Introduction 

The Madaouela Uranium Project is situated southeast of the mining town of Arlit, and the Marianne-Marilyn deposit is located approximately 9 km from Arlit. The land surface of the tenement forms a rectangle of less than 250 km2.

Topography
Topographic relief in the Madaouela tenements is minimal, a few tens of meters from high to low. Areas of drilling are at approximately 430 m elevations Over much of the areas drilled, relief is less than 15 m from low ridges of sandstone outcrops to essentially flat sand covered plains.

Climate
Niger is landlocked and almost entirely located within the semi-desert belt of Western Africa. Its climate is characterized by very scarce rainfall, mostly concentrated during the summer months (July to September), and with very hot temperatures, notably at the end of spring (April to June).

Infrastructure
The proximity of the town of Arlit and Akokan are an asset for Madaouela permits. The towns have over 160,000 people supporting local mining operations with airports, drilling companies, electricity, potable water, and a hospital. Arlit is connected to the Southern part of Niger via the so-called "uranium-highway" through Agadez and Tahoua to Niamey, the Niger capital further south. A power line connects the town to the Sonichar coal-fired power station located North of Agadez.Access by plane is possible through an airstrip in Arlit and also Agadez.

History
The French Commissariat à l'Energie Atomique (CEA) discovered the Madaouela uranium mineralized areas in the early 1960s. They conducted drilling operations using drilling grids of 800 m down to 100 m, over vast areas of the permit. The discovery of the Marilyn deposit was then drilled locally at 50 m. CEA sunk a 67 m deep shaft and drove 330 m of drifts within the mineralized formation. The simultaneous discovery of the Somaïr uranium deposits was responsible for the decision to stop all works at the Madaouela site.

PNC, the Japanese Pacific Reactor and Nuclear Fuel Development Corporation, took over the CEA tenement in 1980 in association with ONAREM, a Niger State-Owned Organization. PNC conducted additional uranium exploration work up to 1992 and produced a report on the feasibility of the Madaouela deposit in 1993, which was later updated (1999) by the Japan Nuclear Cycle Development Institute, the new company name for PNC. Very few drillholes (less than 20) were drilled by PNC in Madaouela I, and none on Marianne or Marilyn. The feasibility study was fully based on CEA drillholes. In 1999, the economic assumptions and data for the 1993 feasibility study were updated and concluded that underground mining could be cost-effective, provided the uranium price stabilizes at around US$27-28/lb U308.

A Chinese company (CNUC) took over Madaouela and held the land from 2003 to 2006. They drilled a limited number of holes and departed, apparently because they could not access the original CEA data. Little exploration work seems to have been carried out until GoviEx Niger Holdings Ltd. (GNH Ltd.) took over the property in 2007.

Regional Geology
The Madaouela property is located in the Tim Mersoi Basin. This basin covers most of the western part of the Republic of Niger with extensions in Algeria, Mali, Benin, and Nigeria. In early Paleozoic, an open gulf developed to the south of the Central Saharan Massif and fed continental sediments to the developing basin. During the Mesozoic and Tertiary, the area was mainly continental, periodically invaded by marine transgressions diminishing in thickness to the south and passing laterally into continental series. Uplift movements beginning in the Middle Eocene gave the basin its present aspect.

Pre-Carboniferous sedimentation consists of Cambro-Ordovician sandstones and graptolite shales. These formations are of major interest because they host the major reduced uranium deposits in the Arlit area. The stratigraphic sequence begins by the grey-black Talak Visean argillites. It consists of black shale. This is overlaid by the Guezouman formation, which includes a lower and an upper member. The lower member is composed of fine- to coarse-grained cross-bedded sandstone units with minor conglomerates (Teleflak). The upper member consists of fine sandstone, siltstone, and shale units.

Geological Structures
West dipping units mark the structure of the Tim Mersoi basin. The deformation of the sedimentary body resulted from basement fault activities located between the Air Massif and the Azaoua lineament. Several large faults systems cut the sediments and have played a major role during the sedimentation.

The main structure is the Arlit fault. It has been active during the sedimentation, especially during Carboniferous time, and has been reactivated several times. All the major uranium deposits are located immediately to the east of the fault.

The Madaouela fault shows similar characteristics, with a large uplift of the northwestern compartment (Quart-de-brie) that is situated across the GoviEx Madaouela tenements. In Anou Melou, the Airlet and Madaouela faults converge and present GoviEx with a clear future exploration target.

Mineralization is always localized at the contact between the Guezouman sandstone and the underlying Talak argillite. The mineralization is located on the flank of the channel, following the reducing unit of the Talak, and always associated with coarse sandstone of the Guezouman.

In 2012, GoviEx geologists made a major scientific breakthrough and discovered the La Banane deposit as a result of GoviEx’s area exploration program. This discovery has had a major impact on the exploration philosophy in the Tim Mersoi basin, as the La Banane deposit is situated in the Madaouela sequence of sandstones where previously it was not envisaged that uranium mineralization could significantly occur.

Deposit Type
Sandstone-hosted uranium deposits occur in permeable medium-coarse grained sandstone, usually deposited in continental fluvial or marginal marine sedimentary environments. The source of uranium is usually igneous or volcanic rocks either in close proximity to or inter-bedded with the sandstone units. The uranium mineralization typically precipitates from oxidizing fluids, under reducing conditions caused by a variety of reducing agents. The reducing agent for Madaouela is most likely in-situ organic material (lignite) or hydrocarbons transported along major fault. The main primary uranium minerals are uraninite and coffinite, with minor secondary uranium minerals being noted in exposed (weathered) mineralization.

Sandstone deposits are an important source of uranium, representing approximately 30% of the world's known uranium resources and accounting for over 18% of the African uranium deposits in 2007. This style of uranium deposit typically yields small- to medium-size individual deposits (10,000 to approximately 50,000 t of U3O8), characterized by low to medium grade (0.05 to 0.5% U3O8), but deposits typically occur in clusters.

Mineralized Zones
The Marianne-Marilyn deposit is a nearly flat, tabular body of mineralization that spans approximately 5 km by 2 km across in plan, and the deposit thickness varies from 0.2 to over 2 m (average thickness of about 1 m). The mineralization occurs at depths from about 30 m on the east-end of Marilyn, to approximately 60 m in depth in the middle of the Marianne-Marilyn deposit, up to 120 m in depths on the west extensions of Marianne.

The MSNE deposit is approximately 4 km south of Marianne-Marilyn with Maryvonne deposit in between. The geology of these deposits is very similar to Marianne-Marilyn. Ore depth ranges from 100 m to 160 m across the deposits. The Miriam deposit was discovered in 2011 and is located in the Southern portion of Madaouela I tenement. The ore is 20 to 30 m in thickness at Miriam and at a depth of 60 to 80 m.

Adjacent Properties
There are currently two producing mines in the Arlit region that are on property positions immediately adjacent to the Madaouela Uranium Project. Both mines are subsidiaries of Areva and have operated uninterrupted since starting production:

• Somaïr: Operates an open pit and an acid leaching plant since 1968, producing 1,500 t uranium annually; recently started a heap leaching operation.

• Cominak: Operates underground mine and has its own acid leaching plant to produce more than 2,000 t uranium per year.

Exploration Drilling
Exploration is undertaken with mud-rotary drill rigs that drill 120 mm diameter holes. Historical drill holes have been located where possible in the field, and then re-drilled with this larger diameter drill bit and re-logged. GoviEx is therefore relying on GoviEx data from historical drill holes, not historical data.

In uranium exploration, the usual technique consists of the following procedures:

• Measuring the radioactivity in the drill holes using dedicated probes.

• Transforming the radioactivity into uranium grade (equivalent uranium grade eU or eU3O8).

Core drilling is therefore done with the rotary drill rig as conventional drilling to collect core from the mineralized horizons for assay comparisons with gamma probe eU308 determinations.

GoviEx’s exploration approach is complete surface mapping and sampling along traverse lines approximately 1.6 kilometres apart. Data collected during these traverses includes geological mapping and radioactivity measurement on regular spacing.

Once areas of exploration interest have been defined, GoviEx commences with a wide-spaced drilling program starting at 400 m by 400 m, and based on these results, exploration drilling continues but on decreasing spacing towards those required for resource classification.

Based on analysis, Inferred material is where the drilling density of the deposit is 200 m by 200 m or lower, while Indicated material is defined a nominal drillhole spacing of 100 m by 100 m. GoviEx has reduced drillhole spacing to as low as 25 m by 25 m in large parts of Marianne-Marilyn and Miriam.

Mining Operations
Three primary mining targets are defined for future possible development: the Marilyn and Marianne deposits that are located adjacent to each other along a 6.5 km NE-SW strike length, the MSNE and Maryvonne deposits, and the Miriam deposit to the south of the Madaouela I license.

The Marilyn/Marianne deposits are shallow, with depths below surface from 30 m in the NE to 120 m in the SW, while the MSNE/Maryvonne deposits are approximately 160 m in depth. The deposits are generally flat lying (0° to 15° slope), with thicknesses varying from 1 m to 3 m. Tabular deposits such as these generally lend themselves to room and pillar type mining methods.

The mineralized material will be mined using low-profile mining equipment capable achieving mining heights of 1.8 m. Panel development will be undertaken using 7-m wide drifts. A primary pattern of 17 m by 17 m pillars will be developed during the initial advance through the panel. On retreat from the extremities of the panel, each 15 m by 15 m pillar will be split by 7 m drifts to leave four 5 m by 5 m pillars.

The mineralized material is transported by LHD to the conveyor feeder that is located at the entrance to the panel, where initial crushing will occur. The crushed material is to be transported by conveyor to a coarse ore stockpile situated before the process plant. A panel mining fleet will consist of a single boom face drill, a ground support jumbo with fully automated rockbolt installation, and a 3 m3 bucket capacity LHD.

While the Miriam deposit is approximately 60 m to 80 m deep, it has a greater thickness – up to 30 m with local grades over 1% U308, thus containing the highest-grade*thickness (GT) in four main seams (11, 21, 31, and 41) that coalesce locally in a redox front system. The mining of Miriam is planned to be by open pit operations, in line with that under taken at Areva's Sominak mine.

Metallurgy
Mined ore is transferred to the run-of-mine ("ROM") stockpile. Feed preparation consists of primary crushing with the ore then routed to radiometric ore sorter ("ROS"), whereby the radiometric selection ore is pre-concentrated to provide a higher grade material. Following the ROS stage, the ore is secondary crushed and mixed with water to produce a slurry for the Ablation stage, where two slurry streams are impacted together to form a high-impact energy zone that separates fine, heavier uranium minerals from the host rock. The combination of ROS and Ablation results in 810 tonnes per day (“tpd”) of feed for feed to the leaching circuit, with approximately 97% of the uranium that was contained in the initial 4020 tpd mined feed.

The two-stage leaching circuit consists of primary and secondary agitated leach tanks in recirculation. In the first stage, solution from the second stage belt filters is recirculated to leach the fresh feed, after which the slurry is thickened with the thickener overflow routed to the uranium recovery circuit as pregnant leach solution ("PLS"). The thickener underflow is routed to the second stage leach, which uses fresh acid to further leach the milled solids. After the second stage, the slurry is filtered and the filtered solids residue is washed with fresh solution and discarded to the tailings disposal system.

Leach tanks are agitated and aerated to allow the milled ore to react with sulfuric acid, allowing dissolution of the contained uranium. The solution from leach (thickener overflow) is routed to uranium recovery. Uranium recovery from the neutralised PLS takes place through Solvent Extraction (“SX”).

SX is undertaken using a new process to recover both molybdenum and uranium from acidic solutions using CYANEX® 600 extractant. The overall circuit configuration consists of the following extraction steps: one stripping step for iron, two stripping steps for molybdenum, an ammonia washing step, and two uranium stripping steps. A wash stage is used after the uranium strip to prevent phosphoric acid transfer. Phosphoric acid is recovered through an evaporation step in order to reduce reagent requirements. Additional uranium recovery comes from this step through a bleed stream that feeds back into the solvent extraction process.

As a result of the Cyanex 600 solvent, the Madaouela Project will be able to produce molybdenum oxide and uranium oxide in a saleable form.

SRK completed a technical economic analysis for the project. The economic analysis results indicate an after-tax Net Profit Value ("NPV") of US$340 million at an 8% discount rate with an Internal Rate of Return ("IRR") of 21.9%. Payback will be in production Year 3.

The proposed base case envisions a 2.69 Mlb per year U3O8 yellowcake production rate, and an 93.7% ultimate recovery, generating an eighteen-year mine life and a total production of 45.6 Mlb U3O8. The project economics are at a long-term uranium price of US$70/lb U3O8. Initial capital costs are estimated at US$359 million, with total LoM capital costs at US$676 million, cash operating costs of US$24.49 /lb U3O8 excluding royalties, and US$31.49/lb U3O8 including royalties.