Uranium mineralization in the South Texas Uranium Belt occurs as sandstone-hosted roll front deposits. The deposits are strata-bound, elongate, and often, but not necessarily, occur in the classic “C” or truncated “C” roll configuration. They can be associated with an oxidation front or can be found in a re-reduced condition where an overprint of later reduction from hydrogen sulfide or other hydrocarbon reductant has seeped along faults and fractures. The uraniumbearing sandstone units can themselves be separated into several horizons by discontinuous mudstone units, and separate roll-fronts and sub-rolls can occur in the stacked sandstone sequences.

The generally accepted origin of uranium mineralization in the Goliad Formation is from leaching of intraformational tuffaceous material or erosion of older uranium-bearing strata. The leached uranium was carried by oxygenated ground water in a hexavalent state and deposited where a suitable reductant was encountered. The oxidation/reduction (redox) fronts are often continuous for miles, although minable grade uranium mineralization is not nearly as continuous. The discontinuous nature of uranium mineralization is often characterized as “beads on a string” and is due to sinuous vertical and lateral fluvial facies changes in the permeable sandstone host horizons, coupled with ground water movements and the presence or absence of reducing material.

All known Goliad formation deposits at Palangana are multiple-stage roll-front-type deposits in a roughly “horseshoe shaped” configuration.

The Palangana uranium mineralization occurs in the Goliad sandstone unit at depths ranging from 200 to 650ft below the surface. The favorable sandstone unit is as much as 400ft thick and is bounded by mudstones. Within this unit are at least six separate sandstone horizons hosting roll-type uranium mineralization. These units are interbedded with mudstones that served as constraining aquitards for uraniferous groundwater movement. Mineralization occurs as uraninite and is fixed at positions where the migrating uranium bearing solutions encountered a suitable reductant. Uranium values in mineralized strata grades from 0.001% to several percent eU3O8. Mineralized thicknesses range from less than 1ft to several tens of feet in multiple, stacked roll front zones.

Identification of the uranium minerals has not been specifically determined for Palangana. Uraninite is commonly found coating quartz grains and within the interstices in most south Texas sand and sandstone tabular and roll-front deposits. Molybdenum commonly occurs as jordisite, a molybdenum sulfide, but no documentation of mineralogical analyses was available. Molybdenum is a significant accessory to uranium mineralization, with an erratic distribution. Select core assay reports were reviewed, with assays ranging from a background of approximately 50ppm to as high as 0.23% Mo. More typically, assays range from 0.02% to 0.04% where molybdenum levels are elevated.

Although there were few selenium assays available, it too is commonly elevated in the mineralized zones, its grade generally following uranium grades. It does not appear to have a relationship to molybdenum. The highest value observed in core analyses was 0.09% Se associated with a chemical U3O8 grade of 1.8%; Se grades of 0.01% to 0.03% in the mineralized zones were the most common. Background values were generally less than 10ppm. Vanadium is not common in the south Texas deposits and the few V2O5 assays available did not show an elevation in mineralized zones over background values of 0.01% - 0.03%.

Mineralization does not occur in all of the Goliad sands nor does it persist in the same sand intervals across the dome area. On the west half of the dome near what is referred to as the Dome trend, UCC developed the “C” sand zone. The NW Garcia and SE Garcia trends to the east of the dome also reside in the “C” sand zone. Also to the east of the dome, the PA-2 deposit, as well as the CC Brine, Jemison Fence and Jemison East trends all occur in the “E” sand, while the PA-1 deposit occurs in the “G” sand. Within these mineralized horizons, smaller roll fronts are evident that can be mapped as discrete bodies. Some of these bodies contain economic mineralization while others do not. The mineralized horizons occur as stacked intervals often separated by claystones. Generally they overlap one another but there are differences making a concurrent, multiple horizon recovery scenario not uniformly effective.

The company has one uranium mine located in the State of Texas, the Palangana Mine, which utilizes ISR mining and commenced extraction of uranium oxide (“U3O8”), or yellowcake, in November 2010.

The company utilize or plan on utilizing in situ recovery or ISR uranium mining for our South Texas projects including the Palangana Mine and will continue to utilize ISR mining whenever such alternative is available to conventional mining. When compared to conventional mining, ISR mining requires lower capital expenditures and has a reduced impact on the environment, as well as a shorter lead time to uranium recovery.

ISR mining involves circulating oxidized water through an underground uranium deposit, dissolving the uranium and then pumping the uranium-rich solution to the surface for processing. Oxidizing solution enters the formation through a series of injection wells and is drawn to a series of communicating extraction wells. To create a localized hydrologic cone of depression in each wellfield, more groundwater will be produced than injected. Under this gradient, the natural groundwater movement from the surrounding area is toward the wellfield, providing control of the injection fluid. Over-extraction is adjusted as necessary to maintain a cone of depression which ensures that the injection fluid does not move outside the permitted area.

The uranium-rich solution is pumped from the ore zone to the surface and circulated through a series of ion exchange columns located at the mine site. The solution flows through resin beds inside an ion exchange column where the uranium bonds to small resin beads. As the solution exits the ion exchange column, it is mostly void of uranium and is re-circulated back to the wellfield and through the ore zone. Once the resin beads are fully-loaded with uranium, they are transported by truck to the Hobson Processing Facility and transferred to a tank for flushing with a brine solution, or elution, which strips the uranium from the resin beads. The stripped resin beads are then transported back to the mine and reused in the ion exchange columns. The uranium solution, now free from the resin, is precipitated out and concentrated into a slurry mixture and fed to a filter press to remove unwanted solids and contaminants. The slurry is then dried in a zero-emissions rotary vacuum dryer, packed in metal drums and shipped out as uranium concentrates, or yellowcake, to ConverDyn for storage and sales.