Pele: Elliot Lake Overview

Pele is focused on advancing its 100-percent owned Elliot Lake Uranium Project toward objectives of development and production. The project hosts a NI 43-101 compliant resource of 6.4 million pounds of “indicated” U₃O₈ and 36.1 million pounds of “inferred” U₃O₈ with the potential for significant upgrade and expansion.

The Company has received a positive Scoping Study for the project, authored by Scott Wilson Roscoe Postle Associates, which provides the basis for an economically-viable, environmentally-compliant uranium mining and processing operation. The Scoping Study focused on U₃O₈ mineralization in the Main Conglomerate Bed (“MCB”) that lies within the Adit Block, a 600 by 800-metre area of near-surface and relatively higher-grade mineralization that presents a favourable location for initial mining. The MCB lies about 10 to 15 metres above the basement rocks and extends across a strike length of 6,000 metres, and a dip length of at least 3,800 metres, all within the Pele property. All stated Elliot Lake resources are hosted within the MCB.

The Scoping Study presents a base case mining and processing scenario that includes less than half of Pele’s known uranium resources and which retains significant upside potential in many of its parameters. Highlights of the Scoping Study include:

• An 18-year mine life, producing 826,000 pounds of U₃O₈ annually at a cash operating cost of US$55.51 per pound.
• Initial capital costs of C$195-million (which includes a contingency of C$28.5-million); and C$63-million in sustaining capital costs over the life of the mine, which includes C$31-million for decommissioning.
• An innovative mining and processing plan comprised of 40-percent conventional mining and acid-leaching, and 60-percent underground bioleaching.

The updated NI 43-101 compliant mineral resource estimate at Elliot Lake is as follows:

Elliot Lake Mineral Resource Estimate

The mineral resource was estimated using a cut-off grade of 0.03-percent U₃O₈ and a uranium price of US$55 per pound U₃O₈, at a C$/US$ exchange rate of 1.0:0.9. The Elliot Lake deposit extends down-plunge and to the east beyond the boundaries of the resource. Based on historical wide-spaced drilling, Scott Wilson RPA estimates that these areas could contain an additional 35 to 40 million tonnes grading from 0.04 to 0.05-percent as a potential mineral deposit.¹

The Scoping Study highlights several potential opportunities to improve project economics from the base case scenario, including the following:

• Further optimization of the mine design and mining schedule may result in reduced operating costs and/or increased production rates.
• Additional drilling may expand higher grade zones beyond the Adit Zone, particularly in areas adjacent to the flanks of a topographic high in the basement rocks.
• Additional higher-grade mineralization may be hosted within the Basal Conglomerate Bed at or near the Unconformity between the basement rocks and the overlying sediments, an excellent exploration target with significant “blue sky” potential.
• The recovery of Rare Earth Oxides may provide substantial economic benefit.

The Company has initiated preparations to deliver a Letter of Intent to apply to the Canadian Nuclear Safety Commission (“CNSC”) for licensing a uranium mine at the project. The Letter of Intent will enable the CNSC to more effectively provide guidance to Pele on the preparation for the Environmental Assessment and the licensing application process.

Using the base case scenario presented in the Scoping Study, with a fixed U₃O₈ price of US$95 per pound and initial capital costs funded with all-equity cash advances, the project has an attractive IRR of 13-percent. However, at incrementally higher U₃O₈ prices, significantly higher rates of return are achievable. For example, at a U₃O₈ price of US$115 per pound the IRR increases to 21-percent, and at US$135 per pound the IRR increases to 28-percent. (These IRR figures are significantly higher when a partial debt financing is considered.) This illustrates the explosive leverage of the project to the uranium price.

Additional details of the Elliot Lake Scoping Study can be found in the Elliot Lake project section or in Pele’s press release dated October 4, 2007.

The Elliot Lake mining camp was once known as “the uranium capital of the world” and has produced more than 270 million pounds of U₃O₈ from stratigraphically-bound deposits that demonstrate remarkable consistency over extensive areas. Management believes that as an established mining camp with excellent infrastructure, well-understood geology, and a politically-stable and mining-friendly jurisdiction, Elliot Lake is an ideal location for the development of a secure and reliable long-term uranium supply.

Notes:
¹The potential quantity and grade of the potential mineral deposit identified in the Report are conceptual in nature and there has been insufficient exploration to define a mineral resource and it is uncertain if further exploration will result in the targets being delineated as a mineral resource.