Honeymoon Uranium Project, South Australia

Near term production with substantial exploration upside.

 

 

 

 

 

 

 

 

 

 

Geology
Resources
Assets
Acquisition

Honeymoon

The Honeymoon uranium project is located 75Km NW of Broken Hill, in the Curnamona Region of South Australia. The project contains the Honeymoon Resource, a high-grade sandstone hosted Uranium deposit amenable to insitu-leach mining techniques.

Holdings include the granted Honeymoon ML, 4 EL’s and 8 RL’s.

Mineralisation occurs at 90-120m depth in unconsolidated sand aquifers at the base of a Palaeochannel. A total of 1,625 historical and recent drill holes have been completed between 1969-2012.

Recent airborne electromagnetic survey has outlined significant targets warranting further investigation.

 

 

 

 

 

 

 

 

 

 

 

 

 

Project Geology

The Honeymoon Uranium Project is located in the southern part of the Callabonna sub-basin in South Australia.  Uranium mineralisation within the project area is hosted by the Yarramba and Billeroo palaeochannels (Figure 2).  These consist of Palaeogene age palaeovalleys filled by a sequence of inter-bedded sand, silt and clay.  Thickness of the palaeochannels at Honeymoon deposit area reaches a maximum of 55m thick.

The uranium mineralisation represents a classic basal channel type sandstone-hosted uranium roll-front model.  This model implies the movement of oxidised, uranium-bearing fluid through a largely reduced aquifer, with mineralisation occurring at the redox front of the fluid.  A geochemical zonation is associated with the roll front, including oxidation of the sands upstream (orange and yellow limonite) and abundance of pyrite/marcasites and organic matter downstream.  Mineralisation is associated with discreet accumulations of organic matter and pyrite within the palaeovalley sequence.

Distribution of the uranium accumulations within the palaeochannels is controlled by fluid pathways that have transported the dissolved uranium and the distribution of organic matter which served as reductants causing precipitation of uranium.  Interplay of these two main factors has created a stacked geometry of the “uranium rolls” commonly distributed as elongate pods along the strike of the palaeovalley (Figures 1 and 2).  This style of mineralisation is similar to that seen in the Shinarump, Monitor Butte and Moss Back members of the Upper Triassic Chinle formation in the White Canyon areas of the uranium mining districts of South Eastern Utah, USA.

 

 

Figure 1: Geological map showing distribution of uranium mineralisation in southern part of the Yarramba palaeochannel.  Shaded areas denote interpreted thicker conductive palaeo sedimentary packages, dots are the ore grade drill hole intersections, defined at 300ppm U3O8 cut off.

 

 

 

Figure 2: Conductivity map of Billeroo palaeochannel (Airborne EM data) that hosts Goulds Dam and Billeroo deposits showing priority target regions.  Blue regions indicate potential palaeochannel areas.

 

Resources

The Mineral Resources for Honeymoon, Brooks Dam and East Kalkaroo are summarised in Table 1.  In total, they contain 5.3Mt of mineralisation at the average grade of 0.14 % U3O8, which corresponds to 16.6Mlb (7,540 tonnes) of contained U3O8 above a 0.05% U3O8 lower cutoff.

All Mineral Resources are located below the water table at the depth of approximately 100m and hosted by the palaeochannel sedimentary sequence composed of weakly lithified permeable sands intercalated with clays.  Previous hydro-geological test work including pilot production mining study have confirmed that Mineral Resources are amenable for exploitation using in situ leach technologies.

 

 

*Figures have been rounded. Quoted resources have been adjusted to exclude previous production of approximately 335t of U3O8.

 

Uranium One Australia Assets

There is significant infrastructure associated with the acquisition of Uranium One Australia.  Key assets include:

  • Solvent extraction processing plant with a capacity to produce 880,000lbs of uranium per annum currently on care and maintenance
  • Well fields currently on care and maintenance
  • 200 person operating mining camp
  • Administration buildings
  • 75km power line connecting to mains power
  • A fleet of vehicles, spares and other equipment associated with the commissioning of the Project
  • Runway capable of landing light planes
  • Extensive geological database of 1,700 drill holes and associated logging information
  • Cash backed environmental bonds in the amount of $8.7 million

Acquisition Terms

Boss has entered into an agreement to acquire 100% of the issued share capital of Uranium One Australia which owns the Honeymoon Uranium Project (“Acquisition”).  The consideration for the Acquisition includes:

  • A $200,000 site access fee (paid) which gave Boss the exclusive right to access the Honeymoon Uranium Project and conduct all its due diligence
  • An initial cash payment of approximately $2,442,000 (comprising an amount of $2,115,000 plus a care and maintenance contribution of approximately $327,000) (“Closing Amount”)
  • $3 million under a promissory note and repayable within 24 months of completion of the Acquisition
  • $4 million under a promissory note issued and repayable within 48 months of completion of the Acquisition

Boss will also make the following contingent payments to U1 upon successful recommissioning of the Honeymoon Uranium Project:

  • $2 million payable in cash and/or shares upon the later of restart of the operations with commercial production or 5 years of completion of the Acquisition
  • 10% of the net operating cash flow of the Honeymoon Project payable annually up to a maximum of $3 million

The payment of the Closing Amount has been guaranteed by Carbine Resources Limited (“Carbine Guarantee”).  In consideration for the Carbine Guarantee, Boss issued 10 million unlisted options exercisable at $0.02 each within 3 years from date of issue.  The promissory notes are secured under the terms of a general security deed. Repayment of the amounts due under the promissory notes may be accelerated in certain circumstances, including where Boss raises financing of $15 million, the sale of the shares in Uranium One Australia or the Honeymoon Project (or part thereof) or a change in control of Boss.

Conditions to the Acquisition

Completion of the Acquisition is subject to various conditions precedent, including but not limited to:

  • No insolvency event occurring with respect to Boss, its subsidiaries or Carbine Resources Limited;
  • any requisite shareholder approval of Boss;
  • U1 and Uranium One Australia obtaining any necessary approvals from contractors;
  • U1 and Uranium One Australia discharging existing security interests in respect of the shares in Uranium One Australia and the Honeymoon Project; and
  • That a material adverse change in the business or assets of Uranium One Australia does not occur prior to the completion date.

It is anticipated that completion shall occur within approximately three months.

Option over Wattle’s 20% in Joint Venture

Boss has a call option to acquire Wattle’s 20% interest in the Joint Venture after it completes a positive bankable feasibility study to restart the operations.  The terms of the acquisition will be mutually agreed or otherwise determined by an independent valuer taking into account the valuation of the project and market capitalisation of Boss at the relevant point in time.  The consideration of the acquisition of Wattle’s 20% interest may, at the election of Boss, be payable in cash and/or shares in Boss.

 

Valuation