Resources Evaluation Nuclear Fuel Resources Boston October 13 – 14, 2010 Jean René BLAISE

The evaluation of the uranium potential is an ongoing activity throughout the life of the mine, from exploration to development and production. Various decisions have to be made and will have important financial implications: - Halt or continuation of the exploration and development work, - Opening of a new mine, - Increase of production capacity, - Shut-down of the mining operations. Nuclear Fuel Resources – October 13-14, 2010

 Different stages of an ore reserve estimation –The resource database –The geological model –In situ resource evaluation –Estimation of the recoverable reserves –Ranking of the reserves –Quality of the estimation –Classification of resources and reserves Nuclear Fuel Resources – October 13-14, 2010

 The Resource Database The Resource Database is established by the collection, verification, recording, storing and processing of the exploration data and forms the foundation necessary for the estimation. The Resource Database typically will include : - geological data (e.g.lithology, mineralization, alteration, and structure), - survey data, - geophysical data, - geochemical data, - assay data, - rock quality - bulk density information. Nuclear Fuel Resources – October 13-14, 2010

 The Resource Database A Mineral Resource must have reasonable prospects of economic extraction. Consequently, preliminary data and information concerning a number of factors (e.g. mining, metallurgy, economics and social and environmental sensitivity) will be collected and assessed during the estimation of a Mineral Resources. Nuclear Fuel Resources – October 13-14, 2010

 The Resource Database The establishment of a QA/QC program (Quality Assurance/Quality Control) of all data is essential during the establihmeny of a resource database. This program concerns: Data verification, drill sample recovery, sample size, sample preparation, analytical methods, the use of duplicates/blanks/standards, effects of multiple periods of data acquisition and consistency of interpretation in three dimensions. The results of the QA/QC program form part of the database and must be recorded. Nuclear Fuel Resources – October 13-14, 2010

 The Resource Database A database consists of two types of data, primary data and interpreted data. Primary data are parameters amenable to direct physical measurements. Examples include assays, survey data, and geological observations. Interpreted data sets are derivations or interpretations of primary information. Examples are geological projections and block models. Nuclear Fuel Resources – October 13-14, 2010

 The Resource Database Today most databases are generally maintained in an electronically-stored digital format. Hand-printed tables with well-organized information may also form a database. It is recommended that data be stored digitally, using a documented, standard format and a reliable medium that allows for easy and complete future retrieval of the data. Nuclear Fuel Resources – October 13-14, 2010

Standardisation of the radiometric data Variations caused by the type of probe used Corrections related to measuring conditions in the drill holes Counting losses Nuclear Fuel Resources – October 13-14, 2010

Radiometry – Grade correlation Radiometry measured in drill holes cannot assimilated to a grade: Only 2.1 % of the « gamma » are derived from the Uranium group, the remainder comes from Radium B (Pb 214) and C (Bi 214) A regression curve between the 2 variables can be established and extrapolated to the whole orebody. Nuclear Fuel Resources – October 13-14, 2010

 Radiometry – Grade correlation Nuclear Fuel Resources – October 13-14, 2010

 The Resources Database Grid of information (trenches, drill holes, mining works, …) Data grid should be regular and properly located in regards to the trend size and the shape of the mineralization Information must support the whole mineralized area. Closer spacing to define geostatistical parameters. Nuclear Fuel Resources – October 13-14, 2010

 The Resources Database Geological probing parameters Specific porosity ResistivityNeutronScintillometry These parameters will be used for the interpretation of the geological model Nuclear Fuel Resources – October 13-14, 2010

 The Resource Database Geographical position of the measure: Topographical survey of drill holes Hole deviation measurements Survey of the mining works Nuclear Fuel Resources – October 13-14, 2010

 Geological interpretation All geological information within the deposit should be transposed from plans onto sections (or vice versa) to confirm reliability and continuity using all available data (drill holes, mine workings, etc.). Two directions of vertical sections (usually orthogonal) and plans should be used to ensure manual interpretations are internally consistent. Nuclear Fuel Resources – October 13-14, 2010

 Geological interpretation Geological interpretation is frequently completed in a three dimensional (3D) computer environment. Computer assisted interpretations should be validated on plan and orthogonal section to evaluate the reliability of the geological interpretation. Nuclear Fuel Resources – October 13-14, 2010

 Geological interpretation Mineralization may be defined or limited by some combinations of features such as structure, lithology and the alteration envelope. These limits or boundaries should be used to constrain the interpolation of grade or quality within the model. Deposits can comprise more than one type of mineralization. The characteristics of each type will likely require different modeling techniques and/or parameters. Nuclear Fuel Resources – October 13-14, 2010

 Geological model Minimum components of a model Limits of the mineralized bodies at different cut-offs Topographic surface Contours of mining (stope outlines, pit contours, …), if there is active mining Nuclear Fuel Resources – October 13-14, 2010

Economic Requirements Cut-off grades used for resources evaluation are largely determined by reasonable long term metal price(s), mill recovery and capital and operating costs relating to mining, processing,administration, among others. All assumptions and sensitivities must be clearly identified. Cut-off grade must be relevant to the grade distribution. The mineralization mustexhibit sufficient continuity for economic extraction under the cut-off applied. Nuclear Fuel Resources – October 13-14, 2010

Estimation techniques Methods range from polygonal or nearest neighbor estimates, inverse distance to a power, various kriging approaches (e.g. ordinary kriging, multiple indicator kriging) through to more complex conditional simulations. The estimation uses methods that operate on variables (grade, grade-thickness) in a 2 or 3 dimentionnal space. Nuclear Fuel Resources – October 13-14, 2010

 In situ resource evaluation Estimation obtained, within the enveloppe defined by the geological model, using an above background cut off No mining cut offs or constraints are applied to the geological estimation There is no change in time of this estimation without new data. Nuclear Fuel Resources – October 13-14, 2010

 In situ resource evaluation Precision of the estimation The precision of the estimation of the geological resources is the sum of the relative variances resulting from the errors on each variable: Precision of the density Precision of the informing samples Precision on volume Precision on the estimation of the mean value Nuclear Fuel Resources – October 13-14, 2010

 Estimation of recoverable reserves Due to the spatial variability of the quality of the ore, the overall resources are rarely entirely mined. Recoverable reserves depend on: The cut off defined by the costs The support of the selection unit The information ultimately available at the time of the selection. Nuclear Fuel Resources – October 13-14, 2010

 Mining Requirements Mining assumptions for a Mineral Reserve include: Continuity of mineralization, Methods of extraction, Geotechnical considerations, Selectivity, Minimum mining width, Dilution, Percent mine extraction. Nuclear Fuel Resources – October 13-14, 2010

 Estimation of recoverable reserves Estimation methods: Service variable method Disjunctive kriging Uniform conditioning method Models without edge effect Conditional simulations Nuclear Fuel Resources – October 13-14, 2010

 Integration of technical constraints Open pit –Overburden –Pit slope –Waste mining cost –Ore mining cost –… Nuclear Fuel Resources – October 13-14, 2010

 Integration of technical constraints Underground mining - Access to the block - Extraction cost - Ventilation - Dewatering - … Nuclear Fuel Resources – October 13-14, 2010

 Classification of resources and reserves Reasonably Assured Resources (RAR) refers to uranium that occurs in known mineral deposits of delineated size, grade and configuration such that the quantities which could be recovered within the given production cost ranges with currently proven mining and processing technology, can be specified. Nuclear Fuel Resources – October 13-14, 2010

 Classification of resources and reserves Reasonably Assured Resources (RAR) Estimates of tonnage and grade are based on specific sample data and measurements of the deposits and on knowledge of deposit characteristics. Reasonably Assured Resources have a high assurance of existence. Nuclear Fuel Resources – October 13-14, 2010

 Classification of resources and reserves Inferred Resources refers to uranium, in addition to RAR, that is inferred to occur based on direct geological evidence, in extensions of well-explored deposits, or in deposits in which geological continuity has been established but where specific data, including measurements of the deposits, and knowledge of the deposit’s characteristics are considered to be inadequate to classify the resource as RAR. Nuclear Fuel Resources – October 13-14, 2010

 Classification of resources and reserves Inferred Resources Estimates of tonnage, grade and cost of further delineation and recovery are based on such sampling as is available and on knowledge of the deposit characteristics as determined in the best known parts of the deposit or in similar deposits. Nuclear Fuel Resources – October 13-14, 2010

 Classification of resources and reserves Prognosticated resources refers to uranium, in addition to inferred Resources, that is expected to occur in deposits for which the evidence is mainly indirect and which are believed to exist in well-defined geological trends or areas of mineralisation with known deposits. Nuclear Fuel Resources – October 13-14, 2010

 Classification of resources and reserves Prognosticated resources Estimates of tonnage, grade and cost of discovery, delineation and recovery are based primarily on knowledge of deposit characteristics in known deposits within the respective trends or areas and on such sampling, geological, geophysical or geochemical evidence as may be available. Nuclear Fuel Resources – October 13-14, 2010

 Classification of resources and reserves Speculative Resources (SR) refers to uranium, in addition to Prognosticated Resources, that is thought to exist, mostly on the basis of indirect evidence and geological extrapolations, in deposits discoverable with existing exploration techniques. Nuclear Fuel Resources – October 13-14, 2010

 Classification of resources and reserves Speculative Resources (SR) The location of deposits envisaged in this category could generally be specified only as being somewhere within a given region or geological trend. As the term implies, the existence and size of such resources are speculative. SR are normally expressed in terms of uranium contained in mineable ore, i.e., in situ quantities Nuclear Fuel Resources – October 13-14, 2010

 Resources classification Nuclear Fuel Resources – October 13-14, 2010

Resources classification Nuclear Fuel Resources – October 13-14, 2010

ESTIMATION OF MINERAL RESOURCES and MINERAL RESERVES BEST PRACTICE GUIDELINES Adopted by CIM Council on November 23, Nuclear Fuel Resources – October 13-14, 2010

The JORC Code and Guidelines The JORC Code provides minimum standards for public reporting to ensure that investors and their advisers have all the information they would reasonably require for forming a reliable opinion on the results and estimates being reported. Nuclear Fuel Resources – October 13-14, 2010