THE MILE 72 URANIUM PROJECT, NAMIBIA

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1 THE MILE 72 URANIUM PROJECT, NAMIBIA 1. INTRODUCTION The Mile 72 uranium project is located on the central coast of Namibia, approximately 115 km north of the town of Swakopmund and approximately 150 km north of the major port of Walvis Bay. The tenement (EPL 3308) totals some 72.6km 2 in area and is held in the name of Metals Namibia (Pty) Ltd, a wholly owned subsidiary of Metals Australia Ltd (Metals). Access to the project is via the C34 coastal highway which runs through the licence area. This highway extends from Walvis Bay, in the south, via Cape Cross, and on to the north, along the coast, into the Skeleton Coast Park. The Mile 72 project is situated within the Central Damara Uranium Province, which is one of the world s best known uranium provinces. This area contains major alaskite-hosted deposits and mines (e.g. Rössing (Rio Tinto), Husab (Extract Resources), Etango (Bannerman Resources) and Valencia (Forsys Metals)) and calcrete-hosted deposits and mines (e.g. Langer Heinrich (Paladin Resources) and Trekkopje (Areva)), along with several others. 2. EXPLORATION HISTORY In the 1970s a surge in the uranium price accelerated worldwide exploration for this nuclear fuel metal. In Namibia, radiometric surveys in the Mile 72 region by General Mining and Finance Corporation (Gencor) detected anomalous radioactivity associated with underlying granitic units. Exploration progressed in the region and resulted in the discovery of the Mile 72 deposit (386, ppm U 3 O 8, Non-JORC), which is located about seven kilometres to the southeast of Metals current project area. Gencor found that the mineralisation at Mile 72 was associated with carnotite, and minor uraninite, which is leached from the Figure 1 - Location of the Mile 72 uranium project underlying stratigraphy, primarily in the granites and alaskites. Further investigation found that the mineralisation has been emplaced within gypsum and calcite fracture infill, due to weathering of the stratigraphy and evaporitic processes. The area covered by Metals tenement (EPL 3308) was also historically explored for tin but it was not until Metals exploration team began to remove the surface cover at Mile 72 that the uranium potential of the project was recognised. Metals commenced exploration on the Mile 72 uranium project in 2007 and this work is now continuing in 2011.

2 3. LICENCE RENEWAL Ongoing exploration at Mile 72 was interrupted in 2008 by delays to the renewal of the licence when legal action was brought against Metals. Accordingly, the Namibian Ministry of Mines and Energy ( MME ) deferred renewal of the licence, pending the Court's decision confirming Metals rights to the licence. With the handing down of the judgement in November 2010, in favour of Metals, the Company requested the renewal of licence EPL As recently announced, the MME has now renewed licence EPL 3308 for a 2 year period from 18 May The Company has now recommenced its exploration activities. 4. STRATIGRAPHY The Mile 72 uranium project lies within a small depression on the central Namibian coast. A thin veneer of windblown sand and alluvial gravels, of varying thickness, covers much of the project area and masks the radiometric and geochemical signature of the underlying geology. Figure 2 A conceptual cross-sectional model of the Mile 72 project geology and uranium mineralisation. The basement stratigraphy is composed of quartzites and micaceous schists of the Khomas Subgroup metasedimentary rocks. These sediments have been intruded by several generations of granite and dolerite. The granitic units vary in mineralogy but include granite, pegmatite and alaskite. Primary uraniferous minerals are possibly associated with the alaskites at Mile 72, indicating that the deeper mineralisation may be similar in nature to that found at the nearby Rössing, Husab and Etango deposits. 5. URANIUM MINERALISATION Uranium mineralisation at Mile 72 is associated with a number of units within the basement stratigraphy, including metasediments, granites and pegmatite. This presence of uranium mineralisation in basement rocks at Mile 72 points to a possible primary source to the mineralisation from the intrusive alaskites. The reconnaissance mapping, sampling, prospecting and trenching undertaken all indicate that uranium mineralisation is found in two main zones. Firstly, there is mineralisation in the near-surface gypcrete cap/oxide zone, which occurs as the secondary mineral carnotite (hydrated uranium vanadate) and a variety of uranium hydroxides. Secondly, there is mineralisation in the primary zone, which occurs in alaskite and schist, which appears to be associated with uraninite (uranium oxide) and also secondary uranium minerals.

3 Figure 3 - The Mile 72 uranium project, looking west towards the Atlantic Ocean in the distance. Trenches in the middle distance cut across windblown sands and sub-crop. Low hills in the middle distance are outcrops of dolerite GYPCRETE CAP (OXIDE ZONE) The oxide zone at Mile 72 is a layer that extends from surface down to 4-5 metres depth. The gypcrete is hosted within variably weathered, jointed and fractured schist, and granite/alaskite. This material contains varying amounts of gypsum, occurring as either a replacement of the original lithologies, or as fracture infill. Sampling of the oxide zone has returned assay grades of greater than 2% U 3 O 8, with mineralisation observed as carnotite associated with the gypsum as well as weathered alaskite and granite intrusive rocks. This zone has the potential to host a significant shallow, high-grade uranium deposit. Figure 4 Uranium-mineralised rocks at Mile 72. Left - strong carnotite mineralisation in gypsum from the surface zone at Mile 72. Right - uraniferous alaskite from Mile 72 the smoky colour of the quartz is a result of damage to its crystal lattice by radioactive decay ALASKITES (PRIMARY ZONE) The pitting and trenching undertaken by Metals indicates that the uranium mineralisation at Mile 72 may originate from a primary or bedrock source. The primary source is considered to be the granite-alaskite rocks that have intruded into the basement country rocks within the project area.

4 The alaskites in the project area have returned assays of up to 2,000 ppm (0.20%) U 3 O 8. In addition, the associated schists are also mineralised, with many assays exceeding 200 ppm (0.02%) U 3 O GEOPHYSICAL EXPLORATION 6.1. GROUND RADIOMETRIC GEOPHYSICS In the early stages of exploration at Mile 72 it was determined that extensive windblown sand and alluvial cover blanketed much of the tenement area. A regional programme of ground radiometrics was devised and undertaken, utilizing 500 metre line spacing and radiometric readings taken from shallow pits at metre spacing along the lines. Figure 5 - Trench radiometric geophysics superimposed on ground radiometrics over the Mile 72 project area.

5 The programme was successful in highlighting two target areas along the south-eastern tenement boundary, where the cover is thinnest, namely the Kudu and Impala prospects. These prospects cover more than 11 kilometres of strike and were the focus of the company s exploration in AIRBORNE RADIOMETRIC AND MAGNETIC GEOPHYSICS A detailed airborne radiometric and magnetic survey was acquired over the project area utilising a fixed wing aircraft, at 200 metre line spacing, with an 80 metre sensor height, with radiometric readings taken every second. The sand and gravel covering much of the tenement resulted in a subdued airborne radiometric signature, in comparison to the ground radiometrics, but had no effect on the magnetic data. This data has resulted in the definition of a substantial radiometric anomaly that is known through subsequent trenching to correspond to uranium mineralisation in the subsurface TRENCH RADIOMETRIC GEOPHYSICS Radiometric surveying of the trenching has shown a good correlation between the geology and the radiometrics. The radiometric sampling highlights the uraniferous alaskite units and will assist in targeting future exploration, particularly drilling. A comparison between the earlier ground radiometrics, and the trench radiometrics highlights the effect that the thin veneer of gravel and sand cover has in blanketing the signature of the uranium mineralisation. The trench radiometrics clearly show a higher-level response than the ground radiometrics and also indicate that the mineralisation continues beneath the cover to the north of both the Kudu and Impala prospects. 7. RECONNAISSANCE SAMPLING Several phases of sampling have been undertaken at Mile 72, following the discovery of highgrade, near surface mineralisation in Reconnaissance sampling covered the Kudu and Impala prospects on the south-eastern boundary of the tenement and has returned highly significant results SAMPLING AT KUDU The Kudu anomaly extends over 11 square kilometres covering a strike length of approximately 5.5 kilometres and a width of over 2 kilometres. The anomaly shows peak radiometric values of over 5,000 uranium counts per second. Sample No U 3O 8 ppm U 3O 8 % M72 KDU M72 KDU M72 KDU 003 1, M72 KDU 004 2, M72 KDU 005 3, M72 KDU 006 1, M72 KDU 007 2, M72 KDU

6 Initial rock sampling over the Kudu anomaly returned a significant number of high-grade assays. These samples were often in excess of 1,000 ppm (0.1%) U 3 O 8, with the highest assayed sample (from the first phase of gypcrete sampling) returning a result of 3,152 ppm U 3 O 8. In early 2008 further sampling was undertaken at Kudu in an effort to penetrate deeper into the weathering profile and determine the primary source of the mineralisation. A number of small pits were dug to around one metre deep and samples were taken for assay. The pits showed an increase in the grade of the uranium mineralisation with depth within the gypcrete layer and have returned a number of outstanding high-grade assays, with the highest assayed sample returning a result of 23,113 ppm (2.31%) U 3 O SAMPLING AT IMPALA Sample No U 3O 8 ppm U 3O 8 % Geology M72 KDUP 001 5, Gypcrete M72 KDUP , Gypcrete M72 KDUP Basement Schist M72 KDUP 004 9, Gypcrete/ Schist The Impala anomaly extends over 7 square kilometres covering a strike length of approximately 4.5 kilometres and a width of over 1.5 kilometres. Only around 2 kilometres strike length of the Impala anomaly has been trenched. The anomaly shows peak radiometric values of over 1,000 uranium counts per second. The initial sampling over the Impala prospect returned a number of assays in excess of 150 ppm (0.015%) U 3 O 8. The highest assay returned being 455 ppm U 3 O 8. Sample No U 3O 8 ppm U 3O 8 % M72 IMP M72 IMP M72 IMP M72 IMP M72 IMP The Impala prospect is partially covered by sand and gravel terraces, which mask the surface expression of the anomaly. However the surface sampling continues to highlight the mineralised trend through this prospect, which appears to be similar in size to the Kudu prospect in the south. The success of the sampling at both Kudu and Impala resulted in the initiation of an extensive trenching programme at Mile 72, which is described below. 8. TRENCHING Reconnaissance sampling at Mile 72 demonstrated that the sand and gravel cover not only obscured the underlying geology but also the uranium mineralisation. A programme of trenching was initiated to remove this cover and allow geological mapping and sampling to be undertaken.

7 Several phases of trenching have now been completed at Mile 72, covering both the Kudu and Impala prospects. Exploration activities within the trench areas have included: Radiometrics Mapping Sampling 8.1. SPOT SAMPLING Spot sampling was undertaken within the trenches in areas of high radiometric response. Sampling shows widespread mineralisation throughout the Kudu area, with a number of samples grading over 5,000 ppm (0.5%) U 3 O 8. Results from the Kudu sampling include: Sample No. Trench No. U 3O 8 ppm U 3O 8 % Th ppm G1616 2A 2, G1623 2A 2, G1624 2A 5, G1249 3A 2, G1239 3A 3, F , G , G , G , G , G , G , G , G , G , The spot sampling across the Kudu trenches was designed to verify the radiometric response against the geochemical assays. The majority of samples were taken in areas of high radiometric response (greater than 500 cps) though a number of samples were also taken in areas of low response to test the background mineralisation levels of the area. A total of 358 samples were taken from throughout the trenches, with more than 50% of these samples returning assays in excess of 100 ppm U 3 O 8. Both the intrusive alaskites and the host schist contain uranium mineralisation at Kudu. Spot sampling produced assays of up to 1,977ppm U 3 O 8 within the alaskites, with the highest assay from the schist being 5,413 ppm U 3 O 8. The samples also show low levels of thorium, which is also typical of alaskite uranium mineralisation.

8 Figure 6 Trench and spot sample U 3O 8 assays for the southern Kudu prospect. The contoured image is calculated on the samples shown along the trenches

9 8.2. CHANNEL SAMPLING Following the spot sampling, a programme of channel sampling was undertaken at Kudu in Results from this channel sampling, received in 2008, included: Channel Sample No U 3O 8 ppm Channel 2A ppm (0.015%) U 3O 8 Channel 3A ,351 ppm (0.335%) U 3O 8 Channel ppm (0.021%) U 3O 8 A further 321 channel samples were collected from portions of 14 of the trenches at the Mile 72 uranium project. All channel samples were taken over 2m intervals. These samples supplement earlier trench samples reported in 2008, infilling previously unsampled areas or expanding upon previously identified mineralised zones. The trenches covered a 7km strike length of the known mineralisation through the Kudu and Impala prospect areas. The channel samples returned a number of highly anomalous and potentially economic uranium-bearing intervals. Individual samples assayed up to 1,158ppm U 3 O 8 over a 2 metre interval, while continuous sampling returned intervals of up to 24m with values of 190ppm U 3 O 8. This programme has only sampled a very small part of the excavated trenching. It is important to note that each of the samples analysed was taken from either below or away from the high-grade gypcrete cap that has previously yielded very high grade results at Mile 72. Samples include a number of rock types, including uraniferous schist and alaskite. The values recorded here show that there is significant uranium beneath the gypcrete cap that must now be tested at depth. Outstanding results from the programme include: Trench U 3O 8 intercept From To Easting Northing Easting Northing ppm including ppm ppm ppm including ppm ppm A ppm including ppm and ppm ppm ppm ppm ppm ppm

10 Figure 7 All assay results for trench sampling at Mile 72.

11 In addition 40 rock samples were collected largely from the Impala prospect area in the north. These samples were also taken from below the high-grade gypcrete cap and returned a number of highly anomalous and potentially economic uranium-bearing intervals. Individual samples assayed up to 1,686ppm U 3 O 8. Highlights include the following: Trench U 3O 8 (ppm) Easting Location Northing , Despite the extensive sampling, only a small proportion of the trenches has been analysed. Further analysis will be done directly as well as using other methods to identify subsurface uranium mineralisation, as detailed below. 9. PLANNED MILE 72 EXPLORATION PROGRAMME Metals is now recommencing exploration on the ground at Mile 72. This follows the hiatus caused by legal action against the Company and the subsequent Namibian Supreme Court's decision in November 2010 in favour of Metals ownership of the project. The licence was recently renewed for a 2 year period. A number of different approaches are now planned to commence in the near future at the project. Trench sampling will continue. Further systematic channel sampling will assist with definition of the near-surface expression of uranium mineralisation at the Kudu and Impala prospects. The area in which trenching has been utilised is in response to airborne and surface radiometric anomalies showing through in areas of thinner cover. However, much of the tenement has thicker sequences of sand and alluvial cover and consequently will not have allowed the detection of any buried channels, alaskite or other uranium mineralisation that occurs below this cover. In recognition of the fact that there may be further uranium mineralisation within the tenement and that the areas now being explored may just be part of a larger target, a number of other programmes are also planned to explore the covered areas of the tenement. Plans are well underway for a radon cup survey to be deployed over the entire area of the tenement that contains sand, alluvium and gypcrete cover, starting during the second half of This work aims to detect any radon gas arising from the natural radiogenic breakdown of buried uranium mineralisation under areas of sand and gravel cover. It is thought that this cover will mostly be less than 10-20m thick, although it is possible that larger and deeper channels may also lie under the alluvial cover. In order to better understand the depth, type and thickness of these cover areas an electromagnetic (EM) survey is also planned to be completed in conjunction with the radon cup survey. This work aims to determine the thickness of the cover sediments and examine the possibility of buried channels and other features under the sediments.

12 Results from the radon and EM surveys should be received in late 2011 and will then be used to design a follow up programme of further sampling, utilising trenching and drilling on the optimum targets generated. Metals Australia considers the Mile 72 uranium project to be an exciting opportunity for the company and now looks forward to receiving the results of this active and successful ongoing exploration programme. Competent Persons Declaration The information in this document relating to the geology and exploration results of the projects owned by Metals Australia Ltd is based on information compiled by Mr Kieron Munro, Exploration Manager for Metals Australia and a full time consultant to Metals Australia. Mr Munro is a member of The Australian Institute of Geoscientists, a Recognised Professional Organisation by the Australasian Joint Ore Reserves Committee, who has sufficient experience relevant to the style of mineralisation and types of deposits under consideration and to the activity which is being undertaken to qualify as a Competent Person as defined in the 2004 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. Mr Munro consents to the inclusion in this report of the matters based on his information in the form and context in which it appears. Forward-Looking Statements This document may include forward-looking statements. Forward-looking statements include, but are not limited to, statements concerning Metals Australia Ltd s planned exploration programme and other statements that are not historical facts. When used in this document, the words such as "could," "plan," "estimate," "expect," "intend," "may, "potential," "should," and similar expressions are forward-looking statements. Although Metals Australia Ltd believes that its expectations reflected in these forward-looking statements are reasonable, such statements involve risks and uncertainties and no assurance can be given that actual results will be consistent with these forward-looking statements.