Going Underground at Shea Creek

Vancouver — Areva Resources Canada, a subsidiary of French energy giant Areva (ARVCF-O) has informed its joint-venture partner UEX (UEX-T, UEXCF-O) that it plans to sink a shaft at their Shea Creek uranium project, located in the western Athabasca basin region of northern Saskatchewan.

The first phase will see the launch of regulatory applications for the sinking of an exploration shaft and drift development. UEX says it fully supports the move.

With an expected vertical depth of about 950 metres, the partners estimate capital costs for the shaft to fall in the neighbourhood of $100 million.

The partners hope to have a project description filed by late 2007, followed by an environmental assessment process, then construction permitting.

“The decision to go underground at Shea Creek is the most significant event in UEX’s short, five-year history,” said UEX president and CEO Stephen Sorensen. “In my opinion, Shea Creek could eventually become one of the largest producing uranium projects in the world, elevating UEX to the ranks of a major uranium producer.”

Drilling on the Kianna deposit indicates high-grade uranium mineralization within multiple zones and occurring at depths from 662 metres to 922 metres and over a strike length of 200 metres and width of 150 metres, remaining open in all directions.

There are three main types of mineralization with examples of high-grade uranium values:

* “perched,” which occurs within the sandstone as discrete zones, tens of metres above the unconformity; hole SHE-114-5, drilled in 2005, intersected 8.8 metres grading 27.4% U3O8 including 3.5 metres of 58.3% U3O8;

* unconformity-type at the sandstone-basement rock contact zone; 2006 hole SHE-115-3 cut 11.9 metres of 12.57% U3O8 including 4.2 metres of 27.35% U3O8; and

* basement-hosted, occurring up to 200 metres below the unconformity; hole SHE-114-11, drilled in 2005, returned 37.7 metres of 5.4% U3O8, including 4 metres of 25.46% U3O8.

The JV partners currently have a pair of drill rigs working on Kianna plus a third rig testing towards the south within the Shea Creek corridor. Two additional drills are scheduled to arrive shortly at the project area.

Shea Creek is one of 10 western Athabasca basin projects UEX has under option from Areva. The junior has earned a 24.5% interest in the project portfolio by spending at least $15 million in exploration so far, and can boost its interest to 49% by putting up another $15 million by the end of 2015.

UEX anticipates that by the fourth quarter of this year it will be up to the 36.75%-level, earning its full 49% interest by mid-2008.

For this year, the company has budgeted $25 million for exploration and development on its 19 uranium projects in the Athabasca basin.

Shares of UEX recently rallied to new highs around $7.90, giving the company a $1.4-billion market capitalization based on its 182.1-million shares outstanding. Cameco (CCO-T, ) holds a 21.5% interest in UEX.