The results are from the first stage of the exploration programme that investigated two (Big Yellow and Gaobis) of the 14 uraniferous alaskites identified to date. The results show reasonable grades (around 100ppm) with higher grade sections e.g. over 200ppm and that mineralisation tends to be close to surface and continues to depth. The results also show significant sections that are not mineralised or of low grade implying that there would be waste to mine, which is not unusual.


These drill results form only the very beginning of the programme and the company is still working to better understand the geology of the alaskites within the property. It has barely scratched the surface. As exploration work continues then understanding of the geology of the deposits will improve which should lead to a more targeted programme with which to develop a resource.


Drilling recommenced on 17th January having stopped on the 18th December for the seasonal holidays. Xemplar plans to grid drill each uraniferous alaskite to a depth of 200m, which will require 10-15 vertical holes per body (wide spacing). Big Yellow will be the first of the alaskites to be drilled out as part of this initial programme. What is potentially the largest alaskite Aluriesfontein is scheduled for drilling early this month. This programme will help identify the alaskites with the most potential for development.

The company has also renewed all of its Exclusive Prospecting Licenses (EPLs) as of 31st January 2008 for an additional two years, which is essential for work to continue.


We feel there remains a strong possibility that exploration work could yield an economic resource for a large scale low-grade operation that may be a major source of supply to world markets. The principal risk is exploration, however, these latest results confirm the presence of uranium and our view that within such a large prospect it should be possible to pull together an economic resource. Such a resource could make the company an attractive acquisition target for a major. It appears necessary to secure a supply source for a nuclear facility before long term contracts can be signed for uranium supply.

Xemplar has been highly valued for a stock which up till now had no drill results. But may offer value provided investors are comfortable with the exploration risk and are positive about the outlook for uranium markets.

It will be key for the company to carry out as much drilling as possible as quickly as possible since there are other uranium projects at similar stages of evolution e.g. Extract Resources Husab project also in Nambia. Availability constraints for drill rigs and operators are an issue, and for the evolution of such a large resource area it will take time to fully determine the extent and grades of the different alaskites.

Our valuation scenarios (US$2-7bln on a peer group comparison see note dated 7th January 08) are contingent on a resource being developed which could take 12-18months and cost around US$50m. The company would need to raise funds to complete a resource calculation. However, it is possible that a major would place a bid before a resource is developed provided that the exploration programme carried out gives sufficient confidence to an acquirer of the size of the deposit.