Standard Uranium Inc.

Standard Uranium Inc.

October 11, 2005 09:50 ET

Standard Uranium Inc.: Company Commences Action to Become a Significant South Texas In-situ Leach Uranium Producer

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - Oct. 11, 2005) -


Standard Uranium Inc. (the "Company" or "URN")(TSX VENTURE:URN) is pleased to announce that it has signed a binding Letter of Intent ("LOI") with privately held Everest Exploration Inc. ("EEI") and Everest Resources Company ("ERC") outlining the terms for a 99%-1% URN-EEI joint venture ("JV") that will position the Company to become a south Texas in-situ leach ("ISL") uranium producer. Upon closing of the transaction, this new venture will provide the Company with the facilities and expertise to fast-track URN from junior explorer to uranium producer. Through 99% ownership in the JV, the Company plans to use the Hobson Plant, an existing recovery facility located near Hobson, Texas, to produce a saleable uranium oxide product from ISL solution mining of the Palangana property located in Duval County, Texas. The JV will control the Hobson Plant, Hobson satellite production facilities, Palangana leases and an extensive Texas uranium exploration database. Strategically, this transaction would put the Company in a strong position for growth in the ISL mining sector at a time of increasing energy demands and surging uranium prices. Further, the Company will enjoy a strong competitive advantage in the permitting, construction and operation of additional ISL uranium mining projects in Texas and the U.S.

Completion of the proposed transaction is subject to a number of conditions, including, but not limited to, completion of due diligence, a Company financing, and receipt of all regulatory approvals (including that of the TSX Venture Exchange). There can be no assurance that the transaction will be completed as proposed or at all.

Terms of the Letter of Intent

Under the terms of the LOI, the Company will make a cash payment to EEI of US$4.5 million for the permitted Hobson processing plant, the associated satellite mining facilities, and the Texas database. EEI will maintain a one-percent participating interest in the JV and will be the nominal operator of the production facilities. EEI will receive a net production royalty of US$0.75 per pound on the first 8,000,000 pounds of uranium oxide ("U3O8 or yellowcake") produced from the Hobson plant.

Concurrent with closing, the JV will purchase certain leases covering the Palangana mining property ("Palangana or the Property") for a payment of US$705,000 to ERC. The JV will assume the existing terms of the Property leases, including annual property payments and a sliding scale leasehold royalty burden.

Total cash payments upon the signing of the definitive agreement include US$4.5 million to EEI and US$705,000 to ERC for a combined total of US$5,205,000. The Company has made an initial payment of US$100,000 for exclusivity to be followed by two additional US$100,000 payments to be made at 30-day intervals for exclusivity during the 90-day LOI period. Upon the Closing, the exclusivity payments will be credited to the purchase price.

The Hobson Plant

Located on 7.5 acres near the town of Hobson, Texas, the Hobson plant was initially put into production in 1977 with final production in 1988. Peak production was achieved in 1986, when the plant produced 621,000 pounds of yellowcake. Current plans are to increase the plant's annual production capacity from 750,000 to 1,000,000 pounds. The Hobson facility is a central processing facility that includes offices, a geochemical lab and a maintenance shop capable of handling uranium-loaded resin from multiple mine sites in south Texas.

Palangana Mine Property

The 6,200 acre Palangana property position is located about 4 miles north of Benevides, Texas in Duval County. Uranium was originally discovered on the Palangana Lease in the 1950's, with Union Carbide Corporation ("UCC") conducting exploration and later using the property for their pioneering work in developing ISL technology between 1967 and 1979. By 1980, UCC had produced 318,000 pounds of yellowcake from a 17-acre production area that was subsequently reclaimed by Rio Grande Resources. An EEI internal evaluation (1980) yielded an estimated historic ISL resource of 4.84 million pounds of U3O8 based on a grade thickness cutoff of 0.5 from mineralized zones averaging 9.25 feet thick and grading 0.182% U3O8. Chevron purchased the project from UCC later in 1980 and evaluated a contiguous portion of the resource within and to the north of the production area, where they estimated a historic open pit resource of 3,229,000 tons at a grade of 0.125% U3O8 (8.1 million pounds U3O8) at an average depth below surface of 270 feet (Chevron internal report, 1983). Chevron drilled 224 rotary holes on the Property, but never developed the mine due to low uranium prices. ERC recently acquired the Property on behalf of EEI in January 2005. Both EEI and URN consider Palangana to be an ideal property for south Texas uranium production due to the excellent resource base, past mining history, favorable geology and location.

The information provided in this section was taken from various EEI property reports. The Palangana historic resource estimates made by Chevron and EEI are considered to be relevant, and are believed to be reliable based on the amount and quality of historic work completed. At the time of this news release the Company has not performed sufficient independent work to verify the resource estimate. Grade thickness is defined as the length of the drill intercept in feet multiplied by the U3O8 grade of the intercept in percent.

Mining Joint Venture

Upon closing of this transaction, the JV plans to begin resource definition drilling on the Property. This exploration and delineation program will benefit from an extensive database of over 1,200 exploration holes generated by UCC, Chevron and EEI, detailed data from another 3,000 production area holes, and experienced personnel familiar with the Property and other south Texas ISL projects.

Production area permitting will begin once a sufficient reserve has been delineated by the planned exploration and delineation drill program. Upgrading and modernization of the Hobson production plant and satellite facilities will be ongoing.

EEI History, Database and Technical Staff

EEI has been active in the uranium exploration and acquisition business since December of 1977, and started ISL uranium production in 1979. EEI developed producing ISL mines in Texas on the Hobson, Las Palmas, Mt. Lucas and Tex-1 properties, while their affiliate Everest Minerals Corporation developed the world class Highland Uranium Project in Converse County, Wyoming. Reports provided by EEI note that the Hobson Plant produced 2.7 million pounds during the 1980's. The Highland Uranium Project (now Cameco) has produced over 18 million pounds (Wyoming State Geologist web site and other verbal communication, 2005) and was the largest uranium ISL operation in the U.S. until recently. EEI was also the first company to prove the efficacy of long distance transport of loaded uranium-bearing resins from the mine site to the plant.

EEI brings an extensive geologic and mining database to the JV. This information will be organized for use with future Texas projects. The Company is finalizing agreements with key technical personnel to obtain their services so that the JV can move forward simultaneously on exploration, operations and new acquisitions.


Upon the closing of this transaction, URN will begin a transition from uranium explorer to an up and coming domestic producer. With existing permitted production facilities and a proven ISL uranium producing property position in south Texas, URN will be well positioned to fully utilize a strong exploration and development team while becoming a competitive uranium producer. Compared to conventional open pit or underground mining methods, ISL technology has several advantages including: lower capital costs and improved cash flow, less lead time to production, lower energy use and equipment maintenance, exceptionally low labor per unit of product, and significant environmental benefits.

Further Comments on Historic Resources and Other Company News

All resource estimates quoted herein are based on data and reports prepared by previous operators. The Company has not completed the work necessary to independently verify the accuracy and has not assigned a category to the mineral resource estimates. The Company is not treating the mineral resource estimates as National Instrument 43-101 defined resources verified by a qualified person. The historical estimates should not be relied upon. The Palangana property in-situ leach historic resource estimate is currently being re-evaluated by an independent Qualified Person as defined by National Instrument 43-101 and will be included as part of a 43-101 Report submitted to the TSX Venture Exchange with closing. This news release has been reviewed and approved by Company President Mr. Nathan Tewalt (P. Geo), a Qualified Person as defined by National Instrument 43-101.

In other matters, the Company has entered into an agreement with Energy Metals Corporation for the purchase of data related to URN's Maybell Property located in northwestern Colorado. The terms of the Agreement include the issuance of 10,000 common shares of the Company and is subject to the approval of all applicable regulatory authorities.

For additional information related to this news release and the Companies other projects, please check our website at:

The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release.

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