Uranium deposits in the Dewey-Burdock Project are sandstone, roll front type. This type of depositis usually “C” shaped in cross-section, with the down gradient center of the “C” having the greatest thickness and highest tenor. The “tails” of the “C” are usually much thinner and essentially trail the “roll front” being within the top and bottom of the sand stone unit that is slight lyless permeable.

These “roll fronts” are typically a few tens of feet wide and often can be thousands of feet long. Uranium minerals are deposited at the interface of oxidizing solutions and reducing solutions. As the uranium minerals precipitate, they coat sand grains and partially fill the interstices between grains. As long as oxidizing groundwater movement is constant, minerals will be solubilized at the interior portion of the “C” shape and precipitated in the exterior portion of the “C” shape, increasing the tenor of the orebody by multiple migration and accretion. Thickness of the orebody is generally a factor of the thickness of the sandstone host unit. Mineralization may be 10 to 15ft thick within the roll front while being inches to feet thick in the trailing tail portions. Deposit configuration determines the location of well field drillholes and is a major economic factor in ISR mining.

The uranium deposits in the southern Black Hills region are characteristic of the Rocky Mountain and Intermontane Basin uranium province, United States (ref., Finch, 1996). The uranium province is essentially defined by the extent of the Laramide uplifts and basins.

Roll-front sandstone uranium deposits formed in the continental fluvial basins developed between uplifts. These uranium deposits were formed by oxidizing uranium-bearing groundwater that entered the host sandstone from the edges of the basins. Two possible sources of the uranium were uraniferous Precambrian granite that provided sediment for the host sandstone and overlying Tertiary age (Oligocene) volcanic ash sediments. Major uranium deposits occur as sandstone deposits in Cretaceous and Tertiary age basin sediments. Cluster size and grades for the sandstone deposits range from 500 to 20,000t U3O8, at typical grades of 0.04 to 0.23 percent U3O8.

Ore mineralogy consists of uraninite, pitchblende and coffinite with associated vanadium in some deposits. Typical alteration in the roll-front sandstone deposit includes oxidation of iron minerals up- dip from the front and reduction of iron minerals down-dip along advancing redox interface boundaries.

Size and shape of individual deposits can vary from small pod-like replacement bodies to elongate lobes of mineralization along the regional redox boundary.

Historical drillhole data (electric and lithology logs), along with Azarga’s confirmatory drilling results confirm that the mineralization at Dewey-Burdock is a roll front type uranium deposit. This is determined by the position of the uranium mineralization within sandstone units in the subsurface, the configuration of the mineralization and the spatial relationship between the mineralization and the oxidation/reduction boundary within the host sandstone units.

The Dewey-Burdock mineralization is located at depths of 550 to 800ft below surface at Dewey and 300 to 600ft below surface at Burdock, as several stacked horizons, which are sinuous and narrow but extend over several miles along trend of mineralization. The deposits are planned for ISR mining by development of individual well fields for each mineralized horizon. A well field will be developed as a series of injection and recovery wells, with a pattern to fit the mineralized horizon, typically a five spot well pattern on 50 to 150ft drillhole spacing. Hydrogeological investigations suggest that an average 100ft pattern will be acceptable for the Project.

The ISR benefits are substantial in that no tailings are generated,surface disturbance is minimal in the well fields, and restoration, reseeding, and reclamation can begin during operations. As a particular well field is depleted, groundwater restoration will begin immediately after, significantly reducing both the time period of post-production restoration, and the cumulative area not restored at any point in time. At the end of the project life, affected lands and groundwater will be restored as dictated by permit and regulatory requirements.

The design of the Project is consistent with that of currently and historically operating ISR facilities. It includes no untested technologies or equipment.

The Dewey-Burdock uranium resources are potentially mineable by in-situ leach and recovery (ISR) mining methods, and this is the basis upon which further conceptual mine and process plant design are predicated. Recovery of the estimated mineral resource is projected at 80 percent from the mineral deposit placed underneath of patterns, through to feed to the plant.

It is also projected that 100 percent of the resource will be placed under a mining pattern and an average 0.5 percent recovery will be realized during restoration thus accounting for a total estimated recovery of 80 percent of the total mineral resource not including any plant losses. Therefore, the overall potential yellowcake production is estimated to be 9.69 million pounds.

The proposed, fully constructed central processing plant (CPP) will have four major process circuits: the uranium recovery/extraction circuit (IX); the elution circuit to remove the uranium from the IX resin; a yellowcake precipitation circuit; and the dewatering, drying and packaging circuit. The
Satellite facility will include IX and resin transfer systems to provide loaded resin to the CPP for removal of uranium from the resin and further processing at the CPP.

One CPP and one Satellite Facility are proposed for the project. The CPP will be located at the Burdock site and the Satellite Facility will be located at the Dewey site. The distance between the two facilities is approximately four miles.