Announcement to the Australian Stock Exchange5 June 2007Option...

Announcement to the Australian Stock Exchange
5 June 2007
Option Exercised over Swedish Uranium
Projects
• Hodges has exercised its option to earn up to a 70% interest in four
projects with identified uranium mineralisation in Sweden.
• High grade uranium values from sampling and previous drilling
confirmed.
• Previous surface results up to 28% uranium oxide.
• IOCG, intrusive and stratiform uranium potential exists over a
significant area.
• Hodges due diligence confirms high grade potential
The directors of Hodges Resources Limited (ASX: HDG) (“Hodges” or “the Company”)
are pleased to announce that the Company has completed its technical and legal due
diligence of the Swedish Uranium Projects which were subject to the agreement
announced on 4 April 2007. The company has formally advised the Vendor that the
option has been exercised and Hodges will commence earning equity in accordance
with the terms of the farmin agreement, subject only to necessary regulatory
approvals.
The Swedish Uranium projects are divided into four project areas:
• Norr Dottern
• Harrejokk
• Asnebogruvan, and
• Sjaule
Hodges’ due diligence team visited Norr Dottern, Harrejokk, and Asnebogruvan. These
project are located within mature mining provinces. Access to Sjaule was not possible
during the due diligence period. The field inspection and confirmed Norr Dottern,
Harrejokk, and Asnebogruvan contain bedrock mineralisation which had previously
identified by Swedish Geological Survey (“SGU”) drilling. The styles of mineralisation
include intrusive or hydrothermal vein related and potentially Iron Oxide Copper Gold
(“IOCG”) targets. The most prominent example of IOCG deposits is Olympic Dam in
South Australia.
Technical investigations included rock chip sampling and spectrometer screening of
outcrops, chip samples and drill core. The semi quantitative portable spectrometer
analysis supports the conclusions of historic work on the deposits. A suite of samples
have been submitted for laboratory analysis and the results will be released when all
assays have been completed.
Norr Dottern (4 permits)
The Norr Dottern Project is located in the Arjeplog-Arvidsjaur uranium province of
northern Sweden approximately 700km north of Stockholm (see Location Map).
The SGU discovered uranium mineralisation in the area in 1974 from boulder tracing,
mapping and sampling at 8 prospects. Historic sampling of only a small set of boulders
averaged 0.32% U3O8 and ranged up to 1.0% U3O8. SGU reports identify advanced
targets with ground geophysical work and diamond drilling. This work was successful
in identifying high-grade, narrow bedrock uranium mineralisation associated with
roughly north north-east fractures.
Norr Dottern 1 drilling includes best results of 5m @ 0.10% from 65m (DOT77003).
A small exploration pit at Norr Dottern 2 reportedly exposed a 5 x 1.5m mineralised
zone with uranium grades of up to 28% over 0.2m. A translated section of the SGU
report states:
“During detailed boulder work in 1974 the SGU discovered a radioactive
fracture on top of the Norr Döttern mountain. The fracture was uncovered
for over 5m. Uranium sits in uraninite in the fracture and dispersed finely
around it. The content over a few dm over the fracture is 20% U and the
mean value is approx 3% over a width of 3metres. In 1974 a
simpler/smaller uncovering was done by hand. 1975 a ground-emanometry
was conducted. 1979 a dense magnetometer measurement was conducted
which showed that the fracture appears as a distinct low-magnetic
anomaly.”
Both Norr Dottern 1 and 2 targets are considered significant due to drill intercepts or
mineralised outcrop discovered after tracing radioactive boulders to their source. The
diamond core from Norr Dottern 1 and 2 was viewed by Hodges geologists. A
scintillometer confirmed that radioactive intervals were sampled by the SGU from
hematite-carbonate altered fractures in coarse-grained pink granite or epi-syenite
(quartz-poor syenite)
The Norr Dottern project contains 8 significant uranium prospects over 35 sq km with
varying levels of follow up completed to date. High grade mineralisation identified in
outcrop and drilling has not been adequately tested and important structural controls or
trends have not been explored along strike. Drill targets will be defined by
geochemical sampling and ground geophysical surveys.
Photo 1: Norr Dottern historical drill core
Harrejokk Project (2 permits)
The Harrejokk Project is also located in the Arjeplog - Arvidsjaur uranium province of
northern Sweden 700km north of Stockholm (see Location Map).
Uranium mineralization was discovered at Harrejokk by the SGU in 1970. Uranium
mineralisation occurs within a granitic syenite and high uranium grades are common.
Sixty five boulders averaged 0.25% U3O8 with values ranging from 0.1% to 4.2%
U3O8.
At Harrejokk East , the Swedish Geological Survey drilled twenty five drill holes in
1974 to test for the source of radioactive boulder trains. Eleven drill holes intersected
uranium mineralisation. Two moderately south-east dipping uranium mineralised
structures were discovered and best drill results included 4.5m @ 0.14% U3O8 from
85m and 5.3m @ 0.11% U3O8 from 34m.
Photo 2: 1 Radioactive boulder at Harrejokk West
Asnebogruvan Project (1 permit)
The Asnebogruvan Project is located approximately 400km west of Stockholm. (see
Location Map).
The presence of intrusives, hematite breccias and the multi commodity mineralisation
in the area has drawn some comparisons with IOCG style mineralisation (e.g. Olympic
Dam). Sandstone hosted mineralisation is also widespread in the district but usually
only 1-2m thick. The claim contains three main prospects:
a) The central Langvattnet structurally controlled uranium mineralisation within
hematite breccia and rare earth elements (analyses from old workings of up to
0.25% Pb, 0.34% Ni, 374ppm Co, 24.8% Fe, 28g/t Au, 0.32% W, 2.7% Te,
4%U and 0.17% Th),
b) the Haserud or Asnebo East prospect located 1.5 km east of Langvattnet
whichcontains uranium and copper mineralisation intersected in 9 diamond drill
holescompleted by the SGU in 1983-84 (peak analysis of 460ppm U in drilling),
and
c) the Asnebo West prospect which is a copper showing where 9 diamond drill
holes were drilled by the SGU in 1983. This revealed a copper-silver
mineralised contact between sandstone and calcareous schist.
Sampling by the SGU in 1980 within two pits assayed 4.7% uranium oxide (U3O8), 28
g/t gold, 0.32% wolfram, 2.7% tellurium, 0.15% yttrium, 10g/t silver and 25% iron oxide
whilst a grab sample from a second pit assayed 12.6 g/t gold, 0.11% wolfram, 1.0%
tellurium, 10g/t silver and 30% iron oxide (uranium was not analysed in this case).
Pitchblende-bearing mineralisation was noted to occur within fractures and faults
within a hematite brecciated sandstone. Within the local area seven more uranium
bearing fractures were noted.
The area was also explored for stratabound uranium mineralisation in 1970 by the
SGU. One and a half kilometres east of sampled pits, still within the claim area, drilling
discovered an irregular uranium horizon averaging 0.054% U3O8.
During recent site visits by Hodges geologists, radioactive mulloch was sampled from
prospecting pits at Asnebogruran. The accompanying high grade gold, base metal and
rare earth values suggest that an IOCG mineralisation style is potentially a valid
comparison. Further work will be required to confirm this model. The project
represents an important exploration target of Uranium and multi-commodity
mineralisation.
Sjaule Project (1 permit)
The Sjaule Project is located 560km to the north west of Stockholm on the border with
Norway (see Location Map).
Uranium mineralisation at Sjaule is hosted within north east trending, steeply dipping
fractures zones over an area of 700m by 950m. Five samples assayed by the Swedish
Geological Survey in 1976, ranged up to 0.57% U3O8 and averaged 0.22% U3O8 over
the main mineralised structure which is 20 metres wide and 300 metres long zone.
Uranium mineralisation is characterised by pitchblende and brannerite. Pitchblende is
a naturally occurring uranium oxide (UO2) and brannerite is a complex oxide of
uranium, calcium, titanium and iron.
The project was considered by Swedish governmental geologists in the 1970s to be
the most prospective project within the Hotagen Inlier and has yet to be drill tested.
TERMS OF THE AGREEMENT
Under the terms of the agreement, Hodges can initially earn 47.5% by completing the
following:

payment of US$60,000 cash on execution of the agreement

issuing of 1,500,000 fully paid ordinary shares

Issuing 1.5M Tranche A options exercisable at $0.50,

1.5M Tranche B options exercisable at $0.75, (the Tranche A options must be
exercised before the B tranche is allotted),

Issuing 1.5M Tranche C options exercisable at $1.00 (the Tranche B options
must be exercised before the Tranche C is allotted),

Spending US$1,000,000 over four years
This agreement is conditional upon various regulatory approvals as well as
shareholder approval. Hodges has completed its due diligence and now intends to
convene a shareholders meeting to approve the issue of the securities included in the
consideration.
Hodges has the right to increase its equity to 70% by fully funding a successful
feasibility study. The vendors’ free-carried interest will remain until completion of a
bankable feasibility study.
The results have been reported in a range of technical reports sourced from the
Swedish Geological Survey dating from 1969 to 1991. It is now the Company’s
intention to commence a more systematic evaluation of the projects and design an
exploration programme over these projects.
SWEDEN URANIUM SECTOR
Sweden has an estimated 15% of the world's uranium deposits and ten nuclear power
reactors which provide approximately 50% of the countries electricity. Uranium
exploration activity in Sweden peaked in the late 1970’s but was abandoned when the
Swedish Government decided to defer any decision to mine uranium for a thirty year
period. This was in spite of the country commissioning several nuclear power plants.
Sentiment in the uranium exploration sector in Sweden has renewed enthusiasm due
to a perceived change in public attitude towards uranium mining. Today there are a
number of exploration projects in advanced resource definition and scoping stages in
Sweden. The swing in public opinion, along with the fact that Sweden is a nuclear
power consumer, gives explorers the hope that a uranium exploitation permit will be
granted for the first time in the country when it is inevitably lodged.
The Norr Dottern, Harrejokk, Asnebogruvan and Sjaule Projects are considered
prospective for the discovery of significant high grade vein style uranium
mineralisation. They represent a positive entry point for Hodges into the uranium
exploration sector in a country that has a long history of exploration and mining as well
as advanced regulatory system.
For further information, please call
Adrian Griffin Nathan McMahon
Managing Director Non Executive Director
Mobile: 0418 927 658 Office: 08 9388 2967
DISCLAIMER
Information in this report pertaining to mineral resources and exploration results has been prepared relying on
publicly available information provided by the vendor. The information has been compiled by Mr Don Horn who is
a Member of the Australasian Institute of Mining and Metallurgy. The information reported is contained in a range
of open file reports which are publicly available from the Swedish Geological Survey. Mr Horn has sufficient
experience with respect to mineral exploration and to the activities being undertaken and qualifies as a competent
person as defined in the 2004 edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral
Resources and Ore reserves’. Hodges has no reason to believe the information is not accurate and intends to verify
the information whilst conducting due diligence on the projects. Mr Horn consents to the inclusion in the report of
the matters on his information in the form and context in which it appears.