pop dom perignon uranium producer by end of yr, page-6

ABN 39 063 074 635
Level 1 181 Roberts Road Subiaco Western Australia
Postal: PO Box 616 West Perth 6872 Australia Ph: +61 8 9381 9522 Fax: +61 8 9381 9525
Email: [email protected]
ANNOUNCEMENT
URANIUM MINING AND EXPLORATION VENTURE
Uranium Assets Spin Off
• The uranium assets of Golden State Resources and Utah miner White Canyon
Exploration are to be spun off in a new ASX-listed uranium mining and
exploration entity, to deliver the Company’s shareholders maximum value and
exposure to the uranium market. Golden State shareholders will have a
priority entitlement in the capital raising for the new company.
• The new entity will hold high grade U3O8 deposits estimated to contain in
excess of 1.9 million pounds (a non-JORC-compliant resource – see page 2 for
details) and is expected to begin mining operations, given satisfactory
confirmatory drilling results and statutory approvals, within the year.
The directors of Golden State Resources announce the execution of a Memorandum of
Agreement for a mining and exploration joint venture between the Company and Utah-based
independent uranium miner White Canyon Exploration LLC to combine their respective
uranium-vanadium resource and exploration assets into a specialized uranium mining entity
to be listed on the Australian Stock Exchange.
It is anticipated that Golden State and White Canyon will each hold approximately 30% of the
new entity, with the remainder to be held by the public as a result of a planned capital
raising. It is the intention of Golden State’s directors that there will be a priority entitlement
for Golden State shareholders to participate in this raising.
The agreement is the result of six months’ negotiation with White Canyon and will provide the
Company’s shareholders with the greatest value for the Thompson Uranium Project and
exposure to a much larger advanced project with a short time frame towards mining
operations.
The new joint enterprise has distinct advantages:
• In excess of 1.9 million pounds of U3O8 with an ore grade of 0.3% (6.2 lbs per ton)
contained in 300,000 tons of ore in high grade sandstone-hosted roll-front deposits,
plus substantial exploration potential on the Thompson Project.
• Experienced management, with successful underground uranium mining expertise, who
are currently contract mining and shipping ore to the White Mesa Mill, Blanding, Utah.
• Early mine production potential from drilling-defined ore bodies.
• Favourable and proven geology – the Chinle and Morrison Formations of the Colorado
Plateau. Utah has historical production of 130 million pounds of U3O8, with 80% from
the Chinle Formation.
• All projects are in Utah, USA – a supportive jurisdiction with currently licensed and
operating uranium mines and mills.
• An aggressive and ready market for yellow cake product from US electricity utilities.
Spot price for uranium has doubled in the past six months to US$113.
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White Canyon Assets
White Canyon Exploration LLC brings a historically delineated 1,265,000 pounds U3O8
“defined reserve”, defined between 1975 and 1983 by Utah Power & Light, on its Daneros and
Geitus leases, and over 30 years of uranium mining expertise.
There is an additional “undefined category” of 693,000 pounds U3O8 outside the “defined
reserve” on the Daneros and Geitus leases.
The Daneros and Geitus historical estimates do not conform to current standards and will
require further work, including drilling, to be converted to JORC-compliant resources.
The following important points regarding these historical estimates are made:
1. The historical 1985 estimate of “defined reserve” is not reported in accordance with the
current JORC code. A drilling programme sufficient to confirm the mineralization as a
JORC-compliant resource is planned to commence in May, but investors should be aware
that there is no certainty as to what proportion of the quoted “defined reserve” will
eventually convert to a JORC-compliant reserve.
2. The historical estimates were generated by Utah Power & Light, a US electricity utility,
from drilling commenced in 1975. The estimates and the means by which they were
generated are documented in a Utah Power & Light report dated 26 June 1985. The
“defined reserve” category in this case were bodies of mineralisation contained within an
envelope defined by the 0.2 %.foot (grade x width) contour. The “defined” category had
a high degree of confidence, generally defined by 20m x 20m centred drilling. The
“undefined” category was calculated with a lower degree of confidence but based on
geological inference.
3. The historical estimates are relevant. The drilling pattern over the deposits is of a design
and density that satisfactorily investigates the mineralized bodies. Exploration techniques
used to acquire data and generate the estimates are similar to those used today.
4. The historical estimate is considered reliable in itself. The available drilling and log data
indicates work of consistent reliable quality. Informal calculations from drilling data
confirm the order of magnitude of the estimates. Estimates were generated using a 20m
x 20m drilling pattern to an average depth of 150m. 595 holes were drilled on the
extended property, with the 80 holes covering the ore bodies contributing to the
estimates.
5. The historical estimate uses non-JORC categories of “defined reserve” and “undefined
reserve”. The economic and technical input, at the time, in the assessment of the ore
bodies was insufficient to translate these estimates to a JORC-compliant “reserve” of any
category. Any economic parameters used to generate these estimates would now be out
of date. The data currently available would be more suited to the calculation of a JORCcompliant
resource figure.
6. There are no more recent estimates available.
7. The Company considers that this is an occasion where details of a non-JORC compliant
estimate should be given under the Continuous Disclosure requirements of the ASX listing
rules, since details of the deposits and estimates are available in the public domain, and
non-disclosure might provide some individuals with an advantage.
8. The Australian Stock Exchange has granted a waiver from listing rule 5.6 to allow the
Company to report the above Historical Estimates.
Golden State Resources Assets
Golden State contributes the Thompson Uranium Project (including the significant historical
Ringtail Mine), with significant potential for uranium deposits indicated by uranium-vanadium
mineralisation defined within the existing drilling pattern, and further untested exploration
potential on the Company’s leases covering 6,640 acres of mineralized Morrison Formation.
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Mining Expertise
The directors of White Canyon will join the board of the new entity.
White Canyon, through its associate company Reliance Resources LLC, is currently mining
under contract the only operating underground uranium mine in Utah, producing ore for
treatment at the White Mesa Mill at Blanding, Utah. Reliance has indicated that it will provide
mining fleet and personnel as required for development and mining operations on the
Daneros ore body.
White Canyon Exploration and Reliance Resources principal Mike Shumway inspecting a high grade ore
face at the Pandora underground uranium-vanadium mine at La Sal, Utah
A recent New York Times article on Mr Shumway can be found at:
http://www.nytimes.com/2007/03/28/business/28uranium.html?ex=1332734400&en=2ee40a7e7c5a9144&ei=5088&
Drilling to commence in May
The Company has engaged a drilling rig and lodged application for statutory permits to
commence a drilling programme on the Daneros and Geitus bodies. The technical programme
will include twinning a large number of the drill holes used in the original assessment, infill
drilling certain zones and opening up and relogging old drill holes. The work will evaluate the
assessment and reporting criteria of Table 1 of the JORC Code and allow the generation of
mineral resources over a period of two to four months, and in time ore reserves in
accordance with the JORC Code.
Terms of agreement with White Canyon Exploration LLC
Golden State and White Canyon will contribute their respective uranium interests to the new
entity, which will acquire remnant interests in the Daneros and Geitus leases from unrelated
parties for US$10,000,000, part of funds to be raised. The new company will own 100% of all
assets. There is a pre-existing 15% mill return royalty on the Daneros and Geitus leases,
ceded to the previous owner of the leases in 1993.
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Indicative timetable
An indicative timetable for due diligence investigations, fund raising and listing will be
released within two weeks.
John Hasleby
Director
3 May 2007
The information in this report that relates to Exploration Results, Mineral Resources or Ore Reserves is based
on information compiled by John Hasleby who is a Member of The Australasian Institute of Mining and
Metallurgy. Mr Hasleby is full-time Exploration Manager for the Company and has sufficient experience that is
relevant to the styles of mineralization and types of deposit under consideration and to the activities that he is
undertaking to qualify as a Competent Person as defined in the 2004 Edition of the ‘Australasian Code for
Reporting of Exploration Results, Mineral Resources and Ore Reserves’. Mr Hasleby consents to the inclusion
in the report of the matters based on his information in the form and context in which it appears.
Location: Uranium Mining and Exploration Project, Utah, USA
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Thompson Uranium Project
Daneros and Geitus Prospects