Yeelirrie Channel Project

(E53/1154-1158, ELA53/1251, E36/540-542 and 569) - Encounter 80%, Avoca 20%

BHPB's Yeelirrie uranium deposit, located approximately 60kms south west of Wiluna, is the world's largest calcrete associated uranium deposit with a published resource of 52,500 tonnes of U 3O 8.

Previous exploration at Yeelirrie focused on the defined radiometric anomalies within the main Yeelirrie channel. Several areas along this defined channel are covered by non radioactive sheetwash sands and sediments that may obscure a radiometric response. Encounter believes these areas of shallow cover offer an excellent opportunity for the discovery of additional uranium resources up and down stream from the Yeelirrie deposit. With this in mind, Encounter has established an exploration tenement holding encompassing over 40 strike kilometres of the defined drainage channel to the northwest and southeast of the Yeelirrie deposit.

An area of specific interest was identified by Encounter following a review of the GSWA regional geochemical data on the Sir Samuel 1:250,000 sheet. Two data points with anomalous uranium values are situated wholly within the Encounter tenements on the margin of a lake system. This discrete uranium geochemical anomaly is within an area of thin sheetwash and lake cover, 25kms southeast of the Yeelirrie deposit. The two points are considered significant as they sit within the top 2% of the +20,000 sample GSWA dataset. A review of historical data has highlighted that there has been no systematic uranium exploration over the Yeelirrie South anomaly.

Encounter commenced its maiden drilling program at the Yeelirrie project in May 2006 and then completed a follow up drilling program in early July 2006.

Tenements covering the Geological Survey of Western Australia (GWSA) uranium geochemical anomaly at Yeelirrie South ( Anomaly 5) were recently granted. The anomaly is located 50km directly down stream of the Yeelirrie Deposit in an area of minimal historical uranium exploration. Systematic traverse drilling has been planned to cover the southern extension of the Yeelirrie Channel. In addition, a number of specifically targeted drill sections have been planned to cover Anomaly 5.

Bellah Bore East (E53/1158)

The work program at Bellah Bore East was designed to evaluate a discrete, high amplitude airborne radiometric anomaly. A field examination in the area of the airborne anomaly identified visible uranium mineralisation within an outcrop of silicified calcrete.

In early June 2006, five reconnaissance aircore holes (EYN001-5) were drilled at Bellah Bore East to determine the nature and depth extent of the outcropping uranium mineralisation. Drill holes EYN001 and EYN005 intersected a highly anomalous, near surface zone of uraniferous silicified calcrete that remained open along strike and to the west.

  • EYN001 - 7m @ 100ppm U 3O 8 from 1m, including 2m @165ppm U 3O 8 from 5m
  • EYN005 - 8m @ 123ppm U 3O 8 from 0m, including 3m @ 204ppm U 3O 8 from 0m

In July 2006 an 18 hole aircore drilling program was completed to test the immediate area to the north, south and west of the uranium mineralisation intersected in EYN001 and EYN005. Drill hole EYN064, located roughly in the centre of this calcareous zone, has intersected 3m @ 781ppm U 3O 8 from 4m including 1m @ 2,111ppm U 3O 8.

The 32 hole follow up program in December 2006 at Bellah Bore East was designed to test for strike repetitions and the continuity of near surface uranium mineralisation. The drilling confirmed the continuity of near surface uranium mineralisation at Bellah Bore East. Results include:

  • 8m @ 215ppm U 3O 8 from 0m incl. 2m @ 410ppm U 3O 8 from 1m
  • 10m @ 166ppm U 3O 8 from 0m incl. 2m @ 410ppm U 3O 8 from 1m

An Inferred Mineral Resource of 350,000t averaging 210 parts per million U 3O 8 for a contained U 3O 8 content of 160,000lb of U 3O 8 has been estimated in accordance with the JORC Code (2004).

Table 1. Bellah Bore East Resource Summary

Tonnes

U 3O 8 ppm

Contained U 3O 8 tonnes

Contained U 3O 8 pounds

350,000

210

73.5

160,000
The numbers in this table are rounded to reflect the accuracy of the estimation process and as a consequence exhibit rounding errors. Both Contained U 3O 8 tonnes and Contained U 3O 8 pounds are based on contained metal content and at this stage do not consider any mining, metallurgical or economic parameters.The estimate is based on a cut off of 100ppm U 3O 8 over a minimum downhole distance of 1m. Shallow aircore drilling has been completed on a nominal 150m by 150m grid. All grade values used in the calculation are based on chemical analysis of representative drill samples. A specific gravity of 2.1 was used in the calculation which is an assumed figure based on a literature search of similar deposits found in Western Australia and Namibia.The mineralised zone varies in vertical thickness from 1m to 6m. The main uranium mineral identified in drilling is carnotite which is a common mineral found in Surfical style deposit in Western Australia. All mineralised intervals in the modelled area are within 10m of surface and, therefore, are potentially easily mined.Figure 2 is an oblique view of the Bellah Bore resource area looking to the NNE showing the location of the drill hole collars used in the estimation. Additional drilling is required determine the extent of the higher grade core of the mineralisation centred on EYN064 (3m@781ppm U 3O 8 including 1m@2111ppm U 3O 8). The assay interval of 1m@2111ppm U 3O 8 in EYN064 was treated as an outlier in the resource model and cut to 500ppm U 3O 8. If further drilling can extend the high grade area it is anticipated that the resource grade will increase.

Bellah Bore East (E53/1158)

Drilling during the previous financial year defined an area of near surface uranium mineralisation approximately 500m by 150m and between 2m to 10m thick at Bellah Bore East.

Resource modelling of this satellite uranium discovery within the Yeelirrie Channel Project was completed during the year. An Inferred Mineral Resource of 350,000t averaging 210 parts per million U3O8 for a contained U3O8 content of 160,000lb of U3O8 has been estimated in accordance with the JORC Code (2004).

Altona Gap (E36/541)

Encounter Resources controls the 4km gap between BHPB's mineral claims at Yeelirrie and their South Yeelirrie prospect. A section of holes were drilled at the Altona Gap prospect during the year to deepen a line of previous drilling that had failed to test the complete calcrete profile. A second line of drilling was completed upstream of the Yeelirrie deposit to test an area of outcropping calcrete within E53/1154. Samples have been submitted and assays are pending.

Anomaly 5 (E36/540 & E36/542)

Drilling over the Geological Survey of Western Australia (GWSA) uranium geochemical anomaly at Yeelirrie South (Anomaly 5) was completed in January 2007. The program included a series of traverses across the southern extension of the Yeelirrie Channel and a number of specifically targeted drill sections over Anomaly 5. Results from this drilling defined an area of low level anomalism (<50ppm U 3O 8) within a broad zone of elevated vanadium and uranium in the regolith. Additional work in the area will focus on the anomalous trends defined in the broad drilling to determine the potential for satellite occurrences. Additional drilling will also target the base of the Yeelirrie palaeochannel for 'roll-front' style uranium mineralisation.

Middle Bore (E36/541 & E36/569)

Follow up drilling at Middle Bore to assess anomalous results identified within a broad southwest trending tributary returned similar low level uranium anomalism. Results included 2m @ 93ppm U 3O 8 and 2m @ 88ppm U 3O 8. Although these results are of interest, the potential of the area to host substantial uranium resource has been downgraded. The spacing between drill lines of approximately 3km leaves the potential for small, higher grade pods of mineralisation to be found.

Youno Downs (E53/1156)

A series of shallow reconnaissance drill traverses were completed over the Youno Downs radiometric anomalies. The areas of radiometric anomalism appeared to be coincident with zones of hydrothermal alteration of the granitic basement.

Re-sampling of a number of anomalous 5m composite samples at Youno Downs identified a narrow zone of 2m @ 112ppm uranium within the altered granitic bedrock. A review of the magnetics and radiometrics indicated a potential bedrock target to the west and south of the drilling.

Results confirm the near surface radiometric anomalism within these areas is related to weak metasomatic alteration of the subcropping granitic bodies. Coincident low level, rare earth element and uranium anomalism was found within the most altered portions of the granites with broad zones anomalism of up to 25ppm uranium within the bedrock. These results indicate the uranium source rocks in the north of the Yeelirrie Channel are significantly enriched in respect to the regional signature of between 5-10ppm uranium.

Additional drilling is planned in the coming year to test the bedrock target at Youno Downs.