Southern Cross Resources Australia Pty Ltd (Southern Cross) purchased Rio Tinto Exploration Limited’s share of the Northern Olary Joint Venture, including its interest in the subject EL 2310 Yarramba, in November 2000. Southern Cross has held the Tertiary uranium rights to EL 2310 since 1997. In this regard, the licence has long been an integral part of the Honeymoon Uranium Project, and was included in Southern Cross’s Environmental Impact Statement released in May 2000. The licence area encloses the mineral claims taken up over the East Kalkaroo uranium deposit, which are now also held by Southern Cross. The Tertiary sedimentary fill of the Yarramba Palaeovalley located within the licence area is highly prospective for occurrences of roll-front style secondary uranium mineralisation, and the underlying Meso-Palaeoproterozoic basement is prospective for primary base metals and gold. Sedimentary Uranium NL discovered the East Kalkaroo and Yarramba uranium deposits within the former sediment sequence in 1970; systematic base metal exploration, begun by CSR in 1984, led to discovery of the Hunter’s Dam zinc-lead-silver deposit in the latter's Bimba Suite metasiltstone and calc-silicate albite-magnetite rocks by Placer Exploration during 1989. Exploration work by Southern Cross on EL 2310 began in 1998 with a compilation of historical uranium drilling data in conjunction with similar work being done on its East Kalkaroo (and adjacent Honeymoon) tenements. 463 (28%) of the 1644 drillholes which were entered into the company's Yarramba Palaeovalley drillhole database were located within EL 2310. Activity included: · data acquisition and retrieval, including that for all drill holes within the Yarramba Palaeovalley; · data digitization, including geophysical logs (gamma ray, induction/SP) and collar locations to form the Yarramba drillhole spatial database; · stratigraphic and palaeovalley modelling; and · resource estimation. An Inferred Mineral Resource was estimated for the Yarramba prospect for the first time. The primary cut-off was 0.01% eU3O8, with up to 1 m of internal dilution allowed. Applying a secondary grade x thickness (GT) product cut-off of 0.12 m% for composited intercepts in each stratigraphic unit, the inferred uranium resources are: Ore (Mt) %eU3O8 eU3O8 (t) Thickness (m) Middle Sand 1.8 .025 440 4.8 Combined Middle Clays 0.17 .078 130 1.9 Upper Basal Sand 0.54 .056 300 2.6 Total 2.5 .035 870 3.7 (0.13 m% GT) The uranium grades are expressed in terms of equivalent U3O8 (eU3O8), as no disequilibrium adjustment was made, i.e. the estimate describes the amount of U3O8 present if the mineralisation is in radiometric equilibrium. During August to October1999, 21 vertical rotary mud stratigraphic holes with a total penetration of 2047 m (the H series holes) were drilled by Southern Cross within EL 2310 to better define the margins of the Yarramba Palaeovalley. Two of these holes were cased and completed as groundwater supply wells. [The drillhole metadata plus digital geological and geophysical logs are provided herein]. No field work took place on EL 2310 from late 1999 until late 2001. However, during this period a number of technical interpretations were made of the accumulated drillhole data with regard to Tertiary sedimentology, sequence stratigraphy and palaeovalley geomorphology, which are summarised by Southern Cross in the licence annual report of April 2001. Exploration activities conducted during the 2001-2002 licence year included: • flying of an orientation airborne EM survey across the Honeymoon Project during August 2001, at 115 m sensor mean elevation along 16 x 2 or 4 km spaced east-west lines using the 25 Hz Tempest system, with coverage on EL 2310 totalling 180.9 line km; • acquisition, gridding and processing of government and open file company magnetic and gravity datasets; • drilling of 51 vertical rotary mud holes for 4853 m to aid in channel definition and allow hydrological testing of the Tertiary aquifers; • drilling of 60 holes for 5189 m, including 4 with diamond cored tails, to sample Tertiary uranium mineralisation and basement rocks; • submission of 103 basement samples for multi-element assaying, plus 9 basement samples for petrological study. The orientation AEM survey data successfully mapped saline groundwater in the palaeochannel aquifers, and identified discrete basement conductors. The channel definition drilling and hydrological testing defined the hydrogeological environment of the Honeymoon Project area, and the Federal Minister for Environment and Heritage and the South Australian Minister for Minerals and Energy Resources approved both mining and export licences for uranium proposed by Southern Cross for solvent extraction at the Honeymoon mine. Exploration drilling repeated some of the isolated historical uranium intercepts made in the Yarramba Palaeochannel outside of the Honeymoon / East Kalkaroo deposit limits, but did not extend current resources. Basement sampling detected anomalous lead-zinc (up to 0.64% Pb and 0.45% Zn) in the Pelite Suite, and anomalous gold-copper close to Honeymoon. A granite to the south of Honeymoon was cored, petrologically examined and confirmed to be highly uraniferous (76 ppm U). A discrete basement AEM conductor was identified at the edge of the uraniferous granite, between two palaeo-tributaries, 2 km south of the Honeymoon and East Kalkaroo deposits. This anomaly coincides with the Bimba Position and with a zone of demagnetisation. It is also along strike from gossanous and geochemically anomalous basement intersected by Rio Tinto in 1998. This and several other basement targets require drill testing. Exploration activities conducted in the first year of renewed EL 2937, ending 29 April 2003, included: • processing of geophysical datasets and holistic integration in the GIS environment to create a new solid geology and structural interpretation of the basement under cover; •flying an airborne EM survey using the 25 Hz Tempest system over the entire licence area during May-June 2002, along 29 x 1 km spaced east-west traverses with 120 m mean terrain clearance (total coverage 447.8 line km); • performing validation and data entry of original digital downhole gamma ray log data. In addition, the capture of information about oxidation state and sulphide content from historic logging records was completed; and • carrying out digital capture of past basement exploration drilling datasets and integrating sets of digital open file data into the GIS environment. The new basement interpretation recognised a series of high-level non-magnetic granites which rim a deep-seated batholith. Strata of inferred D1 / D2 origin in the roof pendant have been thrust fault - stacked and folded into domal structures during emplacement of the deeper intrusion. A dominant north-south orientation of structures, which are interlinked and offset by north-east trending faults, was suggested by structural geology consultant Tim Hopwood as being part of the original basin architecture. The new AEM data successfully mapped the Tertiary palaeodrainage system and identified several discrete basement conductors on CDI depth slices below 150 m. Southern Cross reported that the integration of the AEM results with the factual and interpreted basement geology had made an important contribution to its understanding of the mineralising processes responsible for forming the Honeymoon uranium deposit, and had highlighted a number of new target areas. However, the validity of gamma ray logging to accurately detect and measure the content of uranium in the subsurface was questioned, and use of alternative methods was proposed. One potentially uraniferous basement target in particular had been lately noted as lying close to Honeymoon: this had never been drill tested, despite appearing as an anomaly in a number of datasets. Exploration activities conducted by Southern Cross in the second year of EL 2937 ending 29 April 2004 included: • construction and commissioning of a Prompt Fission Neutron (PFN) tool, a specialised geophysical device that is capable of accurately measuring uranium grades directly from boreholes; • completing the design, approval and construction of calibration pits for the PFN tool on-site at Honeymoon; • assisting with site clearance surveys over proposed drill sites by Native Title claimants; • drilling 43 vertical rotary mud holes for 5740 m during March-April 2004 to further explore the Yarramba palaeodrainage system; and • concurrently drilling 6 vertical rotary mud exploratory holes for 378 m within Mining Lease 6109, to confirm the metrics of known uranium mineralisation using PFN technology, and to evaluate whether incomplete knowledge about its qualities should be upgraded due to the existence of radioactive disequilibrium. Results of the drilling done outside of the mining lease were disappointing, with only spotty discontinuous uranium mineralisation (as measured by PFN logging) intersected within the Eyre Formation Basal sand at the historic Yarramba prospect downstream of Honeymoon, in holes located on either side of mineralisation discovered by historical gamma ray - logged drillholes. Drilling done at the eastern end of the Honeymoon deposit extended its boundary marginally in this direction. The most westerly hole, HML019, returned a result (4.5 m @ 0.32% U3O8) comparable with the better mineralised zones in the heart of the deposit. Mineralisation however decreased easterly, as did the depth to weathered basement. It was therefore thought as likely that there is a physical palaeo-topographic high separating the high grade Honeymoon deposit from the lower grade East Kalkaroo deposit. Drilling done at East Kalkaroo concentrated on the highest-grade portion of the historical resource. The results obtained by PFN logging confirmed the known grade of mineralisation, but no substantial increases due to disequilibrium were evident. Stratigraphically, it appeared that East Kalkaroo is more clayey than Honeymoon, a factor that could limit the potential for this portion of the palaeochannel to host substantial undiscovered mineralisation. Further drilling on the mining lease was recommended in order to confirm and better delineate the East Kalkaroo uranium deposit. Target refinement and drill testing was recommended for the basement.