included a narrow intersection of uranium

mineralisation that confirmed the validity of the

exploration approach implemented by Afmex and

the effectiveness of the geophysical Versatile

Time-Domain Electromagnetics (‘VTEM’) method as a

means of detecting potential unconformity uranium

host rocks.

In the Soma target area, six diamond core holes were

drilled including five diamond core holes on

a single cross section line across the Soma A1 VTEM

conductor (GT04-GT08 - Figures 3 and 4).

Hand-held XRF measurements on the drill

core located significant anomalous uranium

concentrations, including spot measurements up

to 2,100ppm U (0.252% U3O8) in GT04 (155.9m

156.3m) and up to 1,470ppm U (0.176% U3O8)

in GT07 (164.45m –165.6m). These uranium

The Gardiner-Tanami Project, which comprises 9,600km² of granted tenements and tenement applications in the Tanami region of WA/NT, has been the principal focus of the Company’s exploration efforts in 2009/10. The Company continues to benefit from the experience of the project operator, French global nuclear group Areva NC, through its wholly owned subsidiary Afmeco Mining and Exploration Pty Ltd (Afmex).

concentrations are due to the presence of uranium

minerals pitchblende and autunite in small veinlets.

Downhole gamma logging and subsequent

assaying only returned values up to 235ppm U

in a 0.1m interval; but preliminary mineralogical

and geochronological studies of the pitchblende

mineralisation by Afmex confirmed that the Gardiner-

Tanami region displays similarities in geology and

style of mineralisation/alteration with the Athabasca

Basin and Alligator Rivers uranium provinces.

In October 2009, Northern Uranium finalised a farm-

in agreement with Manhattan Corporation Limited

(ASX: MHC) which expanded its uranium exploration

targets in the Gardiner-Tanami area. The agreement

provides an exclusive right to earn a 60% interest in

Manhattan’s Gardner Range Project which adjoins

the Gardiner-Tanami project. The Gardner Range

JV area includes the historical uranium prospects

known as The Don and Deva. During the December

Quarter an airborne VTEM survey was flown from

the Oracle-Soma target area eastward across the

Manhattan exploration licence (Figure 5). Results of

the survey showed that the VTEM conductors which

were drilled on the Soma A1 target extend over a

total of 8km, of which 6km is a continuation to the

east under sandstone cover in Manhattan’s tenement

E80/3275.

For

per

sona

l use

onl

y


During 2009/10 the Company has built a high

value Heavy Rare Earth Elements (HREE) portfolio

in Western Australia through exploration and

acquisition. Browns Range, north of the Gardiner-

Tanami Project was identified through exploration

while John Galt was acquired as part of a review of

other HREE opportunities. The mineralisation at the

John Galt Project has a similar HREE distribution to

that at Browns Range. Xenotime mineralisation at

Browns Range occurs in hydrothermal quartz veins

within an arkosic metasediment, and is dominated

by high value HREE, particularly dysprosium,

erbium, ytterbium and yttrium. Recently completed

reconnaissance mapping and rock chip sampling at

Browns Range has identified four separate xenotime

prospects, which are proposed for drill testing in

2010/11.

The Company continues to maintain its

interests in phosphate exploration, with the

strategically-positioned Epenarra phosphate project,

covering over 2,900km² in the Georgina Basin,

only 50km from the Wonarah deposit and

covering similar favourable geology. The Company

has also maintained its Amadeus Basin phosphate

project in an area near Alice Springs. Previous

exploration in an area now covered by an adjacent

tenement is reported to include records of drilling

with intersections of up to 6m at 22.8% P2O5.

Figure 1: Project Location

For

per

sona

l use

onl

y


gardiner tanami project &gardner range joint venture

projects: uranium

The Gardner Range Joint Venture is contiguous

with the Gardiner-Tanami Project and covers

an area of approximately 550km2. In October

2009, Northern Uranium entered into a farm-

in agreement with Manhattan Corporation

Limited, giving Northern the exclusive right to

earn a majority stake in Manhattan’s Gardner

Range project. The project consists of four

granted exploration licences which cover The

Don prospect, where historic drilling intersected

unconformity related uranium mineralisation of

0.44m at 1.5% U3O8 and 1.7g/t gold in graphitic

shale at a depth of 40m.

Tenement Status The Gardiner-Tanami Project consists of 17

granted exploration licenses’ and 18 tenement

The Gardiner-Tanami Project covers an area of approximately 9,600km2 and has been the primary

focus for the Company’s uranium exploration efforts since 2007. In 2009, Northern Uranium

completed the first uranium-focused diamond drilling program in the region in nearly 30 years.

Figure 2: – Gardner-Tanami Project & Gardner Range JV – Tenements, Geology and Drill Targets

For

per

sona

l use

onl

y


projects: uranium

applications (Fig 2). Tenements on the WA side

of the border cover an area of 1,850km2, while

those on the NT side cover 7,750km2. All of the

13 tenements in WA are located wholly or

partially within lands on which native title has

been determined in favour of the Tjurabalan

Native Title Land and Aboriginal Corporation

(TNTLAC). During 2009/10 three new tenements

were granted, two of which are located

immediately to the south of the Company’s

high priority Oracle-Soma prospect area.

During the reporting period six exploration

licences within WA were surrendered following

the completion of geophysical surveys in the

previous two years, which failed to identify

any significant targets.

In the NT, four granted tenements are located

on the Suplejack pastoral lease, and another 18

tenement applications are located on Aboriginal

freehold land. Exploration access agreements are

currently being negotiated in respect of eight

of the tenement applications in order that these

tenements can be granted and included in the

exploration program for 2011. Progress has been

made during the course of 2009/10 on these

negotiations and a successful outcome is expected

during 2010/11. The tenement applications under

consideration for access cover an area

of 4,246km2².

Gardner Range Joint Venture Agreement Successful negotiations with Manhattan

Corporation Limited (“Manhattan”) resulted in

an agreement for Northern Uranium to have

an exclusive right to earn a 60% interest in

Manhattan’s Gardner Range Project.

Under the terms of the agreement with

Manhattan, Northern Uranium has the right to

farm-in and earn a 60% interest in the project by

spending $1.05m within four years. A minimum

expenditure of $262,500 is required before

Figure 3: Soma Drill Target Area – VTEM Conductors & Geology

For

per

sona

l use

onl

y


projects: uranium

Northern Uranium has the right to withdraw

should it wish to do so.

On Northern Uranium acquiring its 60% farm-

in interest the two companies will enter into a

joint venture with Manhattan holding a 40%

interest. On commencement of the Joint Venture

Manhattan has the option to contribute to

expenditures in accordance with its then interest

or be free carried to completion of a pre-feasibility

study to develop a mine and retain a 20% interest.

On completion of the pre-feasibility study

Manhattan has the option to contribute to

expenditures in accordance with its then interest

or be free carried to completion of a definitive

feasibility study to develop a mine and retain a

10% interest. Thereafter Manhattan may either

maintain its interest by contributing 10% share

of expenditure, elect to be carried under a loan

arrangement or sell its interest.

Target and Geology Northern Uranium is targeting unconformity-

related uranium deposits, which are high grade

uranium deposits. Such deposits are typically

formed by the mixing of oxidised basinal

uranium-bearing brines and reduced basement

fluids at or near an unconformity, associated with

distinctive basement rocks (graphitic sediments)

within fault zones, where redox reactions

favour the deposition of high grade uranium

mineralisation. Northern

Uranium’s exploration is therefore aimed at

discovering sub-surface sites where conductive

graphitic sediments and faulting occur at or near

the geological unconformity between Middle

Proterozoic Gardiner Sandstone and the Lower

Proterozoic Killi Killi beds (or equivalents). Deposits

of the unconformity-related type in the highly

productive uranium provinces of Australia’s

Alligator Rivers region and Canada’s Athabasca

Basin, are typically associated with graphitic

sediments and have distinctive hydrothermal

alteration haloes.

The Gardiner-Tanami area is compared

geologically favourably with the Alligator Rivers

region in the NT where the Ranger mine,

Australia’s largest operating uranium mine, is

located. During the 1970s and 1980s the

Gardiner Tanami project area attracted the

attention of numerous uranium exploration

companies, some of which discovered

outcropping uranium prospects and radiometric

anomalies indicating the possibility of

unconformity-related uranium mineralisation.

The most significant of these discoveries was

‘The Don’ prospect, found in the 1980s by

BHP Minerals. Primary high-grade uranium

mineralisation was intersected in a drill hole.

The Don prospect is located on the Gardner

Range JV tenement E80/3275, adjacent to

and in close proximity to the Oracle & Soma

target areas.

Exploration Update In 2009, following two years of geophysical

surveys and ground geological reconnaissance

covering 6,000km2 of tenements, Northern

Uranium completed the first uranium-focused

diamond drilling program in the region in nearly

30 years. The geophysical surveys completed

in the previous two years included airborne

magnetics, radiometrics and Versatile Time-

Domain Electromagnetics (VTEM), a method of

locating sub-surface conductors. Two main target

areas with strong VTEM conductors (potential

graphitic sediments and uranium host rocks)

were drilled, which were as follows:

Soma

• Highestprioritytargetareainthe

vicinity of ‘The Don’ prospect

• Six(6)holesfor1,047mdrilled

• Primaryuraniummineralisation(pitchblende)

and clay alteration characteristic of

unconformity-style uranium deposits

intersected in three holes out of five drilled

through unconformity,

• Spotmeasurementsupto2,100ppm

U (0.252% U3O8) in hole GT04 (155.9m –

156.3m) and up to 1,470ppm U (0.176%

U3O8) in hole GT07 (164.45m ____-165.6m),

• Primaryuraniummineralspitchblendeand

autunite identified in small veinlets.

For

per

sona

l use

onl

y


projects: uraniumMt. Mansbridge South • Extensivesurfaceuraniumradiometric

anomalies and several VTEM conductors on

favourable structures at or near the Gardiner

Sandstone unconformity;

• Twoholesfor467mdrilled,

• Secondholeintersectednarrowzoneof

uranium mineralisation at a depth of 146.8m,

• Mineralisationiscloselyassociatedwith

an oxidised fracture zone located below a

graphitic conductor.

Preliminary mineralogical and geochronological

studies of the pitchblende mineralisation by

Afmex confirmed that the Gardiner-Tanami

region displays similarities in geology and style

of mineralisation/alteration with the highly

productive Athabasca Basin and Alligator

Rivers uranium provinces. In late 2009 an airborne

VTEM survey was flown from the Company’s

Oracle-Soma target area eastward across the

adjacent Gardner Range JV exploration licence

(E80/3275). The results of the survey showed

that the VTEM conductors which were drilled on

the Soma target extend over a total of 8km, of

which 6km is a continuation to the east under

sandstone cover in Manhattan’s E80/3275.

Figure 4: Soma Drill section – GT04-08

For

per

sona

l use

onl

y


The new VTEM survey also revealed that the

conductor beneath the Don prospect extends

to the west-northwest below sandstone cover.

As with the Oracle-Soma target area, the VTEM

conductors are potential host rocks for high

grade uranium ore deposition.

In 2010 the exploration program commenced,

following the completion of Aboriginal heritage

surveys in May, with detailed geological and

structural mapping, principally at the Don, Soma

and Oracle prospect areas. This work is aimed

at refining the targets for the Reverse Circulation

(RC) drill program which is expected to

commence in late 2010.

Future Work RC drilling is proposed for several targets and is

expected to commence in the last quarter of 2010

and continuing into 2011. The key target areas

are as follows:

• TheDon(E80/3275)–Drillholesaretargeted

at strong conductors to the west of the

discovery hole at the Don Prospect and areas

of Gardiner Sandstone cover.

• Soma(E80/3405&E80/3275)-Drillingwill

be focused on testing the continuation of the

conductive body drilled in 2009. All holes are

on top of the Gardiner Range plateau and

will intersect the Gardiner Sandstone/Killi Killi

Formation unconformity.

• Oracle(E80/3405)-Thistarget,comprising

strong late-time conductors in proximity to

the unconformity was proposed in 2009 but

was not tested in that program due to access

problems and budgetary constraints.

• Mt.MansbridgeNorth(E80/3414)-Strong

conductors have been targeted at two

locations; one directly into the Killi Killi

basement and adjacent to a major structure,

and the second targeting the Gardiner

Sandstone/Killi Killi Formation unconformity.

projects: uranium

Figure 5: The Don, Soma and Oracle drill targets (on VTEM Late-time image)

For

per

sona

l use

onl

y


projects: uranium• Mt.MansbridgeSouth(E80/3414,3404)-

This area was drilled with two diamond drill

holes in 2009, and intersected some weak

uranium mineralisation. The proposed holes

will target strong conductors.

In addition further geological and structural

mapping will be carried out on other target

areas such as the Deva historical prospect, and

particularly where conductive bodies have been

identified by the VTEM surveys. Further VTEM

surveys are also proposed over newly granted

tenement areas to the south of the Oracle and

Soma prospect areas.

kurundi project - NT(Northern Uranium 100% uranium rights)

In late 2007, Northern Uranium completed RC

Drilling in an area extending southeast along

strike from the Munadgee mine workings.

The drilling intersected numerous zones of

anomalous uranium and associated distinctive

red potassic and silica alteration of the host rocks.

Following review of these results it was decided

that diamond drilling, precisely targeting the

Munadgee workings at depth, with the aim of

intersecting the down-plunge extension of the

Munadgee mineralisation, would be carried out.

The historical Munadgee uranium mine is located

close to the western boundary of the Kurundi

Project and within mineral claim MCC968. In June

2008, the Company secured an exclusive right to

purchase a 95% interest in MCC968 for $100,000

in cash or shares, having paid $5,000 and 20,000

shares for a two-year option. The Company

extended the option for a further two years by

paying the equivalent of $20,000 in shares (at the

then current VWAP30) to the mineral claim holder.

Munadgee was a 1950s discovery that produced

uranium in the 1960s. According to unofficial

records, some 3,000 tonnes of ore at an average

grade of 10lbs/ton uranium (approximately 0.5%

U3O8) were produced

Future Uranium Exploration As a first priority, exploration for uranium at the

Kurundi Project will focus on the Munadgee mine

area, targeting the potential high-grade zone

immediately below the historical workings.

During the period under review, negotiations

with the traditional owners of the land around

mineral claim MCC968, concerning Aboriginal

heritage and access across Aboriginal freehold

land that adjoins mineral claim MCC968, failed to

make any progress. The Company continues to

intend diamond drilling this high-grade uranium

target once these negotiations have been

successfully concluded.

The Kurundi Project is located approximately 100km southeast of Tennant Creek. Northern

Uranium acquired 100% of the uranium rights to the project from Washington Resources Limited

(now Ferrum Crescent) in 2006. The focus of the Company’s uranium exploration efforts have

been at the historical Munadgee uranium mine.

With the expectation of tenements being granted

in the NT in 2011, more emphasis will be placed

on the largely untested tenement package in the

NT. The exploration program on these tenements

is likely to be initially dominated by airborne

geophysical surveys including VTEM, Magnetics,

Radiometrics and Hyperspectral mapping.

The geophysical surveys will then be followed up

by on-ground reconnaissance geological

mapping and sampling.

For

per

sona

l use

onl

y


rare earths

Typically these are of greater value as they are essential in a wide range of industrial processes and hi-tech applications.

what are rare earths?Northern Uranium’s rare earth’s projects are particularly endowed with ‘heavy’ rare earths.

Rare Earth Uses and Market Rare Earth Elements (REE) are a collection of seventeen chemical elements in the periodic table, (namely scandium, yttrium and the fifteen lanthanides), which have unique physical, chemical and light-emitting properties. REE are essential components to products with high growth potential, including electronics and technology industries, energy efficiency and greenhouse gas reduction. They are in demand for use in hybrid vehicles, rechargeable batteries, mobile phones, plasma and LCD screens and laptop computers, clean energy production (such as wind turbines). As such the REE’s are becoming increasingly important commodities that have major strategic implications.

The global REE market has grown from 40,000 tonnes per year to 125,000 tonnes per year in the past 10 years. China accounts for approximately 95% of world REE production, and has 70% of the world’s known REE resources. Recently, China has announced curtailing of REE exports due to their importance for its internal industry, and this is contributing to a shortage of REE for the rest of the world.

Heavy Rare Earth Elements (HREE), such as those identified at Northern Uranium’s

Browns Range project are of particularly high

value. The estimated value of the HREE at

Browns Range is up to a value of $6000/t.

For

per

sona

l use

onl

y


rare earths

Petroleum ProductionGreater consumption by ‘heavy’ oils and tar sands

Hybrid Vehicles LaNIH Batteries. Hydrogen absorption alloys for rechargeable batteries. Auto catalysts

Fibre Optics Signal amplification Phosphors

Energy efficient lighting

PhosphorsLCD/LED screens

Digital Cameras Used to cut transmission of uv light and increase glass refractive index of digital camera lenses

Rare Earths supply and demand 2004-14

DEM

AN

D T

PA-R

EO

250,000

200,000

150,000

100,000

50,000

0

2004

2005

2006

2007

2008

2009

2011

2012

2013

2014

2010

CHINA SUPPLY ROW SUPPLY ADJUSTED GLOBAL DEMAND

CHINA DEMAND

For

per

sona

l use

onl

y


projects: rare earths

browns range project

Target and Geology

The target is hydrothermal quartz vein hosted

xenotime mineralisation, xenotime being a rare

earth phosphate mineral and a rich source of

yttrium and high value Heavy Rare Earths (HREE).

Xenotime was first identified in the Browns Range

area in the 1980s by PNC Exploration while

exploring for uranium. PNC named the area of

quartz-xenotime mineralisation “Area 5 Prospect”

and tested one of the larger quartz-xenotime veins

(10-30cm wide, 15m long) by costeaning and

shallow drilling, obtaining results up to 16% yttrium

(Y), 0.2% uranium (U), 0.5% light REE (LREE) and

12% HREE.

The Browns Range project previously formed part of the Gardiner-Tanami Project, but since 2009

has become a focus for the Company’s Rare Earth Element (REE) exploration program. The project

consists of two granted exploration licenses and one tenement application. The tenements

cover an area of 400km2, within Western Australia, located adjacent to the WA/NT border

approximately 150km southeast of Halls Creek.

Figure 6: – Browns Range Project – Prospect Location

For

per

sona

l use

onl

y



Browns Range Project – Outcropping xenotime mineralisation at Area 5 North Prospect

The Area 5 Prospect is located on the western side

of the Browns Range Dome, a Palaeoproterozoic

dome formed by a granitic core intruding the

Palaeoproterozoic ‘Browns Range Metamorphics’

(meta-arkoses, feldspathic metasandstones

and schists) and an Archaean orthogneiss

and schist unit to the south. The dome and its

aureole of metamorphics are surrounded by

the Mesoproterozoic Gardiner Sandstone of the

Victoria-Birrindudu Basin. Area 5, Browns Range,

was described by PNC Exploration as consisting

of outcrops of arkose, conglomerate and minor

quartz mica schist. Sub-cropping ultramafic rocks

and a banded iron formation (BIF)/quartz pebble

conglomerate occur in the area. Calc-silicate rocks

are also recorded 4km to the east. Elongate,

probably discontinuous magnetic ultramafic bodies,

up to 400m wide, appear to have been intruded

alongfaultstrending060̊.

Exploration Update Previous sampling completed by Northern’s

strategic alliance partner, Afmeco Mining and

Exploration Pty Limited (‘Afmex’) and historical

exploration completed by PNC Exploration while

exploring for uranium in the 1980s, identified

xenotime mineralisation within hydrothermal quartz

veins and quartz breccias. The 2010 field program

was designed to further investigate these high-

grade xenotime occurrences, outline their extent

and identify new target areas.

A total of 59 rock chip samples were assayed from

the Browns Range area, with 11 returning assays

with Total REE (TREE)+Y greater than 1% and up to

a maximum of 7.95% TREE+Y.

REE distribution is dominated by high value

HREE, with 65-75% of REE’s being Heavy REE

for all except one of the anomalous samples.

Sampling was focused on three separate target

areas (see Figure 7), one of which had already been

identified (Gambit), while the other two are newly

discovered zones (Wolverine and Area 5 North).

No sampling was carried out at the original Area

5 Prospect, but a ground radiometric survey was

completed.

Based on the latest Rare Earth prices for oxide

FOB China, the range of value of the Brown Range

xenotime mineralisation is US$547 per tonne to

US$6,000 per tonne. This is largely due to HREE

being over ~70% of all REE in samples.

Petrology studies on rock chip samples from the

area confirm the presence of xenotime within quartz

veins. The xenotime is relatively coarse-grained,

typically in the range of 50-300 microns with grain

groups up to 3mm in length. Details of the sampling

and mapping at each prospect are as follows:

Gambit Prospect Xenotime mineralisation was previously identified by

Afmex regional reconnaissance sampling as part of

their Gardiner-Tanami uranium exploration program.

Follow-up sampling has identified a xenotime

mineralized quartz breccia zone trending east-west,

at least 200m in strike length. Rock chip samples

of the quartz breccia assayed up to 2.63% TREE+Y

including up to 2.30% Total HREE (THREE) +Y.

Wolverine Prospect This is a newly identified zone of high-grade

mineralisation located approximately 900m north

of the Gambit Prospect. Although limited in outcrop

extent, the mineralisation is very high-grade with

rock chip results up 7.95% TREE+Y including up to

7.06% THREE+Y. Xenotime mineralisation occurs in

pods within an approximately east-west trending

fault zone, 400m long and up to 20m wide. The

mineralisation is potentially open to the east and

west along strike under soil cover.

For

per

sona

l use

onl

y



Area 5 North At Area 5 PNC Exploration reported quartz-

xenotime veins with extremely high grade

results up to 16% yttrium, and 12% HREE. Recent

sampling has been focused on a newly recognized

mineralised area 500m to north-east of PNC’s

mineralisation, where xenotime mineralisation has

been identified within a series of east-west trending

structures. This mineralisation is separate to that

identified by PNC, who were focused on a very

high-grade mineralised quartz vein. Mineralisation at

Area 5 North is associated with narrow quartz veins

within an arkose host and significantly, xenotime

also occurs finely disseminated within the host.

Detailed soil sampling has also been completed

over the three aforementioned prospect areas, and

results at the time of writing are pending.

Figure 8: Browns Range Project – Areas of HREE (xenotime) mineralisation (over uranium radiometric image)

Future Work Results from the soil sampling will determine the

extent of an initial drill program which is proposed

for commencement in the first half of 2011.

Prior to the commencement of drilling more

detailed geological mapping and sampling will

be undertaken in the target areas. In 2010 it is

expected that the soil sampling coverage will

be extended over a wider area, and follow-up

drilling will be required. In addition, metallurgical

testwork will be carried out on bulk samples from

outcropping mineralisation at the Wolverine,

Gambit and Area 5 North prospect areas.

For

per

sona

l use

onl

y


john galt project(Northern Uranium option to acquire 100%)

Option Agreement Under the terms of the agreement with Arnhem,

Northern Uranium has the right for a four year

period to acquire 100% interest in the project.

Upon granting of the tenement, Northern

Uranium will also issue Arnhem 500,000 unlisted

options with a three year exercise period at 25c.

Should Northern Uranium proceed to purchase,

the final consideration comprises:

• Cashpaymentof$250,000

• IssueofNTUordinarysharestothe

value of $500,000

• 1%NetSmelterReturnRoyaltyonall

minerals on the tenement.

John Galt REE deposit The John Galt Rare Earth Element (REE) deposit

was discovered in 1971 following an airborne

gamma spectrometer survey of the Kimberley

region of Western Australia. In 1973, nine

diamond holes were drilled for a total of 503m

at the Main Zone. No further drilling or field work

has been carried out on the deposit since this time.

The distribution of xenotime mineralisation at

John Galt has been identified to occur in three

separate zones which are located approximately

600m apart on the current topographical surface

of the ridge. The “Main Zone”, which is also

referred to as the John Galt Deposit, is where

most of the exploration work has been conducted

and is considered to be the primary ore zone.

The presence of mineralised veins at the base

of the cliff beneath the Main Zone indicated the

possible extension of the ore body to lie below

the cliff/scree contact. The other two occurrences

of xenotime mineralisation are referred to as the

“Second Vein” and “Third Vein”

Future Work The tenement is currently an application but is

expected to be granted in late 2010, whereupon

field work will be able to commence. The

following work program is proposed for 2011:

• Office-basedstudiesincludingcompilationand

interpretation of government and historical data

• Reconnaissancegeologicalmappingandrock

chip sampling

• Detailedmapping(withafocusonidentifying

structural controls) and a systematic program

of rock chip and soil sampling

• Identifydrilltargetsandsuitabledrillsites.

The John Galt project is situated in the East Kimberley region of Western Australia, approximately

200km south of Kununurra (28km south of Warmun) and 35km from the Great Northern

Highway. The John Galt project comprises the tenement application E80/4298 which covers an

area of 65km2². The dominant ore mineral within the John Galt deposit is xenotime as at Browns

Range, and the distribution of Heavy REE is also very similar to that at Browns Range.

During the June quarter the company finalized a formal sale and purchase agreement with

Arnhem Resources Pty Ltd (“Arnhem”) for the Option to purchase the John Galt project under

the terms outlined below.

projects: rare earthsF

or p

erso

nal u

se o

nly


projects: phosphate

epenarra project

The Epenarra Project comprises ten licenses

(EL27027, EL26818, EL26775, EL26776, EL27085,

ELA27555, EL27554, EL27636, ELA27635 and

EL27382) which cover an aggregate area of

5,756km2. The Epenarra phosphate project is

within close proximity and shares the same

geological setting as the Wonarah deposit,

which is Australia’s largest undeveloped

phosphate resource.

Australia’s largest phosphate deposits are confined

to the shallow marine Cambrian aged sediments

of the Georgina Basin. These deposits include the

Phosphate Hill deposit (1400Mt @ 17.5% P2O5) in

Queensland, which is currently being mined and

Wonarah (330Mt @ 18.9% P2O5) and Arruwurra

(131Mt @ 18.6% P2O5) in the Northern Territory

(NT), which are currently undergoing feasibility

studies. Other deposits in the NT within the same

stratigraphic horizon include Highland Plains (56Mt

@ 16% P2O5), Alexandria (15Mt @ 10% P2O5),

Alroy (5Mt @ 20% P2O5) and Buchannan Dam

(8Mt @ 20% P2O5).

During 2009/10 exploration work was limited

to desk-top studies and reviews of historical

and NT Government data. In 2010/11 further

geophysical data processing and interpretation

(using new high quality NT Government gravity

data) to define drill targets is proposed. This will be

followed by reconnaissance geological mapping

and sampling of outcropping phosphatic

Wonarah Formation and leading to a wide-

spaced first-pass aircore drilling program.

The Epenarra project area lies approximately 150km east and south east of Tennant Creek.

Access to the project area is via the Barkly Highway and local pastoral tracks. The project is in

reasonable proximity to existing rail and road infrastructure.

(Northern Uranium 100%)

For

per

sona

l use

onl

y


amadeus basin project(Northern Uranium option to acquire 100%)

The Amadeus Basin Project comprises licenses

(EL26920, EL27016, EL27017, EL27018, EL27019

and EL27020) which cover an aggregate area of

a 1000km2 and are situated approximately 60km

east of Alice Springs in the Northern Territory.

A regional overview has shown phosphorite

occurrences to be widespread in the Proterozoic

and Cambrian sediments of Australia. Although

the major Australian phosphate deposits occur in

the Georgina Basin, several significant occurrences

have been recorded within the Cambrian

sediments of the Amadeus Basin.

The tenements host 36km strike length of the

Early Cambrian Todd River Dolomite which is

confined to the eastern portion of the Amadeus

Basin and considered to be the most prospective

unit for hosting phosphate mineralisation.

Unpublished exploration reports on work

completed by Broken Hill Pty Ltd record that

the dolomites and interbedded sandstone

are phosphatic and one drill hole yielded a

6m intersection of calcareous silty sandstones

associated with minor limestone, chert and

ferruginous siltstone averaging 22.8% P2O5 and

a 2m intersection of 17.2% P2O5 from 30m.

Work on the project during 2009/10 was

confined to desk-top studies and reviews of

historical and NT Government data. In 2011 a

program of geological mapping, and soil and rock

chip sampling is proposed which if successful will

result in the definition of drill targets.

The Amadeus Basin phosphate project is located approximately 60km east of Alice Springs

and within close proximity to existing rail and road infrastructure.

projects: phosphate/uranium

wallal project(Northern Uranium 100%)

An airborne electromagnetic survey covering

approximately 60% of the project area was

completed in 2007. The survey indicated the

presence of a 4.5 kilometres long north-northwest

trending conductor at a depth of approximately

150m, which is suspected to be due to graphitic

or sulphide-rich rocks in the basement beneath

the Canning Basin sediments.

Exploration work in 2010/11 will be focused on

the basement conductor target area. Ground-

based geophysics followed by drilling is proposed

to test the target. In addition, the potential for

buried Channel Iron Deposits (CID) has been

recognized within the project area, particularly

given the close proximity of BHP’s Shay Gap/

Nimingarra iron ore mine. A gravity survey

can be implemented to detect any buried CID’s

within palaeochannels.

Northern Uranium has three granted exploration licences at the Wallal Project, which

cover approximately 452km2 located 140km east of Port Hedland. The project area is at

the southwestern margin of the Canning Sedimentary Basin, where the Company is targeting

sandstone-hosted (or roll-front) style uranium mineralisation in Mesozoic-age Wallal

Sandstone and Jarlemai Siltstone.

For

per

sona

l use

onl

y


board of directorsKevin Schultz Chairman (appointed 22 June 2006)Mr Schultz, a geologist and mining engineer from the Western Australia School of Mines, and a Fellow of the Australasian Institute of Mining and Metallurgy (Chartered Professional), has extensive experience in mining and mineral exploration management. He gained experience in uranium as the Director of Operations for the Uranium Branch exploration division of the Australian Atomic Energy Commission (‘AAEC’) from 1975-76, and as the Exploration Manager for Nord Resources Corporation from 1977-1982, which had a number of uranium projects in northwest Western Australia (WA) and the NT. During the past three years Mr Schultz has also served as a director of the following listed company:

• PolarisMetalsNL.(ManagingDirectorMay2003–November2008)

George Bauk Managing Director (appointed 2 March 2010)Mr Bauk has more than 20 years’ experience in the resources sector, having worked in both mining operational and corporate roles globally with a variety of companies including WMC Resources, Arafura Resources and most recently, from 2006 to 2009, Indago Resources (formerly Western Metals) as Managing Director. He has broad experience in the resource sector, including specific involvement in uranium and rare earths. During the past three years Mr Bauk has served as a director of the following listed company:

• IndagoResourcesLtd(ManagingDirector26June2006–7August2009)

Adrian Christopher Griffin Non-Executive Director (appointed 22 June 2006)Mr Griffin is an Australian trained mining professional with exposure to metal mining and processing throughout the world. Mr Griffin has been involved in the development of extraction technology and was a pioneer of the WA lateritic nickel processing industry. He specialises in mine management and production. During the past three years Mr Griffin has also served as a director of the following listed companies:

• DwykaDiamondsLimited(DirectorDecember2005–August2007)

• EmpireResourcesLimited(DirectorFebruary2004–January2010)

• HodgesResourcesLimited(DirectorAugust2005–December2008)

• ReedyLagoonCorporationLimited(DirectorsinceMay2007)

• WashingtonResourcesLimited(DirectorSeptember2004–December2009)

• FerrumCrescentLimited(formerlyWashingtonResourcesLimited–January2010September2010)

Colin James McCavana Non-Executive Director (appointed 22 June 2006)Mr McCavana has more than 30 years of management experience worldwide in the earthworks, construction and mining industries. Much of this has been related to acquisition, development and operation of mining and mineral recovery projects. Mr McCavana is a Fellow of the Australian Institute of Company Directors and a Member of the Australasian Institute of Mining and Metallurgy. During the past three years Mr McCavana has also served as a director of the following listed companies:

• HaddingtonResourcesLimited(DirectorSeptember1999–December2008)

• PolarisMetalsNL(DirectorMay2003–November2007)

Simon Storm Company Secretary (appointed 6 April 2010)• MrStormisaCharteredAccountantwithover25yearsofAustralianandinternationalexperienceintheaccounting

profession and commerce. He has held various senior finance and/or company secretarial roles with listed and unlisted entities in the banking, resources, construction, telecommunications and property development industries. In the last 7 years he has provided consulting services covering accounting, financial and company secretarial matters to various companies in these sectors.

For

per

sona

l use

onl

y


26 Directors’ Report

30 Remuneration Report

35 Corporate Governance Statement

39 Statement of Comprehensive Income

40 Statement of Financial Position

41 Statement of Cash Flows

42 Statement of Changes in Equity

43 Notes to the Financial Statements

69 Directors’ Declaration

70 Independent Auditor’s Report

72 Auditors’ Independence Declaration

73 Additional Information

For

per

sona

l use

onl

y


For

per

sona

l use

onl

y


For

per

sona

l use

onl

y


For

per

sona

l use

onl

y


For

per

sona

l use

onl

y


For

per

sona

l use

onl

y


For

per

sona

l use

onl

y


For

per

sona

l use

onl

y


For

per

sona

l use

onl

y


For

per

sona

l use

onl

y


For

per

sona

l use

onl

y


For

per

sona

l use

onl

y


For

per

sona

l use

onl

y


For

per

sona

l use

onl

y


For

per

sona

l use

onl

y


For

per

sona

l use

onl

y


For

per

sona

l use

onl

y


For

per

sona

l use

onl

y


For

per

sona

l use

onl

y


For

per

sona

l use

onl

y


For

per

sona

l use

onl

y


For

per

sona

l use

onl

y


For

per

sona

l use

onl

y


For

per

sona

l use

onl

y


For

per

sona

l use

onl

y


For

per

sona

l use

onl

y


For

per

sona

l use

onl

y


For

per

sona

l use

onl

y


For

per

sona

l use

onl

y


For

per

sona

l use

onl

y


For

per

sona

l use

onl

y


For

per

sona

l use

onl

y


For

per

sona

l use

onl

y


For

per

sona

l use

onl

y


For

per

sona

l use

onl

y


For

per

sona

l use

onl

y


For

per

sona

l use

onl

y


For

per

sona

l use

onl

y


For

per

sona

l use

onl

y


For

per

sona

l use

onl

y


For

per

sona

l use

onl

y


For

per

sona

l use

onl

y


For

per

sona

l use

onl

y


For

per

sona

l use

onl

y


For

per

sona

l use

onl

y


For

per

sona

l use

onl

y


For

per

sona

l use

onl

y


For

per

sona

l use

onl

y


For

per

sona

l use

onl

y


For

per

sona

l use

onl

y


For

per

sona

l use

onl

y


For

per

sona

l use

onl

y


For

per

sona

l use

onl

y


For

per

sona

l use

onl

y

For

per

sona

l use

onl

y

annual report2010

ABN 61 119 966 353

Unit 10, Level 2, 12-14 Thelma Street

West Perth WA 6005


Email: [email protected] Website: www.northernuranium.com.au

ABN 61 119 966 353

For

per

sona

l use

onl

y

Date post:	06-Oct-2020
Category:	Documents
Upload:	others
View:	0 times
Download:	0 times

For personal use onlyto impose sector-specific new taxes on Australia’s mining industry. Despite...

Documents