Uranium in Zambia

The occurrence of uranium in Zambia is well documented, yet to date no formal production has commenced. To address this, the Zambian government is well advanced in completing its uranium mining policy, with a stated aim of encouraging exploration companies to commercialise discoveries.

Zambezi Resources Uranium Rights Agreement

Lithic Metals and Energy can earn into uranium rights over 6800km² of granted tenure in Zambia. Although very lightly explored for uranium, the license areas are highly prospective and include a number of high priority targets including the Oryx prospect, where uranium mineralisation >6% U3O8 was discovered in 2006 by Zambezi Resources.

Lithic has entered into a Heads of Agreement with Zambezi Resources Limited, under which the Company can earn 51% of the uranium rights over the project licenses by spending US$5 million in 2.5 years.

Lithic must spend a minimum of US$3M before it can withdraw from the Agreement, of which US$2M must be spent on the Chumbwe license, where the Oryx project is located.

The uranium rights are held by two Zambezi Resources Zambian subsidiaries; Chalimbana Resources and Oryx Resources. Oryx Resources holds the uranium rights to the Chumbwe license, whilst Chalimbana Resources holds the uranium rights to the other three licenses. Lithic will own 51% of each subsidiary upon completion of its earn-in obligations.

Once Lithic has earned its 51%, Zambezi Resources can elect to contribute to exploration expenditure or dilute to a minimum 25%. Lithic can earn up to 75% in Oryx Resources and Chalimbana Resources by sole funding exploration in each company to the completion of a Definitive Feasibility Study (DFS) on a JORC compliant uranium resource for each company.

Upon completion of a DFS and on making a decision to mine, should Zambezi Resources elect not to contribute to mine capital costs, their interests will dilute until it falls below 10%, when their interest will convert to a 2.5% Net Smelter Royalty on any uranium produced.

Licenses

The four licenses are known as Chumbwe (PL 227), Mpande (PL 220), Mulungushi (PL 224) and Rufunsa (PL 279), which collectively cover 6,800km² of prospective southern Zambian lithology.

Chumbwe and the Oryx prospect

The most advanced project within the Zambian uranium assets is the Oryx project, located within the Chumbwe license approximately 80km from the capital city of Lusaka.

Oryx was initially defined as a 12km² intense radiometric anomaly identified by an airborne geophysical survey completed by Zambezi Resources in late 2005. Field reconnaissance of the anomaly revealed the presence of davidite, a heavy titanium-iron oxide mineral that contains significant uranium and rare earth elements including yttrium, cerium and lanthanum.

Initial exploration activities included mapping, trenching, soil sampling, a ground radiometric survey and rock chip sampling. The majority of this work focused the north eastern corner of the radiometric anomaly over peak values.

Trenching identified significant uranium grades over widths of up to 50m, with peak value of 1527ppm U3O8 (0.15% U3O8). Selected sampling of surface accumulations of davidite returned peak assays of up to 6.44% U3O8.

Surface mineralisation in the form of davidite over a wide area prompted the completion of a high resolution helicopter radiometric survey over the Oryx prospect, which identified an untested peak uranium anomaly several kilometers long to the west of where exploration activity was conducted.

Exploration will focus on defining the extent and tenor of mineralisation across the entire radiometric anomaly through mapping, trenching and drilling.

Oryx Metallurgy

Davidite-bearing material was collected and submitted to MINTEK Laboratories of South Africa to confirm the likely metallurgical characteristics of the Oryx mineralisation. Test work on a sample grading 4.44% U3O8 extracted 68% of the uranium over a 6 hour period under pressure acid leaching conditions.

The Mpande Project

The Mpande license has partial radiometric and magnetic survey coverage, which has delineated a number of high order radiometric uranium anomalies of various geometries.

An 8km long elongated uranium radiometric anomaly (eight times background uranium levels) at Mvula has received limited field investigation in the form of mapping, rock chip sampling and spectrometer profile surveys.

This work has confirmed high uranium readings in hand held spectrometry, with a “hot spot” some 2km in strike length. Mapping has identified a dolomitic schist as the host lithology, which has an apparent width of up to 150m. Lithic will complete mapping and surface sampling of the Mvula anomaly in preparation for drill testing in the 2008 field season.

A number of other high priority radiometric uranium anomalies occur within the license area, which will be ranked for evaluation after the completion of a major airborne radiometric and magnetic survey over the untested portions of the Mpande license.

Mulungushi

Approximately 1/3 of the Mulungushi license is covered by airborne radiometric survey data, with five high-order uranium radiometric anomalies defined. Lithic has commissioned a major aeromagnetic and radiometric survey over the remaining untested portion of the license area and on completion will rank targets and commence on-ground exploration.

Rufunsa

 

This license remains relatively unexplored and will be covered by airborne geophysical survey as soon as is practical.