TORONTO, ONTARIO--(Marketwire - April 3, 2012) - U3O8 Corp. (TSX VENTURE:UWE), a Canadian-based company focused on exploration and resource expansion of uranium and associated commodities in South America, has signed a letter of intent with Pacific Bay Minerals Ltd. to acquire three mineral properties, which are contiguous with U3O8 Corp's Cerro Solo East concessions adjacent to the state-owned Cerro Solo uranium deposit in Chubut Province, Argentina (Figure 1).
"This transaction increases U3O8 Corp's strategic land position adjacent to one of Argentina's largest uranium resources - the State's 13 million pound Cerro Solo deposit(1)," said Dr. Richard Spencer, U3O8 Corp's President and CEO. "Our priority project in Argentina is still Laguna Salada, which is progressing towards our goal of doubling the current resource and completing a scoping study this year. The acquisition of key properties in the Cerro Solo district sets up the next target for exploration after Laguna Salada. Our analysis of fault patterns and trends in the sedimentary strata in the district suggest that the area to the east of Cerro Solo is particularly prospective for uranium; hence, our efforts to consolidate our land position there."
(1) The Cerro Solo deposit contains an estimated 5,950 tonnes of recoverable uranium (about 13 million pounds ("mlb")) as reported on the web site of Argentina's National Nuclear Commission (Comisión Nacional de Energía Atómica ("CNEA") on June 5, 2009. The Cerro Solo resource is owned by the Argentina Federal Government through the CNEA. The CNEA does not use the same categories for mineral resources as set out in National Instrument 43-101 ("NI 43-101"), and the resource was not prepared in accordance with NI 43-101. A "qualified person" as defined in NI 43-101 has not done sufficient work to classify this resource as current mineral resources or reserves; accordingly, U3O8 Corp. is not treating such resource in this manner. However, the resource is still considered by U3O8 Corp. to be relevant as it provides an indication of the known uranium mineralization in the region.
The terms of the property acquisition are:
- U3O8 Corp. will issue 1.5 million shares to Pacific Bay, which are subject to a 4-month hold period;
- U3O8 Corp. will pay $100,000 in cash to Pacific Bay; and
- Pacific Bay retains a 2% net smelter royalty on the properties vended to U3O8 Corp. U3O8 Corp. has the right to purchase the royalty at any time for $3 million.
Cerro Solo Uranium District
The Cerro Solo resource is reported to contain approximately 13mlb(1) of uranium, making it one of the largest uranium deposits in Argentina. Exploration drilling is reported to have been ongoing for the past year with the objective of increasing the resource.
At present, Argentina imports all the fuel for its three nuclear plants from Canada and has expressed interest in resuming domestic uranium production to feed its growing nuclear reactor fleet. Both Cameco and Areva have recently negotiated joint venture agreements with junior uranium companies in Chubut, the province in which the Cerro Solo deposit and U3O8 Corp's Laguna Salada and Cerro Solo East projects are located.
Uranium mineralization in the Cerro Solo deposit is located in Cretaceous sandstones at a depth of 50 metres ("m") to 130m below surface. U3O8 Corp's targets within its consolidated land position, the Cerro Solo East Project (49,100 hectares in extent), lie at similar depth. Exploration for sandstone-hosted deposits similar to Cerro Solo on U3O8 Corp's land package would incorporate Pacific Bay's radiometric surveys with geophysics (IP) to locate the pyrite cap that typically overlies these deposits along with sedimentary facies analysis and alteration mapping.
Laguna Salada Project Update
Two new discoveries of gravel-hosted uranium-vanadium mineralization have been identified by U3O8 Corp's ongoing exploration in the vicinity of its Laguna Salada Project. More detailed trenching is planned to better define these new mineralized zones, towards the goal of increasing the project's current uranium resource to 20-25mlb(2) in 2012.
Due to the soft, unconsolidated nature of the gravel, exploration to date has been done mainly through the excavation of pits to a maximum depth of 3m. A vibrosonic rig that is designed to recover a "core" of gravel encased in a plastic tube, is in the process of being imported and should allow exploration and sampling of the full 8m thickness of the gravel. The plan is to continue to use the excavator as an exploration tool with vibrosonic drilling being used to delineate the extent and grade of the mineralization to greater depth in order to contribute to growing the resource at Laguna Salada.
Our prior metallurgical testwork showed that sieving the gravel to remove the pebbles and coarse material concentrated the uranium and vanadium in the fine sand fraction and increased grades by three to 11 times at Laguna Salada (September 21, 2011 press release). Additional metallurgical tests are underway with the aim of further concentrating the uranium by passing the fine sand through hydrocyclones. Results from these tests should be reported in Q2 2012. This hydrocyclone method was used successfully by Deep Yellow Ltd. on its Tubas Red Sand deposit in Namibia, which contains unconsolidated sand similar in many ways to the fine sand that results from screening the pebbles out of the gravels at Laguna Salada.
Regulatory Update on Chubut Province
An open-pit mining ban is currently in effect in Chubut Province, Argentina. Draft legislation is reported to propose that open-pit mining could be allowed in the central semi-desert plain of the province. A similar approach, that allows mining in the central plain, is in effect in the adjacent Santa Cruz Province. U3O8 Corp's principal exploration projects in Argentina, namely Laguna Salada and Cerro Solo East, are located in this central plain of Chubut Province. Other advanced projects in this area are CNEA's Cerro Solo uranium deposit and Pan American Silver's Navidad silver project, both of which are reported to be due for development by open-pit mining methods.
Dr. Richard Spencer, P. Geo., President & CEO of U3O8 Corp., a Qualified Person within the definition of that term in NI 43-101 of the Canadian Securities Administrators, has supervised the preparation of, and verified, the technical information relating to the Cerro Solo East and Laguna Salada projects provided above.
The property acquisition remains subject to the approval of the TSX Venture Exchange.
About U3O8 Corp.
U3O8 Corp. is a Toronto-based exploration company focused on exploration and resource expansion of uranium and associated commodities in South America - a promising new frontier for uranium exploration and development. U3O8 Corp. has one of the most advanced portfolios of uranium projects in the region comprising NI 43-101 compliant resources in Colombia, Guyana and Argentina.
(2) Based on the NI 43-101 resource defined at Laguna Salada, two targets of similar size and grade have the potential to contain a cumulative target of 9-11 million tonnes at a grade of 100ppm to 150ppm U3O8 (estimated 20-25mlb). Refer to the technical report dated May 20, 2011 titled, "Laguna Salada Project, Chubut Province, Argentina: NI 43-101 Technical Report: Initial Resource Estimate" available on U3O8 Corp's web site at www.u3o8corp.com and on SEDAR at www.sedar.com.
Certain information set forth in this news release may contain forward-looking statements that involve substantial known and unknown risks and uncertainties. These forward-looking statements are subject to numerous risks and uncertainties, certain of which are beyond the control of U3O8 Corp., including, but not limited to, the possibility that the open-pit mining ban in Chubut Province may not be lifted or amended on terms that would allow for mining of the Laguna Salada Project, the impact of general economic conditions, industry conditions, volatility of commodity prices, risks associated with the uncertainty of exploration results and estimates, that a mineral resource will be defined on the Cerro Solo East Project or the resource growth potential will be achieved at Laguna Salada, currency fluctuations, dependence upon regulatory approvals, and the uncertainty of obtaining additional financing and exploration risk. Readers are cautioned that the assumptions used in the preparation of such information, although considered reasonable at the time of preparation, may prove to be imprecise and, as such, undue reliance should not be placed on forward-looking statements.
To view Figure 1 (Location of U3O8 Corp's Land Position Relative to Argentina's Cerro Solo Deposit), please visit the following link: http://media3.marketwire.com/docs/u308f1a4.pdf.
Satellite image shows the location of U3O8 Corp's uranium concessions (black box) and newly acquired properties (yellow boxes) that are located adjacent to the state-owned Cerro Solo deposit referred to in the press release, and the areas in which uranium mineralization (red outlines) has been identified in exploration drilling. Limited drilling (green dots) had been carried out by Mega Uranium Ltd. in 2006/2007 prior to U3O8 Corp. acquiring this ground in mid 2010.