Project Description and Location
The Mutanga Uranium Project consists of five main deposits: Mutanga, Dibwe, Dibwe East, Njame, and Gwabe. These deposits make up the bulk of the Mineral Resources described herein. There are also three minor deposits called Mutanga East, Mutanga Extension, and Mutanga West. In addition, several other mineral prospects have been identified.

The Mutanga Project area is situated in the Southern Province of Zambia about 200 km south of Lusaka, immediately north of Lake Kariba, approximately 31 km northwest of Siavonga.

GoviEx acquired 100% of the Mutanga Project (“the Project”) in 2016 from Denison Mines Corp. (“Denison”). The project included the Mutanga, Dibwe, and Dibwe East deposits. In 2017, GoviEx acquired 100% of the Njame and Gwabe deposits from African Energy Resource.

The Mutanga Project is currently comprised of three mining licenses (13880-HQ-LML, 13881-HQ-LML, and 12634-HQ-LML) encompassing 720 square kilometres. The 13880 and 13881 mining licenses have terms to April 2035, whilst 12624 has a term until October 2034.

Geological Setting
The Project area is situated within the Karoo Supergroup, a thick, terrestrial, sedimentary strata, widespread across much of southern Africa and deposited during late Carboniferous to late Triassic. Sediments were deposited in an extensive foreland basin where rifting is thought to be associated with the breakup of Gondwanaland during the Permian Period, followed by opening of the proto-Indian Ocean in the Jurassic and finally development of the East African Rift system in late Cretaceous and early Tertiary. During the Cenozoic, the East African Rift System propagated across the continent and led to reactivation of the Karoo rift basins and formation of new fault depressions, such as the south-eastern extension of the mid-Zambezi and Luangwa rift systems.

The Karoo Supergroup consists of the three formations within the Lower Karoo and four formations within the Upper Karoo. There are at least six regional depositional sequences that broadly reflect synchronous episodes of basin subsidence and climate change. These vary considerably in detail from one sub-basin to another. Karoo strata typically overlie Precambrian crystalline basement rocks. Many of the Karoo rift basins contain sandstone-hosted uranium mineral deposits, typically within the Upper Karoo. At Mutanga, all of the known uranium mineralization occurs within the Escarpment Grit, a 400-m thick series of continental, arenaceous, silici‐clastic sediments with interbedded mudstones and fine grained sandstones as well as grits and conglomerates. The Escarpment Grit consists of two informal members thought to represent a change in fluvial style: a lower “Braided Facies” member is interpreted as braided stream deposits, and the overlying “Meandering Facies” is much more extensive and thought to represent point-bar and flood plain deposits. The Escarpment Grit unconformably overlies the Madumabisa Mudstone, which appears to have acted as an impermeable barrier controlling the base of the mineralization. Mineralization appears to have been introduced after sedimentation, weathered from surrounding Proterozoic gneisses and plutonic basement rocks, transported in solution, then precipitated in siltstones and sandstones. Mineralization appears to be later than at least some of the normal faults that cut the Escarpment Grit Formation. This is evident from the good correlation of the radiometric logging data between adjacent holes within the Mutanga mineral deposit separated by interpreted faulting. Within the Mutanga uranium deposit, the Escarpment Grit Formation comprises at least 120 m of sandstone and conglomerates with occasional mudstones and silts. It overlies the Madumabisa Mudstone Formation, comprising of silty mudstone, with a dark red hematized layer, two to three meters below the contact, representing either oxidising groundwater or a sub-aerial surface. Dibwe East occurs predominantly within the Escarpment Grit Formation and specifically, the uraniferous mineralization is hosted by the relatively un-faulted meandering facies. Generally, uranium mineralization occurs in a number of different associations:

i. As disseminated mineralisation where grades vary considerably.
ii. Associated with mudstones and siltstones.
iii. Fracture hosted uranium mineralisation.
iv. Mineralization associated with pyrite.

The geology at Gwabe and Njame consists entirely of Escarpment Grit, ranging from thick coarse conglomerate beds to thinly-bedded or cross‐bedded fine- to medium-grained sandstones. Thin bands of shale and mudstone are intercalated in the sequence. Below the Grits are well‐developed calcareous shale and siltstone layers, possibly representing the upper part of the underlying Madumabisa Mudstone. Uranium mineralization occurs at the interface between siltstones and sandstones at redox boundaries.

Exploration
In 2006, a detailed aeromagnetic and radiometric survey (Symons and Sigfrid, Report on the Interpretation of Aeromagnetic and Radiometric data 2006) was completed over the areas of interest that were revealed during an earlier pre-digital airborne survey. The 2006 survey has confirmed the position and tenor of the existing targets and identified additional targets.

Prior to Omega/Denison involvement, AGIP and the Zambian geological survey undertook drilling across the Mutanga project area.

The drill program consisted of 14,794 m of drilling (50 diamond holes for 6833 m, 119 percussive (wagon drill) holes for 6998 m, and 83 percussive (shallow wagon drill) holes for 963 m.

In 2006, 11 diamond drill holes were drilled by OmegaCorp to twin previous drilling at the Mutanga mineral deposit. Results confirmed the broad tenor of the historical U3O8 intercepts. Work was also carried out at Bungua, Mutanga, and Dibwe.

During 2007 to 2008, Denison completed work on the Mutanga mineral deposits, focussing on the Mutanga area and the Dibwe area in particular. The work included an appraisal of all available data: maps, plans, sections, limited geological interpretations and radiometrics, and AGIP resource estimations. From this information, Denison produced several databases covering Mutanga and other prospects.

After a two-year delay due to suspension of exploration activities, a two-phase drilling campaign resumed in April 2011. Phase 1 drilling on Dibwe East and Mutanga West targets commenced in April and ended in July 2011, with 72 holes drilled for a total of 7,564 m. The results for Phase 1 confirmed the continuity of uranium mineralization identified in a 2008 drilling program at Dibwe East with a northeast-southwest strike length greater than 2.5 km. Results from the Mutanga West target still require further evaluation and are not considered material to the current Mutanga West resource.

Based on the encouraging results obtained with the Phase 1 drilling over the Dibwe East Zones 1 and 2 targets, a Phase 2 drilling program of 74 holes totalling 7,732 m was completed between August and October 2011. This drilling program discovered primary mineralization at depth and it also increased the strike length to 4.0 km.

A small, uneconomic resource (non-compliant in accordance with NI43-101) containing approximately 980 t of U3O8 was outlined at Njame in 1983‐1984. AGIP ceased their work in Zambia in 1985, and no further work for uranium exploration was undertaken in the vicinity of the Gwabe and Njame deposit area until AFR commenced work in 2005.

AFR undertook a major exploration programme in 2006 to 2007, which included the following:

• Drilling at the Njame deposit identified additional uranium mineralisation to that defined by AGIP.

• An airborne radiometric survey identified a significant uranium anomaly at Gwabe; this was tested with surface radiometric surveying and soil sampling.

• Subsequent drilling at Gwabe outlined uranium mineralization.

Through 2008 and 2009, AFR then completed a series of infill drilling programs, comprising reverse circulation (“RC”) and diamond drilling (“DDH”) to define the extents of both the Njame and Gwabe deposits, as well as to tighten the drilling patterns to improve confidence in the geological and Mineral Resource models.

Summary of Exploration Data used for the Mutanga Uranium Project Mineral Resource Models

Deposit Hole Type Number of Holes Meters (m)
Dibwe East RC 171 17,725.0
DDH 141 15,967.0
Dibwe RC 152 10,790.5
DDH 213 20,728.6
Mutanga RC 228 14,066.3
DDH 518 30,592.5
Gwabe RC 286 12,754.0
DDH 39 1,368.0
Njame AC 74 3,300.0
RC 603 33,519.0
DDH 161 8,311.0
Total 2,696 169,121.8

Exploration for uranium typically involves identification and testing of sandstones within reduced sedimentary sequences. The primary method of collecting information is through extensive drilling (both RC and diamond drill coring) and the use of downhole geophysical probes. The downhole geophysical probes measure the electrical properties of the rock from which lithologic information can be derived, and natural gamma radiation, from which an indirect estimate of uranium content can be made. The downhole geophysical probes measure conductivity, resistivity, self-potential, SPR, deviation, and natural gamma. Geophysical probe data was collected from drilling over the property.

Mining
The deposits are amenable to conventional, shallow, open-cast mining methods utilizing excavators and trucks with relatively low stripping ratios. Ore and waste is in a cemented sandstone that will require blasting. Pit optimizations were run for considered deposits to determine pit limits and pushback development. Production schedules have been prepared for all deposits using a cut-off grade of 129 ppm U3O8 and a plant feed rate of 4.0 Mt per annum (“Mtpa”).

A number of economic and technical parameters used for this study are based on assumptions and historical studies. These parameters will be further interrogated and updated in future studies. A base case metal price of US$ 50/lb U3O8 was used for the pit optimization results in a Run-of-Mine (“RoM") inventory to cover 11 years of production from the six considered deposits.

Mining losses and dilution were applied as 10% and 10% global values. Diluting grade used was 0.0 ppm U3O8. The total pit inventory for mineralized material is 40.8 Mt at 333 ppm U3O8. The overall strip ratio for the Project is 3.4 (t:t), but varies from 1.4 to 6.0 (t:t), depending on the deposit.

At the time of writing, the pit design is preliminary and SRK only developed wireframes with appropriate sensitivity analysis. The mining production schedule has been developed at a feed rate of 2.0 Mtpa in Year 1 and 4.0 Mtpa thereafter.

The conceptual waste and RoM mining fleet estimates are based on 5.0 m3 excavators and 45 t articulated trucks; the assumption was made that waste and RoM materials will be drilled, blasted, and mined on 10 m benches.

Processing
Two process options have been investigated: alkaline leach and acid leach. Acid heap leaching was selected on the basis of giving slightly better overall recovery and leaching rate for all six deposits and having lower operating and capital costs. Test work has indicated that heap permeability would be good and that acid consumption would be relatively low in a range of 3-9 kg/t for all deposits except Gwabe that requires 18 kg/t. The process is robust, simple and has a low environmental profile. The nature of the operation will support greater participation by the local labour force. Work has been completed including bottle roll and column testwork, mineralogy and metal recovery and precipitation.

The acid consumption and uranium recovery for each deposit is shown in the table below. Summary of Metallurgical Data

Summary of Metallurgical Data

Deposit Average U Recovery (%) Acid Consumption (kg/t)
Mutanga 85.4 3.86
Dibwe East 93.3 6.37
Dibwe 74.6 9.34
Njame 85.1 2.61
Gwabe 75.4 18.49

Three separate ore preparation and leach areas will be developed adjacent to the deposits. The main facilities for recovery of uranium oxide will be located close to the Mutanga and Dibwe East pits. Ore will be trucked from the pits and dumped directly into a crushing and agglomeration circuit. The crushed ore will be transported by conveyor to the adjacent leach pad and stacked in 4 m lifts in a continuous operation. Each lift will be irrigated using a drip system with an acidic solution to dissolve the uranium; in addition, ferric sulfate may be used at Gwabe to improve extraction of uranium from slow-leaching silicates. The leach solution will percolate through the heap into drains located above the top pad liner and drain into an intermediate pregnant leach solution (“PLS”) pond. It will then be pumped back on to the heap. Once the solution has sufficient uranium (approximately 30 g/L), this will be directed by open ditches to the pregnant leach solution pond and pumped to the process plant. Pads will be built, operated, and closed out in one- to two-year increments. Once the maximum three lifts are leached, then closure activities will commence. Pads, ditches, and ponds will be double lined. Pads and ponds will have leach detection systems as well as piezometers to monitor local ground water quality.

At the Central Process Facility (“CPF”), uranium will be stripped from the leach solution and loaded onto a resin. The process is reliable and has been proven at other locations. The barren leach solution will be returned to the barren pond to be used for leach solution make-up. The CPF will produce uranium oxide in the form of a dry powder that will be loaded directly into drums and immediately sealed. The drums will be washed, transported to an adjacent storage area, and then loaded into 6.3-m sea containers for transport to port. The plant has the capacity to produce sufficient uranium to fill two or three barrels a day, each drum weighing about 1,000 kg. Uranium production is expected to average approximately 2.4 Mlb U3O8 per annum of uranium contained in uranium oxide.

For Mutanga-Dibwe East leach pad, PLS will be pumped to the adjacent CPF for stripping and concentrating uranium. For the other deposits, PLS will be pumped to an adsorption plant to be stripped of uranium and loaded onto resin shipped to the CPF. Approximately 24,000 L per day of resin will be transported by truck to the CPF for concentrating; barren resin will be trucked back to satellite operations.

Environment
GoviEx currently holds Zambia Environmental Management Agency (“ZEMA”) licences for management, generation, and storing of hazardous waste, plus an emissions licence. Environmental Impact Assessments (“EIA”) were prepared for the Njame and Gwabe operations in 2008 and for the Mutanga and Dibwe operations in 2009. Environmental Management Plans (“EMP”) were generated for both of the EIA and a Resettlement Action Plan (“RAP”) was also prepared for Mutanga. All required licences have been approved and are currently valid.

SRK completed a Preliminary Economic Assessment for the project. The economic analysis results indicate an after-tax Net Profit Value ("NPV") of US$269 million at an 8% discount rate, with an Internal Rate of Return ("IRR") of 25%, based on long-term uranium price of US$58/lb U3O8.

The proposed base case envisions an average 2.4 Mlb per year U3O8 yellowcake production rate, and an 88% ultimate recovery, generating an eleven-year mine life and a total forecast production of 26.4 Mlb U3O8. The project economics are at a long-term uranium price of US$58/lb U3O8. Initial capital costs are estimated at US$112 million, with total LoM capital costs at US$269 million, cash operating costs of US$31.1 / lb U3O8 excluding royalties, and US$36.4/lb U3O8 including royalties.

The PEA is considered preliminary in nature and includes Inferred Mineral Resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as Mineral Reserves. Mineral Resources that are not Mineral Reserves have not yet demonstrated economic viability. Due to the uncertainty that may be attached to Inferred Mineral Resources, it cannot be assumed that all or any part of an Inferred Mineral Resource will be upgraded to an Indicated or Measured Mineral Resource as a result of continued exploration or Mineral Reserves once economic considerations are applied; therefore, there is no certainty that the production profile concluded in the PEA will be realized.

Location of Named Prospects in the Mutanga Project