Mongolian Resource Play

[Tackler]

Western Prospector acquires five Saddle Hills licences

2004-10-01 09:17 ET - News Release

Mr. John Brock reports

SADDLE HILLS URANIUM PROJECT ACQUIRED IN MONGOLIA

Western Prospector Group Ltd. has acquired five contiguous exploration licences covering an area of approximately 460 square kilometres (46,000 hectares) within the western portion of Mongolia's Saddle Hills uranium basin.

There are two equally important aspects of the Saddle Hills uranium project: the inclusion of the Gurvanbulag uranium deposits which were partially developed by the Russians during the 1980s, and the presence of numerous uranium exploration targets identified by prior geophysical surveys and exploratory drilling within a 75-kilometre-by-15-kilometre Mesozoic volcano-sedimentary basin.

The reported style of uranium mineralization, extensive development for production, potential for grade enhancement and indication of additional deposits make the Saddle Hills uranium project an important acquisition for Western Prospector.

Uranium mineralization

The Saddle Hills uranium mineralization occurs in a thick sequence of Mesozoic volcanic rocks that grade upward from a multilayered sequence of volcaniclastics in the lower portion to more massive flows in the upper portion. The uranium is hosted within the lower sequence as both sedimentary "roll front" and structurally controlled deposits.

A cluster of uranium deposits along an eight-kilometre length known as the Gurvanbulag deposits, now acquired by Western Prospector, were the subject of extensive underground development, including four shafts. One concrete-lined four-compartment shaft is 525 metres deep. On one of eight levels, there is an estimated 10,000 metres of underground lateral development and stoping in preparation for mining on the 200-metre level.

A feasibility study, completed in 1987 by the Russians, is in hand and is being reviewed by Western Prospector's geological consultant, Dr. Gerald Harper, PGeo (ON), PEng (ON). The feasibility study is based on developing a minimum of 10 gently dipping stacked deposits defined by extensive underground development. The Gurvanbulag deposits are reported to host 10.56 million tonnes grading 0.152 per cent U or 0.179 per cent U(3)O(8) for a contained 41.7 million pounds of U(3)O(8). The uranium resource has been classified as C1 + C2 resources under the Russian reserve classification system and tabled as follows:

C1 Resources 4.2 million tonnes 0.245 per cent U(3)O(8) 22.7 million lbs U(3)O(8)

C2 Resources 6.4 million tonnes 0.136 per cent U(3)O(8) 19.0 million lbs U(3)O(8)

Dr. Harper, the qualified person for the Saddle Hills uranium project, advises that the resources referenced above are calculated from prior work by Russian exploration groups and may not be considered compatible with resources as defined under Canada's National Instrument 43-101. Russian resource nomenclature and definitions with a comparison to North American methodology are well illustrated in an article by Stephen Henley in Mining Journal, Aug. 20, 2004.

Work plan

Western Prospector has commenced a surface exploration program at Saddle Hills, the results of which will be reported when available.

Upon completion of all data compilation, Western Prospector will commission a report (compliant with National Instrument 43-101) on the Saddle Hills project.

The acquisition agreements

Subject to TSX Venture Exchange approval, a 100-per-cent interest in four of the licences comprising the Saddle Hills has been purchased from Brant Enterprises Inc., for a total consideration of $5,000 (U.S.) and the issuance of 200,000 shares in the capital of Western Prospector to Brant. The fifth licence is subject to an option agreement with a private Mongolian corporation, whereby Western Prospector has the right to purchase a 100-per-cent interest in the license, in consideration for staged payments to the vendor totalling $1,025,000 (U.S.) ($75,000 (U.S.) paid) over the next four years. The vendor will retain a 2 per cent net smelter return, which Western Prospector may purchase at any time for $1.0-million (U.S.).