SUPPORTING R E P O R T A Geology R E P O R T Beverley Uranium Mine EL 3251 Geology Study Part 1 Prepared for Heathgate Resources Pty Ltd Level 3 45 Grenfell Street Adelaide, SA 5001 29 November 2006 42656422/05002 Project Manager: ………………………………….. URS Australia Pty Ltd Sally Modystach 25 North Terrace, Hackney Associate Environmental South Australia 5069 Australia Consultant Tel: 61 8 8366 1000 Fax: 61 8 8366 1001 Project Director: ………………………………….. Jerome Argue Senior Principal Civil Engineer Author: ………………………………….. Date: 29 November 2006 John Slade Reference: 42656422.05002 Geological Engineer Status: Draft B J:\JOBS\42213777\MINING PROPOSAL\SUPPORTING REPORTS\SUPPORTING REPORT A - GEOLOGY.DOC\24-AUG-07 Contents Executive Summary ------------------------------------------------------------------------------------------ES-1 1 Introduction------------------------------------------------------------------------------------------------ 1-1 1.1 Purpose of this Report 1-1 1.2 Literature Reviewed 1-3 1.3 June 1998 Environmental Impact Statement 1-3 2 Regional Geology---------------------------------------------------------------------------------------- 2-1 2.1 Regional Geology 2-1 2.2 Structure and Faulting 2-5 2.3 Mineralisation 2-6 3 Geology of the Beverley Deposit ------------------------------------------------------------------- 3-1 3.1 Geological Units 3-1 3.1.1 Namba Formation 3-1 3.1.2 Willawortina Formation 3-6 4 Geological Properties of the Beverley Deposit------------------------------------------------- 4-1 4.1 Geochemical Environment 4-1 4.2 Uranium Resources 4-1 4.3 Physiography 4-2 4.4 Soils 4-5 4.5 Geotechnical Characteristics of Sediments 4-5 4.6 Surficial Geology 4-6 4.7 Seismicity 4-7 4.8 Terrain Classification and Mapping 4-9 4.9 Terrain Characteristic in Relation to Development 4-14 5 Geological Comparison of Existing Mine and the EL 3251 Study Area ---------------- 5-1 5.1 Geology and Mineralisation 5-1 5.2 Seismicity 5-1 5.3 Soils and Terrain 5-2 6 References------------------------------------------------------------------------------------------------- 6-1 7 Limitations ------------------------------------------------------------------------------------------------- 7-1 J:\JOBS\42213777\MINING PROPOSAL\SUPPORTING REPORTS\SUPPORTING REPORT A - GEOLOGY.DOC\24-AUG-07 i List of Tables, Figures & Appendices Tables Table 2.1 Abbreviated Regional Stratigraphy Table 3.1 Stratigraphic Nomenclature of the Beverley Uranium Deposit Table 4.1 Composition of Beverley Mineralisation Table 4.2 Beverley Resource Summary Table 4.3 Terrain Pattern Descriptors Table 4.4 Terrain Unit Descriptors Table 4.5 Soil Surface Cover Materials Figures Figure 1.1 Study Area Figure 2.1 Regional Geology Figure 2.2 Water Well and Regional Geological Section A- A’ Locations Figure 2.3 Regional Geological Section A-A’ Figure 3.1 Beverley Deposit Stratigraphic Cross-section Locations. Figure 3.2 Beverley Deposit Stratigraphic Cross-Sections Figure 3.3 Alpha Mudstone Palaeosurface, South Westerly View Figure 4.1 Environmental Associations Figure 4.2 Seismicity Figure 4.3 Earthquake Hazard – Cornell-McGuire 6 Zones Figure 4.4 Terrain Pattern Map – Beverley Local Area Figure 4.5 Terrain Unit Map – Beverley Local Area Appendices Appendix 1 Seismicity Appendix 2 Terrain Patterns Associated with the Proposed Development J:\JOBS\42213777\MINING PROPOSAL\SUPPORTING REPORTS\SUPPORTING REPORT A - GEOLOGY.DOC\24-AUG-07 ii Executive Summary URS was engaged by Heathgate Resources Pty Ltd (Heathgate Resources) to undertake a desk-top study of the regional geology and geology of the southern portion of the Beverley Mine Exploration Lease 3251 (EL 3251). This report is proposed to function as a ‘Technical Report’ to support any necessary environmental approval documentation required for a mineral lease within EL3251. This report is based on documented information, and additional information from the progression of the exploration for resources for the Beverley Uranium Mine, to the period ending February 2006. It needs to be noted that exploration to date has been to the south and eastern sections of the study area. This exploration has been broad (i.e. large drill patterns of 200m x 200m) and therefore the definition of geological controls upon depositional environments, mineralization and structural settings are to within the accuracy of this exploration work. A large part of the regional geological discussion in the June 1998 EIS statement remains valid for the study area within EL3251. Therefore, the regional geology discussion is consistent with sections of the June 1998 EIS which are of relevance to the study area. Principal amendments detailed in this report incorporate reference to the study area and updated figures to illustrate the regional geology in context with the study area and the existing Beverley Mine. The report also details the further geological descriptions applicable to the study area, in particular, the recent discovery of additional mineral-bearing stratigraphy and the structural juxtaposition of the strataform mineralisation. The report briefly summarises the geological controls as conceived by Heathgate Resources’ geologists as possibly influencing or controlling the mineralisation of the study area. Following further definition drilling of the ore resource, additional information on the parameters controlling the mineralization at the Beverley Mine could be incorporated into this report. J:\JOBS\42213777\MINING PROPOSAL\SUPPORTING REPORTS\SUPPORTING REPORT A - GEOLOGY.DOC\24-AUG-07 ES-1 Introduction SECTION 1 1 Introduction 1.1 Purpose of this Report URS Australia Pty Ltd has been commissioned by Heathgate Resources Pty Ltd (Heathgate Resources) to oversee priority environmental studies for the southern portion of Exploration Lease 3251 (EL 3251) at the Beverley Uranium Mine (refer to the ‘study area’ in Figure 1.1). This report provides the details of a desk-top study of the geological characteristics of the study area and updates Section 6 ‘Existing Physical Environment– Regional Geology’ of the June 1998 Environmental Impact Statement (EIS) for the current mine operation. The report provides details of: • The regional structural, lithological and depositional factors controlling the mineralisation of the Beverley Uranium Mine resource. This information is based on reports from Heathgate Resources and publicly available maps. • A revised assessment of the seismic activity in the region, soil and terrain classifications and the geotechnical characteristics of the sediments contained within the study area of the Beverley resource. • An updated discussion of the Beverley Mine regional geology. This discussion is sourced primarily from the June 1998 EIS with minor amendments to incorporate reference to the study area. It also includes updated figures to illustrate the regional geology in context of the study area and the current mine operation. • Discussion of the particular geology of the study area, including the recent discovery of additional mineral-bearing stratigraphy and the geological controls as conceived by Heathgate Resources’ geologists as possibly influencing or controlling the mineralisation of the study area. J:\JOBS\42213777\MINING PROPOSAL\SUPPORTING REPORTS\SUPPORTING REPORT A - GEOLOGY.DOC\24-AUG-07 1-1 Introduction SECTION 1 Figure 1.1 – The Study Area Source: Revised drawing from Heathgate Resources (1998) J:\JOBS\42213777\MINING PROPOSAL\SUPPORTING REPORTS\SUPPORTING REPORT A - GEOLOGY.DOC\24-AUG-07 1-2 Introduction SECTION 1 1.2 Literature Reviewed To assist in the preparation of this report, the following documents have been provided by Heathgate Resources Pty Ltd: 1. Heathgate Resources, 1998, ‘Heathgate Resources Pty Ltd Beverley Uranium Mine Environmental Impact Statement – Main Report, June 1998. 2. Heathgate Resources, 1998, ‘Heathgate Resources Pty Ltd Beverley Uranium Mine Environmental Impact Statement – Response Document/Supplement, September 1998. 3. Heathgate Resources, 2004, ‘Heathgate Resources Pty Ltd, Deep South Tertiary Uranium Exploration EL2633 Paralana Progress report to end of July 2004’, Aug 2004. 4. Woodburn, 1996, ‘Heathgate Resources Pty Ltd Beverley Uranium Project Terrain Analysis and Assessment’, Woodburn Associates, Report No. AWA 1670, Dec 1996 5. Personal communications with Heathgate Resources employees on 1/3/06, 7/3/06 and 10/3/06, 1.3 June 1998 Environmental Impact Statement In June 1998, a detailed EIS was undertaken by Heathgate Resources. The EIS assessed multiple areas that are relevant to the study area within EL 3251. These sections include: • Regional Geology (June 1998, section 6.1) • Geology of the Beverley Deposit (June 1998, section 6.21 to 6.2.2) • Geochemical Environment (June 1998, section 6.2.5) • Uranium Resources (June 1998, section 6.2.6) • Geotechnical Characteristics of the Sediments (June 1998, section 6.2.7) • Surficial Geology (June 1998, section 6.3) • Seismicity (June 1998, section 6.4) • Physiography (June 1998, section 6.5) • Soils (June 1998, section 6.6.1) • Terrain Classification and Mapping (June 1998, section 6.6.2) • Terrain Classification in relation to development (June 1998, section 6.6.3) Relevant components of the above sections that apply to the study area are detailed in Section 2. J:\JOBS\42213777\MINING PROPOSAL\SUPPORTING REPORTS\SUPPORTING REPORT A - GEOLOGY.DOC\24-AUG-07 1-3 Regional Geology SECTION 2 2 Regional Geology 2.1 Regional Geology The Beverley Uranium Deposit lies in the western part of the Frome Embayment between Lake