resource star quarterly report to 30 june 2011 · • cue owns 100% of the yuty uranium project in...

Level 9, 440 Collins Street, Melbourne VIC 3000

www.ResourceStar.com.au ABN 71 098 238 585

RESOURCE STAR QUARTERLY REPORT TO

30 JUNE 2011

HIGHLIGHTS

•

For further information contact:

Andrew Bell, Chairman +44 7766 474849

Simon Heggen, Managing Director +61 3 9607 1322

Victoria Thomas, Director - Six Degrees Investor Relations +61 3 9674 0347

Appointments

• Managing Director, Simon Heggen, commenced 1 May 2011

• Exploration Manager, Baker Khudeira, commenced 15 June 2011

Operations

• Livingstonia uranium resource increases by 30% to 6.0Mlbs @ 325ppm eU3O8 following an independent review by CSA Global

• Joint Venture signed with Thundelarra Exploration for the Spinifex Uranium Project in Western Australia

o Exploration work commences on the unconformity related prospect

• New, well defined rare earth targets defined at Ilomba Hill in Malawi • Post quarter, Globe Metals and Mining outlined a $500,000 exploration plan for the

Machinga Heavy Rare Earths Project in Malawi for 2011

Corporate Development

• Entered into a conditional agreement to acquire a strategic 17.6% interest in the Canadian listed Cue Resources, subject to Shareholder approval

• Cue owns 100% of the Yuty Uranium Project in Paraguay, where they have recently reported an updated NI43-101 compliant Measured, Indicated & Inferred Resource at the San Antonio deposit of 9.98Mt at 507ppm eU3O8 for 11.1Mlbs of metal F

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Resource Star Ltd QUARTERLY REPORT – JUNE 2011

Introduction

Resource Star Ltd (‘Resource Star’, ‘RSL’ or ‘the Company’) (ASX: RSL) is pleased to provide its quarterly

report for the period ended 30 June 2011.

Resource Star’s strategy is to grow shareholder wealth by identifying, acquiring and exploring uranium, rare

earth and uranium related specialty metals resources, in development friendly environments.

During the quarter, Resource Star has continued a disciplined focus on developing its portfolio of uranium,

rare earth and uranium-related projects in regions of known prospectivity that present strong mineral

development potential, namely Australia, Malawi in south eastern Africa and more recently, Paraguay in

South America.

Resource Star’s principal projects are:

• Joint ventures with Globe Metals & Mining (“Globe”) on the Livingstonia Uranium Project and the

Machinga Heavy Rare Earths Project in Malawi

• A joint venture with Thundelarra Exploration on the Spinifex Uranium Project in Western Australia

• The 100%-owned Edith River Uranium Project in the Northern Territory.

If Shareholders approve the acquisition of the strategic interest in Cue Resources, that investment will

become an important component of the Company’s growth objectives.

Resource Star will continue to evaluate new opportunities that are consistent with our strategy.

Figure 1: Resource Star’s Projects in Australia and Malawi

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Resource Star Ltd QUARTERLY REPORT – JUNE 2011 3

Appointments

Managing Director

The appointment of Simon Heggen as Managing Director and Chief Executive Officer was effective from 1

May 2011. Simon has over 25 years of experience in corporate development, investment banking, and

strategic planning, with almost half of his career in the resources sector. He has worked with some of

Australia’s highest profile companies and individuals at managerial and Board level including: Boral, WMC

Resources, Wesfarmers, Schroders Australia and members of the Smorgon Family. During his career, Mr

Heggen has led and managed transactions and projects in Australia, North and South America, Asia and

southern Africa. He maintains an extensive network of contacts at senior levels in the resources, industrial

and banking sectors.

Exploration Manager

The appointment of Baker Khudeira as Exploration Manager was announced on 26 May 2011. Baker

commenced work for Resource Star on 15 June 2011. Baker has significant experience working as an

exploration geologist on a number of projects in Australia, Asia, Africa and the Middle East and his expertise

extends to base and precious metals, coal and molybdenum projects. Prior to his appointment at Resource

Star, Mr Khudeira worked as a Senior Exploration Geologist for BHP Billiton at the Yeelirrie Uranium Project

in Western Australia. He has also worked at Heathgate Resources’ Beverley Uranium Mine in South

Australia, a sandstone hosted uranium deposit, the same style as Resource Star’s Livingstonia Project in

Malawi, where he was an exploration geologist.

Operations

Livingstonia Uranium Project - Malawi

Mineralisation at Livingstonia was discovered by Globe and as announced to the ASX on 16 March, 2010,

Resource Star and Globe signed a joint venture agreement to explore the Livingstonia Project. Resource

Star is earning up to 80% equity in the Project through delivery on project development milestones.

Globe had drilled 95 holes at Livingstonia for a total of 11,000 metres, during 2007-08 using both reverse

circulation (‘RC’) and open hole percussion with a combination of either or both laboratory analysis or

downhole gamma probing. Drilling targeted three prospects, with the majority occurring at the Chombe

Prospect.

In July 2010, on the basis of the historical Globe drilling, CSA Global completed a Mineral Resource

Estimate on the Chombe Prospect, and defined an Inferred Resource of 7.7Mt @ 270 ppm eU3O8 using a

150 ppm cut-off.

At the end of 2010 Resource Star completed a programme of a further 13 percussion holes for a total of

1,502m on the Chombe Prospect. Mineralised zones were intersected in all but one of the holes, with some

significant thick intersections along the eastern edge of the July 2010 Resource boundary.

Following the receipt of new drilling results in the March Quarter 2011, CSA Global was engaged to complete

an independent update of the JORC compliant Inferred Resource. The results of that review were released

on 22 June 2011.

CSA Global’s updated estimate of the Inferred Resource is 8.3 million tonnes averaging 325 ppm eU3O8 for a

contained 6.0 million pounds of U3O8 (or approximately 2,700 tonnes of contained eU3O8) at a lower cut-off

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grade of 150 ppm eU3O8. The following table shows a comparison between the initial Resource Estimate

and the Estimate released during the June Quarter 2011.

Table 1: Comparison between July 2010 and June 2011 Livingstonia Mineral Resource Estimates. Note – all

figures are rounded to reflect appropriate levels of confidence; apparent errors in addition are due to rounding.

There has been a significant increase in grade in the previously defined northern zone and a new lower

grade zone has been added to the south.

CSA Global concluded that there is excellent potential to identify additional resources. Thickened zones of

mineralisation are open to the northeast and the sparse drilling in the newly included southern zone raises

the prospect of more mineralisation, and possibly higher grade shoots being defined. The mineralisation is

also open to the north where the project adjoins tenements currently being explored by Paladin Energy Ltd.

The figure below details the areas of potential.

.

Figure 2: Comparison of 2010 and 2011 Resource outlines showing the addition of Resource to the south, and further

exploration potential.

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The blue cross-hatched area around the defined Inferred Resource is an area highlighted by CSA Global

and is one of a number of exploration targets. Future work will focus on the exploration potential that exists

in a number of areas around the defined Resource, namely:

• East of the northern end of the Resource outline, where recent drilling has defined excellent thick

zones of mineralisation

• Along strike from the interpreted NW trending zone of this thickened, higher grade mineralisation

defined in the 2010 drilling within the Resource outline

• Within the Resource outline, where interpretation suggests that earlier drilling has not always drilled

through the full thickness of the host sequence

• In the new lower grade zone to the south, where sparse drilling indicates potential for defining

shoots of higher grade mineralisation within the system and within the areas defined as resource

potential by CSA Global

In addition, an integrated study reassessing all historical information in the light of what is now known about

the distribution of mineralisation will focus on understanding the stratigraphic, structural and mineralisation

controls of the system to better define new drill targets.

CSA Global has been commissioned to undertake a desk-top conceptual study to assess alternate

development options to provide input to the data collection requirements and potential minimum size

requirements for the different options.

Ilomba Hill Nb – U – REE Project - Malawi

The 90%-owned Ilomba Hill Project in northern Malawi is centred on well-defined radiometric targets

identified within an alkali syenite intrusion by airborne geophysical surveys.

Historical results from Ilomba Hill have previously highlighted the prospectivity of the licence with four of the

eight historical samples being highly anomalous in niobium (>1% Nb2O5) and uranium (2,000ppm to >1%

U3O8), with six demonstrating elevated zirconium results (>0.5% ZrSiO4).

Results from systematic soil sampling of the radiometric targets received in full during the quarter, were

intended to provide targets for further exploration as well as indicating the distribution of non-radiogenic

metals, such as niobium, tantalum, zircon and potentially any rare earth elements in the system. Resource

Star announced on 28 April 2011 that it has identified significant geochemical anomalies following the

systematic soil survey, which has now defined a large area of REE anomalism separate from the known

radiogenic feature that requires further follow-up.

A total of 914 soil samples, including QAQC, were taken over the Ilomba Hill alkali intrusive complex and

surrounding areas covering approximately 10km2. The data identifies a number of anomalous features with

many of the targets in areas that were not highlighted by the airborne geophysics.

The figure below portrays the primary data for both identified associations of soil sample results which shows

the clear off-set between the Nb-Ta-U-Th association (Fig3A), related to the known airborne radiometric

anomaly and historical percent level niobium and uranium rock-chip samples; and, the adjacent and parallel,

newly-defined REE anomalies (Fig 3 B).

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Figure 3: Ilomba Hill Soil Sample Responses

Future work will include follow-up mapping and systematic rock-chip sampling or trenching as required,

and development of an initial shallow drill-testing programme on the basis of integrated results.

Spinifex Uranium Project - WA

On 4 April 2011, Resource Star announced that it had entered into a joint venture with Thundelarra

Exploration on the Spinifex Uranium Project in Western Australia. The project consists of a single tenement

covering 30 square kilometres and is located some 50 kilometres south of Kununurra and approximately 60

kilometres north of the Argyle diamond mine.

Figure 4: Spinifex Uranium Project Thundelarra Sample Location Plan

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During the quarter, the Company completed detailed geological mapping in and around the Spinifex and A1

prospects with the assistance of CSA Global, to confirm drill hole locations for an upcoming diamond drill

programme. Historical results from both prospects detail that Uranerz and Metals Miniere identified highly

anomalous, apparently remobilised uranium, above an unconformity at Spinifex in the 1970’s. More recently,

Thundelarra identified a new zone of remobilised surface mineralisation along the unconformity at the nearby

A1 prospect. Of a total of 20 samples, it is reported that half were in excess of 2,000ppm U3O8, with the

maximum result being 13.5% U3O8.

The geological mapping completed by Resource Star since entering the JV, has extended the known area of

surface mineralisation, which has enabled drill hole locations to be defined and drilling parameters to be set.

A Work Clearance Survey with the Traditional Owners, the Miriuwung Gajerrong Corporation, was completed

to clear the proposed drilling locations. The Company is in the process of seeking permits for the maiden

drilling programme to target the interpreted zone of fault associated unconformity and is in discussion with

drilling contractors regarding the proposed programme. Resource Star will also be seeking an extension to

the exploration license, E80/3572, prior to undertaking any drilling.

Northern Territory

Due to the extended wet season in the Northern Territory this year, there has been limited activity on the

ground this quarter with regards to the Company’s projects in that region.

Following the drilling programme completed last year at Edith River and Hayes Creek South, all significant

intersections, i.e. those in excess of 100ppm, were reported in Resource Star’s Quarterly Report for the

period ended 31 December 2010. Those intersections were all from the Edith River Project.

As a follow up to the drilling programme a further sampling and analytical programme was commissioned

earlier this calendar year. As a consequence of the extended wet season, the programme could not be

completed until May 2011. The results of the sampling were received in late June 2011 and confirmed the

findings from the drilling, including at Hayes Creek South.

This means that the airborne radiometric anamoly defined at Hayes Creek South has not yet been explained

and further assessment is required.

Discussions have been held with the Northern Territory authorities regarding a proposed airborne

geophysical survey over areas of the Edith River Project that have not previously been been the subject of

detailed airborne geophysics. Those discussions have prompted Resource Star to submit an application for

additional ground in the northern half of the project area to cover all potential anomalies.

Planning is underway, with the assistance of CSA Global, for the programme for the remainder of this

calendar year.

Corporate Development

Investment in Cue Resources

On 4 May 20011, Resource Star announced that it had conditionally agreed to acquire a strategic interest in

Cue Resources Ltd (“Cue”), a Canadian listed exploration company, from Red Rock Resources plc and

Regency Mines plc for C$2.2 million, subject to shareholder approval.

Cue owns 100% of the Yuty Uranium Project in Paraguay and has recently reported a NI43-101 compliant

Measured, Indicated & Inferred Resource of 9.98Mt at 507ppm eU3O8 for 11.1Mlbs of metal at the San

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Antonio Deposit, a 17% increase on the previously estimated Resource. Cue has also recently completed

encouraging pumping tests indicating that the deposit may be capable of being extracted using In Situ

Recovery technology.

Prior to concluding the agreement, Resource Star, together with geological consultants SRK, completed a

review of the prospectivity of the Yuty Project.

Under the current terms of the contemplated transaction, Resource Star will acquire 20,304,385 ordinary

shares in Cue, comprising approximately 17.6% of the issued capital, and a loan to Cue of C$0.2m. RSL will

also acquire 15,798,000 warrants convertible to ordinary shares in Cue at prices between C$0.12 and

C$0.15 per share, which if converted, on a fully diluted basis (assuming full conversion of warrants held by

third parties), would raise Resource Star‟s shareholding to approximately 18.8% of Cue’s issued capital.

US-based company Anschutz undertook multi-commodity regional exploration in Paraguay in the late 1970s

and early 1980s and discovered extensive sandstone-hosted uranium mineralisation under cover near Yuty

in southern Paraguay, including the San Antonio deposit.

Upon being granted a 20 year renewable concession in 2008, covering over 230,000 ha of prospective

ground for uranium centred on the San Antonio deposit, Cue has been successfully progressing exploration

and other assessment work.

Prior to the recent Resource upgrade, Cue completed 3,600m of new drilling at San Antonio. The drilling

was reported to include the following intersections: 2.6m @ 500ppm eU3O8 and 2.0m @ 1,100ppm eU3O8

outside the then existing Resource boundary, and up to 6.3m @ 2,000ppm eU3O8 inside the then Resource

boundary.

In March 2011 Cue undertook a further 3,500m drilling programme at a second prospect, San Miguel, some

10km north east of San Antonio, where historical drilling had indicated further uranium mineralisation.

Results from that drilling confirmed the area’s prospectivity with intersections reported of 13.9m @ 330ppm

eU3O8, 9m @ 250ppm eU3O8 and 14.8m @ 180ppm eU3O8.

Figure 5: Location of Yuty Project Figure 6: Yuty Prospects within the Lease

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Considerable further potential exists both at San Antonio and within the greater Cue concession area. Cue

has expressed the intention of continuing an active exploration and assessment programme. In particular, it

is expected that Cue will focus on:

• expanding and assessing the feasibility of the San Antonio Deposit

• following up on encouraging initial metallurgical and permeability test work

• drilling at additional prospects indicated by historical drilling, including San Miguel, Typychaty and

Yaratiy

• expanding exploration to the rest of the concession area that has been subjected to little or no

modern exploration

Resource Star is excited by the opportunity to acquire this strategic interest in Cue and, subject to the

transaction being approved by shareholders, is confident that it will be an important component of the

Company’s growth ambitions.

As advised to shareholders on 22 June 2011, discussions are continuing between Resource Star, Red Rock

Resources and Regency Mines to finalise the transaction and, when they are completed, a shareholder’s

meeting will be called to vote on the proposal. The meeting is expected to be held in the September quarter.

An Independent Expert’s Report prepared by Lonergan Edwards & Associates Limited, with technical input

provided by SRK Consulting (Australasia) Pty Ltd, will be provided to shareholders for their consideration.

Other Projects

On 29 November 2010, Resource Star announced that it had concluded an Option and Sale Agreement with

Aldershot Resources Ltd over the Yuinmery Uranium Project in the Yilgarn. The option period under the

Agreement was due to expire on 16 June 2011. Resource Star elected not to exercise the option to acquire

Yuinmery as it was determined that the Project did not fit the Company’s investment criteria.

Resource Star has submitted documentation to the WA Department of Mines and Petroleum to relinquish the

Lake Barlee Project. This early stage, low grade calcrete project now has reduced priority relative to other

more advanced and more prospective projects in the Company’s portfolio, and the expenditure required to

maintain the tenement in good standing could not be justified.

The Board continues to consider opportunities and projects presented to it that meet Resource Star’s criteria

for its portfolio.

Corporate

Cash Position

As at 30 June 2011 the Company held $481,000 in cash.

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Subsequent Events

Machinga Heavy Rare Earths Project - Malawi

On 11 July 2011 Globe provided its shareholders with an update on the Machinga Heavy Rare Earths project

in Malawi. Globe has earned 20% of the Project to date from Resource Star and can earn up to 80% of the

Project by completing a Feasibility Study.

Globe outlined a $500,000 exploration plan for 2011 which includes 5,000m of drilling. Globe also made the

following comments about Machinga:

• “Machinga is in the right location, and initial results confirm the potential of the Project.”

• “Machinga North is just one of seven targets within the EPL; enormous potential to confirm a significant

economic REE deposit.”

• “Globe is excited at the now demonstrated heavy rare earth potential at Machinga, and in particular, the

very high grades of dysprosium that have been encountered.”

• “The Company is very excited by the 2011 drill programme and regional exploration at Machinga. A

steady flow of results will be released over the remainder of the year.”

• “By the end of 2011, Globe will have a better understanding of the REE potential at Machinga. Clearly,

the potential is significant.”

Figure 7: Exploration Targets at Machinga

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Resource Star is pleased with the progress Globe has been making at Machinga. Most importantly, we note

the very high heavy rare earth ratio to total rare earths previously identified at Machinga North and the very

high grades of dysprosium that have been found to date. We are looking forward to receiving the results of

the upcoming exploration programme at Lingoni, and Machinga North, Central and South over the remainder

of the year.

Malawi

Resource Star is monitoring the situation in Malawi following the civil disturbances in the last two weeks. At

this stage these events have had limited impact on the Company’s day to day activities.

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Company Directory Resource Star Ltd

ABN 71 098 238 585

Registered Office:

Level 9, 440 Collins St

Melbourne, Victoria, Australia, 3000

Phone: +61 3 9607 1322 Fax: +61 3 9607 1329

Website www.ResourceStar.com.au

Email [email protected]

Directors

Andrew Bell (Chairman)

Simon Heggen (Managing Director)

Ross Kestel (Non Exec)

Rob Benussi (Non Exec)

Cyril Geach (Non Exec)

Management

Richard Evans (Technical Consultant)

Baker Khudeira (Exploration Manager)

Eryn Kestel (Company Secretary)

Share Registry

Computershare Ltd

GPO Box D182

Perth, WA, 6840

ASX Listed Securities (as at 30 June 2011):

56,928,182 ordinary shares

Competent Person Statements

The information in this report that relates to Exploration Results is based on information prepared by Mr Richard Evans,

who is a Member of The Australasian Institute of Mining and Metallurgy. Mr Evans is a consultant of the Company and

has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to

the activity which he is undertaking, 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 Evans consents to the inclusion in

the report of the matters based on his information in the form and context in which it appears.

Forward Looking Statements

This report contains ‘forward-looking information’ that is based on the Company’s expectations, estimates and

projections as of the date on which the statements were made. This forward-looking information might include, among

other things, statements with respect to the Company’s business strategy, plans, objectives, performance, outlook,

growth, shareholder value, projections, targets and expectations, Mineral Reserves and Resources, results of exploration

and related expenses, property acquisitions, mine development, mine operations, drilling activity, sampling and other

data, grade and recovery levels, future production, capital costs, expenditures for environmental matters, life of mine,

completion dates, uranium prices, demand for uranium, and currency exchange rates. Generally, this forward-looking

information can be identified by the use of forward-looking terminology such as ‘outlook’, ‘anticipate’, ‘project’, ‘target’,

‘likely’, ‘believe’, ‘estimate’, ‘expect’, ‘intend’, ‘may’, ‘would’, ‘could’, ‘should’, ‘scheduled’, ‘will’, ‘plan’, ‘forecast’ and

similar expressions. Persons reading this report are cautioned that such statements are only predictions, and that the

Company’s actual future results or performance may be materially different.

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Forward-looking information is subject to known and unknown risks, uncertainties and other factors that may cause the

Company’s actual results, level of activity, performance or achievements to be materially different from those expressed

or implied by such forward-looking information. Forward-looking information is developed based on assumptions about

such risks, uncertainties and other factors set out herein, including but not limited to the risk factors set out in the

Company’s Annual Report.

This list is not exhaustive of the factors that may affect our forward-looking information. These and other factors should

be considered carefully and readers should not place undue reliance on such forward-looking information. The Company

disclaims any intent or obligations to update or revise any forward-looking statements whether as a result of new

information

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resource star quarterly report to 30 june 2011 · • cue owns 100% of the yuty uranium project in...

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