Rose Petroleum plc



VANE - more uranium exploration prospects and an accelerating programme

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

LONDON ( --VANE Minerals plc is a young company that is developing precious metals and uranium deposits in Latin America and the United States. The company is listed on AIM (ticker symbol VML, market capitalisation £14 million or US$27 million) and the mission is to become a self funding exploration company. VANE was formed by the former international exploration team of Freeport McMoRan copper & Gold Inc and has exclusive access to Freeport's global exploration database, which consist of 7,000 files.

The initial focus has been to identify high-grade gold-silver projects that can come into production as quickly possible in order to fund the exploration of potentially much larger projects.

This appears to be working well and the company's development programme is moving forward at a healthy pace. We reported at the start of this year that the company had brought on stream its Diablito silver / gold mine at Nayarit State in Mexico (through the subsidiary Minerales VANE SA de CV) and that the revenues from this operation would help fund development work. Diablito commenced production in November 2005 and the company reports that it is currently generating revenues of US$420,000 monthly. Total mining, processing, transportation and smelting cost of US$125/tonne implies, at a daily rate of 50 tonnes per day, costs of a short $190,000 per month.

The remaining resource at Diablito amounts to 93,000 tonnes at 12.13 grammes/tonne of gold and 1,319 grammes/tonne of silver over a 130 metre section of the 300 metre surface expression of the Lower Vein. This has returned encouraging assay results as well as confirming good mineralisation in a new vein (the "Upper Vein") and other areas have also been newly identified for further exploration. Intersections on the Lower Vein include an intersect of one metre (over 97.2 to 98.2 metres in depth) at 6.6 g/t gold and 1,118 g/t silver, along with 2.35 metres (90.4 to 92.7 metres) at 3.2 g/t gold and 701 g/t silver, and a seven metre interval (87.6 to 94.6 metres) at 10.6 g/t gold and 1,021 g/t silver. The Upper Vein is parallel to the Lower Vein and along strike to the north east the Lower and upper Veins appear to merge into one.

The Upper Vein is not included in the current mineral resource, but intersections include two metres (from 85.0 to 87.0 metres in depth) at 2.8 g/t gold, 1,507 g/t silver and 27.2 g/t gold and 1,548 g/t silver. Other intercepts include 2.7 metres (80.4 to 83.1 metres in depth) at 6.0 g/t gold and 468 g/t silver. The Upper Vein will be accessible from existing mine workings and will not require extensive new development.

A new resource estimate will be calculated once all assay results and drill hole data have been collated. This should be completed this month and the company will then review the plan with a view to increasing the daily production rate.

A number of holes have been drilled in order to test the extension of the vein on the far side of the faults that bound the system and all have intersected mineralisation, the majority have wider and lower grade intercepts than those on the Lower and Upper Vein, but two interesting intercepts were 0.7 metres at 7.7 g/t gold and 1,873 g/t silver, and 1.4 metres at 2.7 g/t gold and 636 g/t silver. Further investigation is likely and the company is confident that the extended resource base will more than replenish the mineralisation that has been mined out so far.

While the "cash cow" at Diablito is offering encouraging results in its own right, VANE is also continuing to add, via its subsidiary VANE Minerals (US) LLC, to add to its uranium exploration portfolio and the company has recently acquired a further three breccia pipe prospects (Cholla, NCP-7 and CP-14), all of which are located on Federal lands in northern Arizona. This means that VANE has a portfolio of 25 uranium prospects in the Colorado Plateau Uranium District, of which 22 are breccia pipes. The 25 projects between them consist of 131 Federal mining claims and five State permits.

The breccia pipe district of Northern Arizona is a relatively new mining district and to date has produced 23 million pounds of uranium oxide. This was prior to the decline of uranium prices in the 1980s. VANE has now received approval on drilling permit applications on two of its existing pipes and plans to conduct deep drill testing thereon. Drilling permit applications have been submitted on nine additional pipe targets. The company has also been given approval to drill at the North Wash project in Utah, on which there is an inferred resource of 150,000 pounds of uranium oxide - this from a drill programme carried out by Cotter Corporation between 1977 and 1979. The property has a high vanadium:uranium ratio and this drilling, which is intended further to define the vanadium oxide grades, will coincide with drilling at the nearby Happy Jack properties, where there are nine targets, each of which has the potential to produce up to one million pounds of uranium oxide.

While Diablito is throwing off revenues, VANE has just completed a fund raising through a £750,000 convertible note in order to accelerate its exploration and development programme on the uranium properties and to construct a mill at Diablito. This will reduce overall costs as it will eliminate the scheduling of bottlenecks at the custom mill. While this may look as if it contradicts the company's intention to become self-funding, it would appear that this company is in a hurry to maximise the potential offered by a strong uranium market and has taken advantage of an available facility.