Napperby

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Contact

Principal Office:

Toro Energy Limited
3 Boskenna Avenue
NORWOOD
South Australia 5067

ABN 48 117 127 590

Telephone: (08) 8132 5600
Facsimile: (08) 8362 6655
Email: info@toroenergy.com.au

Perth Office:

Toro Energy Limited
Level 2, 16 Ord Street
WEST PERTH
Western Australia 6005

PO Box 584
West Perth WA 6872

Telephone: (08) 9321 1411
Facsimile: (08) 9226 2958
Email: info@toroenergy.com.au

Napperby Project

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The Napperby project in the Northern Territory, northwest of Alice Springs, is an historic uranium prospect, comprising an extensive, near-surface, consistent mineralised zone that is relatively low grate, but is close to infrastructure. Toro Energy purchased this project through an option agreement with Deep Yellow, and is now undertaking a resource definition program aimed at increasing the contained tonnes of uranium. Toro has flagged that it will shortly initiate scoping studies aimed at identifying the key economic factors. Given the favourable political jurisdiction in which this resource lies, it is Toro’s intention to rapidly advance this project to an operating mine status.

PROJECT DETAILS

The Napperby project in the Northern Territory, northwest of Alice Springs, is a historic uranium prospect, comprising of an extensive, near-surface, consistent mineralised zone, that is relatively low grate, but is close to infrastructure. Toro Energy Limited purchased this project through an option agreement with Deep Yellow Limited, and is now undertaking a resource definition program aimed at increasing the contained tonnes of uranium. Toro has flagged that it will shortly initiate scoping studies aimed at identifying the key economic factors. Given the favourable political jurisdiction in which this resource lies, it is Toro’s intention to rapidly advance this project to an operating mine status.

PROJECT DETAILS

The Napperby project comprises a historic uranium prospect, New Well, discovered and explored by CRA Exploration and Uranerz in the late 1970’s, early 1980’s. This prospect is an extensive, near-surface, consistent mineralised zone that is relatively low grade, but is close to infrastructure. Toro Energy has an option agreement with Deep Yellow over the Napperby project which allows 100% purchase at a capped price at any stage over a three year period (see Figure 1).

Napperby’s current Inferred Resource prepared in accordance with the JORC code by Deep Yellow Ltd and announced to the ASX on 13 December 2006, is 1.9 million tonnes at 0.036% U₃O₈ for 670 contained tonnes of U₃O₈. This resource estimate was based upon an auger drilling campaign in 2006 over an area of 0.6km2 within the much larger mineralised zone defined by interpolation of anomalous drillholes in the Uranerz grid. This zone is the focus of resource definition drilling by Toro.

Figure 1 100% Toro via Option Agreement with Deep Yellow Ltd – ELs 24246 and 25606

LOCATION

The Napperby uranium project comprises of two exploration tenements, EL24246 and EL24060, and covers 1403 square kilometres. The Napperby prospect (referred to variously as the New Well prospect) lies within, and at the western end of EL24246, 175km northwest of Alice Springs (Figure 2). Access is via the sealed Tanami Highway, a comfortable 2 hour drive from Alice Springs. Accommodation is provided by Tilmouth Well Roadhouse, 12 km to the north of the project.

Figure 2 Plan showing Napperby project tenements EL24246 and EL24060 in regional context.
Digital Terrain Model base from NTGS Image Webserver.

HISTORY AND TENURE

Historically, the Napperby prospect mineralisation was discovered by CRAE in 1971 and was explored by Uranerz during the widespread uranium exploration activity in the 1970’s and 1980’s. EL24246 was granted to Paladin Energy Minerals NL, a subsidiary of Paladin Resources Ltd, a publicly listed company on October 11th 2004. Deep Yellow Limited subsequently acquired EL24246 from Paladin for cash and shares and retained a 2% gross royalty.

In May 2007, Toro Energy and Deep Yellow executed legal documentation for the Napperby Option Agreement that allows Toro a three year option-style period to advance the Napperby project and acquire 100% equity under certain conditions. In July 2007, all legal pre-conditions to this Agreement were fulfilled and Toro became the operator. As part of the finalisation of the Napperby Option Agreement, approximately 3.07m shares in Toro Energy were issued to Deep Yellow.

GEOLOGICAL SETTING

The Napperby project lies within the Arunta-Ngalia region of the Northern Territory. Basement is comprised of Palaeo- to Meso-proterozoic metasedimentary and granitic rocks. These are overlain by the Neoproterozoic to Devonian Ngalia Basin immediately north of the tenements, and in turn by Tertiary to Recent clastics, derived by erosion of highly-radiogenic basement uplifts to the north in the Reynolds Range.

EL24246 is underlain by shallow, partly outcropping granitic gneiss terrain. Overlying the crystalline basement is a broad, weakly incised palaeodrainage network with up to 150 m relief. Quaternary fluviatile and lacustrine sediments have been deposited within the drainage channels. The sediments are a complex mix of fluviatile sands, in which comprise of coarse sands, sandy clays, clayey sands and lacustrine clays; comprising sandy clays with carbonaceous matter, gypsiferous clays as well as, in parts, massive gypsum. Calcretes, in places variously friable and porous or thick and massive, sometimes indurated and silicified, occur at more than one horizon within the channel sequence. Aeolian sand and calcrete overlie and cap the palaeodrainage fill. The drainage is saline near the confluence with Lake Lewis.

DEPOSIT DESCRIPTION

The Napperby prospect comprises a historically defined ‘mineralised zone’ of near surface uranium mineralisation some 20 km in strike length occurring within a palaeochannel trending approximately east-northeast. At Napperby, the yellow uranium secondary mineral carnotite resides primarily in the palaeochannel sands and sandy clays, as smears, disseminations, pellets and blobs up to 5cm long. Calcrete also hosts carnotite as fracture coating and concretions. The uranium mineralisation is reported as carnotite with minor tyuyamunite in early Uranerz reports. Underlying the mineralised sands at a depth of approximately 8-10 m is a lateritised, transported granitic clay saprolite or palaeosol, characterised by very sticky dark red-brown clays containing very coarse angular quartz and feldspar. This rests on a very irregular palaeotopographic surface on radiogenic granite, with 10-100 m of relief on a kilometre-scale.

The Napperby mineralisation conforms to a calcrete deposit of the valley. This deposit type was defined by Butt and others (1984) as “valley deposits in calcrete and associated underlying sediments in the central channels of major drainage systems and in the platforms and chemical deltas where these drainages enter playas”.

PREVIOUS WORK

CRAE identified the Napperby deposit in 1971 by auger drilling. EL55 was taken out over the area in 1972 and a further 2002 shallow auger holes were drilled at 300m x 400m spacing. In 1973 regional shallow RAB drilling (59 holes) was carried out on 3x2km centres to the west, south and east of the known mineralisation but this failed to detect any additional mineralisation. One drill hole, south of Lake Lewis and now within EL24246, drilled 96m into red clays within a deep Tertiary palaeochannel. EL55 was surrendered in 1974.

Uranerz (UAL) explored the project from 1977 to 1982 holding various tenements up to 1984. The initial Uranerz drilling of the Napperby prospect was carried out over a rectangular grid with 300x400 m spacing on an east-west and north-south orientation, respectively (Figure 3). The objectives were to outline the mineralised area and to obtain a preliminary estimate of the global (in situ) resource. In a later phase of drilling, an area of 1300x700m with higher grade mineralisation was infill drilled at 100x100m spacing. A few smaller blocks were also investigated at 20m centres to provide critical information for the ore resource estimations. Uranerz drilling was carried out initially using twin-tube aircore drilling with reverse air circulation to avoid contamination problems, however, a number of drawbacks with this method were noted.

Figure 3 Plan showing historic drilling at Napperby.

Uranerz reported estimated reserves (prior to JORC) of between 5700 and 6200 tonnes contained U₃O₈ of average grade between 360ppm to 380 ppm U₃O₈ over several large ‘Areas’ within a 14km strike length of the mineralised zone. These resources are based on applying the thickness and grade of mineralised intersections (>200ppm cut-off) from individual drillholes to a range of influence for the drillhole dependent upon the grid spacing. ‘Ore’ blocks so defined within the larger Area, but not necessarily contiguous with other blocks, were summed to give a global tonnage and grade for the Area. Finally the Area grade tonnage figures were summed to provide a global resource estimate for the mineralised zone. Uranerz also collected bulk samples from Napperby for preliminary laboratory leach tests.

Uranerz drilled 4 deep regional holes along the south-west trending extension of the Napperby Creek, identifying oxidized sands to a maximum depth of 130 m west of the Napperby mineralised zone in a major Tertiary Channel. The drillhole (PDH5) closest to the assumed centre of the channel reached a depth of 70 m and did not penetrate into basement. CRA had earlier drilled a hole 10km south of PDH5 intersecting mottled (oxidized/reduced?) muds to a depth of 76 metres without reaching basement.

In 2005, Deep Yellow carried out an aircore drilling programme over the Napperby prospect which was expected to provide the basis for a JORC compliant resource estimation. However, insufficient air core sample recovery and generally lower than expected uranium grades made this objective unrealistic.

A review of the 2005 results prompted the need for direct visual and assay confirmation of the uranium mineralisation in situ, as a result of this, three sites were selected for trench excavation based on the better 2005 air core results. Trenches were excavated to between 6 and 7 m. The trenches were channel sampled down 1 m spaced vertical channels on each wall at nominal 1m sample lengths to evaluate the grade, distribution and controls on the exposed carnotite (assumed) mineralisation. Mapping of the trenches confirmed the presence of bright yellow mineralisation (assumed carnotite). These powdery encrustations and ‘painted surfaces’ in vuggy calcrete within a planar calcrete horizon, developed both above and below the standing water table (at 4.3 m) and as disseminations and blebs through sandy clays. The results of the trench sampling and comparison with the equivalent drill hole position confirmed the presence of higher grade mineralisation rather that what was indicated by the aircore sampling in one equivalent drill hole location only. However, more general vertical and horizontal sampling of the trenches indicated the presence of some higher grades a short distance away from the drill hole locations and hence, confirmed the erratic ‘nuggetty’ nature of the mineralisation.

In 2006, Deep Yellow mounted a drilling campaign over a smaller, higher grade area. 262 truck mounted large-diameter 60 cm auger holes were drilled into a 1000x600m rectangular block. Most of the holes were drilled on a 50x50m grid, with one line of drill holes along the main mineralised part of the palaeochannel drilled at 25m centres. Deep Yellow appointed FinOre Mining Consultants to carry out a Mineral Resource estimate of the 2006 drilled portion of the Napperby uranium mineralisation. FinOre prepared a resource estimate based on 3D block modelling using 25x25m x1m blocks with sub-blocks, as they were appropriate to honour the grade thickness boundaries. The parent block size was based upon the typical drill spacing. The Inferred Resource inventory has been estimated using all material that falls within the mineralisation outline and has a grade above 200 ppm U₃O₈. Using this criteria there is a resource of 1,900,00 tonnes at a grade of 360 ppm U₃O₈ for 670 tonnes or 1,500,00 lbs of U₃O₈ (rounded).

EXPLORATION COMPLETED BY TORO IN 2007

•   Airborne radiometric and magnetics (100m spacing) over both EL 24246 and EL 24606 to assist in mapping of mineralised zone and to assist in drill pattern planning. This survey has been flown and results were received in January 2008. Interpretation is on-going.

•   Airborne EM (Tempest) trial lines over both EL 24246 and EL 24606 to determine it’s effectiveness in predicting geology and mineralisation at Napperby deposit and regional context. This survey has highlighted an irregular granitic basement architecture onto which the mineralised sediments at Napperby have been deposited. Interpretation is on-going.

•   The drilling of 332 resource definition holes for approximately 3200m, adjacent to the existing Deep Yellow resource block during the period September to December 2007. Toro trialled various drilling and sampling methodologies (see Figure 4), including:

o    23 Auger holes (400 mm diam) that were gamma+/-caliper logged and sampled. To ensure a representative assay of the 0.5m samples, Toro used a large-volume sampling procedure involving dry-riffle-splitting and subsequent Boyd-crushing and rotary splitting prior to generation of a pulp for analysis.

o   182 Sonic core holes (150 mm diam) that were gamma+/-caliper logged and sampled via core split at approximately 0.5 m intervals. The Boart Longyear Sonic core drilling technique has been used for the first time in this environment. The technique utilises a patented resonance method that facilitates maximum core recovery in soft and unconsolidated sediments without the use of additives such as water, mud or air. Core is largely undisturbed and retains ambient pore fluids and therefore represents an excellent medium for accurate and representative sampling and assessing lithological information. The narrow sampling intervals (nominal 0.5m) and enhanced drilling and sampling procedures have facilitated increased vertical resolution of the orebody. The better understanding of grade distribution will improve the accuracy of scoping studies.

o   27 Aircore holes that were gamma-caliper logged.

o   Rigorous Quality Assurance and Quality Control (QAQC) system implemented, including staged duplicate samples, certified standard samples, and a trial and statistical comparison of uranium assay methods (ICP vs XRF). Regular field duplicates were collected and analysed from drill spoils and core to determine the mineralisation heterogeneity.

•   Preliminary hydrogeochemical testing of ~30 water bores that were cased during auger and sonic programs to define groundwater regime, solutes, controls on mineralisation, and possible vectors to ore.

•   Biogeochemical trial survey of Napperby deposit itself to determine if it is possible to recognise the established subsurface mineralisation via vegetation. This type of survey will subsequently be applied to areas of poor understanding of subsurface mineralisation, including zones that currently only have 300x400m drill pattern and areas beyond the current resource envelope.

Figure 4 Plan showing Toro Energy’s 2007 drilling program at Napperby and assay Batch 1 returned.

2007 DRILLING RESULTS UPDATE (27 APRIL 2008)

Significant assay results from the latest assay results for 204 holes (Batches 2,3,4 and 5) reported to the ASX on 27th April are shown in Table 1 and the extent of the drilling shown in Figure 4.

Hole ID	Width (m)	U3O8 ppm	U3O8 %
Sonic holes
NA00327	3.0	563	0.06
NA00333	2.0	566	0.06
NA00359	1.5	1043	1.10
Inc.	0.5	1692	0.17
NA00359	2.0	846	0.07
Inc.	1.0	1361	0.14
NA00373	0.5	933	0.09
NA00378	3.5	967	0.10
Inc.	1.0	2042	0.20
NA00389	2.0	570	0.06
NS00020	5.5	907	0.09
Inc.	1.5	2063	0.21
NS00021	2.7	539	0.05
NS00031	3.0	415	0.04
NS00033	3.0	633	0.06
Inc.	0.5	1397	0.14
NS00036	3.0	886	0.09
Inc.	1.0	1580	0.16
NS00038	1.5	744	0.07
NS00044	0.5	724	0.07
NS00046	2.3	566	0.06
NS00058	0.6	965	0.10
NS00060	1.5	1233	0.12
NS00067	3.1	633	0.06
NS00068	2.9	915	0.09
NS00071	1.3	609	0.06
NS00078	2.4	850	0.09
NS00080	1.5	748	0.07
NS00083	4.0	650	0.07
NS00084	3.5	610	0.06
NS00101	1.5	1226	0.12
NS00137	0.5	793	0.08

Table 1 Significant assay results from Napperby Batch 2 to 5

Figure 5 – Grade x Thickness plot for Assay results from Napperby

Figure 6 Grade x Thickness plot for Assay results from Napperby

The above grade x thickness diagram (Figure 6) idicates the semi-continuous nature of the uranium mineralisation in the areas drilled to date by Toro Energy. It is based on results within a 50ppm uranium mineralisation envelope. It is visual respresentation and does not respresent a resource level interpretation.

The Napperby mineralisation occurs in a shallow zone between 3 and 8 metres below surface in semi-consolidated sediments. This provides an approximate 1:1 strip ratio, and will allow selective mining of mineralised zones. Initial metallurgical leach tests are underway, and perology work on samples is still pending. Quality Assurance and Quality Control procedures continue to support the validity of the drilling, sampling and assay techniques used.

The calculation of an extended and upgraded resource will be undertaken with estimated completion in the latter part of second quarter 2008.