Rose Petroleum plc



More uranium; but copper disappoints

Userfiles/Image/mineweb.gifBy: Rhona O'Connell

LONDON ( - Some months ago VANE Minerals, which is
exploring for precious metals using the database that used to belong to Freeport McMoRan, was still being quite coy about the whereabouts of its uranium prospects. They turned out to be in Northern Arizona. in which VANE had obtained the exploration rights to 16 properties in the breccia pipe district of Northern Arizona in the Colorado Plateau. The company has now announced an agreement over additional uranium projects, also in the Colorado Plateau Uranium District but in south-east Utah, and also took the opportunity to provide an update on its Choix copper prospect in Mexico.

Vane is listed on AIM (ticker VML, market capitalisation £18.6 million or US$ 32 million) and was incorporated in 2002. The senior executives in VANE are former senior officials at Freeport and they negotiated an agreement with Freeport, when that company disbanded its exploration programme, providing VANE with an exclusive right to review the exploration files (of which there are more than 7,000) in the Freeport Databank. Over 85% of these prospects have now been reviewed and the company recently announced an extension of the agreement, which now runs to 30 June 2006.

The results have been encouraging and VANE has commenced underground development and ore production at its Diablito gold-silver mine, has completed phase two and three drilling programmes at the Mina Charay gold-silver prospect in Mexico and has mineral investigation permits covering 3,445 square kilometres in Paraguay.

The newer developments concern the uranium prospects and the new agreement on the Choix copper prospect in Mexico. This later is probably better dealt with first. Six drill holes were drilled on the Choix copper prospect, which lies in the State of Sinaloa in Mexico. The newly-received assay results are disappointing and indicate that the strongly mineralised porphyry outcrops at surface lack "roots" and are actually only isolated xenoliths or blocks "floating" on the underlying batholithic rocks. The highest identified grade was 0.14% copper by comparison with 1.50% copper on surface. VANE has now discharged all its obligations regarding the property and has no further financial obligations.

Overall expenditure on the project was les than $100,000 and it is to VANE's credit that it has not only made this announcement promptly but also demonstrates that it can look efficiently at new prospects and walk away when it needs to. Commenting on these results, Chairman Michael Spriggs said that "Although the results of the Choix copper project have disappointed, they have shown that the Company is capable of effectively turning these projects over cheaply and efficiently. The Company's ability to utilise its Freeport database and the contacts of the principals to create substantial deal flow, together with the cash flow from the Diablito gold/silver project in Mexico, enable VANE to evaluate a large number of prospective projects, and we will continue to do so."

In a happier vein, the uranium portfolio in Arizona is regarded as strong and the latest acquisition augments the position. VANE's US subsidiary, VANE Minerals (US) LLC has entered into an agreement with the private company Happy Jack Minerals. This covers the Happy Jack mine and surrounding claims in the San Juan County of south-eastern Utah. The Happy Jack mine was operated predominantly by Atlas Minerals and produced 3.1 million pounds of U3O8 between 19459 and 1982 when adverse market conditions forced the closure not only of Happy Jack, but of most of the uranium mines on the Colorado Plateau. VANE geologists have delineated a resource of approximately 155,000 pounds of U3O8 contained in several pods, some of which are accessible via existing mine workings and which could therefore be put into production with minimal development work. A review of previous results has shown nine additional exploration targets in which previous drilling intersected ore-grade mineralisation, bur that had not been explored with additional drilling or sampling. VANE geologists estimate that there is a potential resource on the property of a million pounds of U3O8.

The property consists of seven patented lode claims, seven unpatented claims and 29 unpatented claims staked by VANE during the due diligence agreement and all of these are now included in the agreement. This agreement is for an initial period of five years, extendable for a further five years on reaching production.

VANE will submit an exploration plan within six months, and commence exploration within sic months of that plan's approval; the company will also commit a minimum of $75,000 within twelve months of starting exploration and any moneys in excess can be defrayed against subsequent expenditure.

VANE is to pay other small sums in recognition of the agreement including an advance royalty of $100,000 at the announcement of a decision to proceed to commercial production. When production is reached, VANE will pay a 5% royalty on production from within the original areas held by the owner and a production royalty of 2.5% on minerals mined from the additional areas claimed.

As well as this potential new resource, VANE has recently located four new US lode Mining Claims and as a result has added two additional breccia pipe targets to its existing portfolio of 17 breccia pipe targets. Proprietary geochemical techniques have been used to sample three of VANE's Arizona targets, all of which have shown indication of uranium mineralisation.

Copper may have let VANE down, but gold, silver and uranium look as if they will prove promising.