Olary Creek

(U3O8 Limited 100%)

• Major palaeochannel defined by gravity survey

• Significant zone of copper mineralisation identified on Mutooroo Ridge adjacent to palaeochannel

•  Drilling completed on palaechannel to identify geology and mineralisation

The Olary Creek project is located some 250 kilometres north east of Adelaide and covers an area where younger Tertiary sediments on-lap Proterozoic basement along the northern margin of the Murray Basin.  Anomalous concentrations of uranium (up to 0.1% U₃O₈) are known in carbonaceous sediments near the northern basin margin.Tertiary sequences on the edge of the Murray Basin are prospective for palaeochannel style uranium mineralisation (Beverley, Honeymoon) in drainages shedding from the nearby hardrock Radium Hill deposit which was the site of Australia's first uranium mine. Previous drilling located uranium mineralisation in the basal part of the Miocene sand sequence along the north-east trending Anabama-Redan fault zone and in a major tributary further north, close to the current course of Olary Creek. Most previous drilling focused on the Anabama Fault zone to the south of U3O8's tenement while the tributaries from the likely source region around Radium Hill which pass through EL3454 are lightly explored.

Olary Creek Project - Regional Geology and Prospects

U3O8 Limited completed one brief drilling programme at Olary Creek in 2006. Eight holes were completed for 230 metres due to limited rig availability. The broad spaced holes were drilled across the current drainage in an attempt to identify the extent of any buried palaeochannel. Only the margin of the channel was identified and no significant results were returned from the programme.

In an effort to clearly define the extent of the buried palaeochannel, U3O8 Limited completed a detailed gravity survey over part of the exploration licence. The gravity survey covered 80km² for a total of 485 stations, 200 metres apart and along one kilometre east-west traverses.

The survey clearly defined a significant buried channel system with tributaries running into it. A drilling programme is planned to test the geological characteristics of the palaeochannel and the presence of uranium mineralisation. The programme will be completed in the December 2007 Quarter.

Processed Gravity Image highlighting probably palaeochannel

Further drilling of the palaeochannel was completed in 2007.  Five broad spaced drill traverses were completed with holes spaced at 400 to 500 metres along the traverses.  The palaeochannel was clearly defined and thick sequences of sands identified in the south of the tenement.  Further drilling of the prospective sections of the palaeochannel occurred in 2008.

During a review of the project a significant zone of copper mineralisation was identified along the adjacent Mutooroo Ridge, within the Company's tenement.  A zone up to 7km long and 100 metres wide contains surface copper mineralisation, but very little drilling has been completed in the area.  One area, less than 500 metres long, has been tested by 8 drill holes with assays to   9.88 metres @ 1.57% Cu     and    5.23 metres @ 1.45% Cu