Indicate by checkmark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act. Yes [X] No [ ]
State issuer’s revenues for its most recent fiscal year: $0.00.
The aggregate market value of the small business issuer’s common stock held by non-affiliates of the registrant as of September 25, 2007 was approximately $15,575,990. Solely for purposes of the foregoing calculation, all of the registrant’s directors and officers are deemed to be affiliates.
APPLICABLE ONLY TO CORPORATE ISSUERS
The number of shares outstanding of the registrant’s Common Stock, par value $.01 per share (the "Common Stock"), as of September 23 2007, was 66,849,969
Transitional Small Business Disclosure Format:
Yes [ ] No [X]
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URANIUM STAR CORP.
Report on Form 10-KSB
For the Fiscal Year Ended June 30, 2007
TABLE OF CONTENTS
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PAGE
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PART I | 1 | |
Item 1 | Description of Business | 1 |
Item 2 | Description of Property | 18 |
Item 3 | Legal Proceedings | 18 |
Item 4 | Submission of Matters to Vote of Security Holders | 18 |
PART II | 19 | |
Item 5 | Market for Common Equity and Related Stockholder Matters and Small Business Issuer Purchases of Equity Securities | 19 |
Item 6 | Management’s Discussion and Analysis or Plan of Operation | 20 |
Item 7 | Financial Statements | 28 |
Item 8 | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure | 28 |
Item 8A | Controls and Procedures | 28 |
Item 8B | Other Information | 29 |
PART III | 30 | |
Item 9 | Directors, Executive Officers, Promoters and Control Persons; Compliance with Section 16(a) of the Exchange Act | 30 |
Item 10 | Executive Compensation | 32 |
Item 11 | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters | 36 |
Item 12 | Certain Relationships and Related Transactions | 38 |
Item 13 | Exhibits | 40 |
Item 14 | Principal Accountant Fees and Services | 41 |
Signatures | 42 | |
FORWARD-LOOKING STATEMENTS
This Report contains, in addition to historical information, forward-looking statements regarding Uranium Star Corp. (the "Company" or "Uranium Star"), which represent the Company’s expectations or beliefs including, but not limited to, statements concerning the Company’s operations, performance, financial condition, business strategies, and other information and that involve substantial risks and uncertainties. The Company’s actual results of operations, some of which are beyond the Company’s control, could differ materially. For this purpose, any statements contained in this Report that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the generality of the foregoing, words such as "may," "will," "expect," "believe," "anticipate," "intend," "could," "estimate," "continue" or the negative or other variations thereof or comparable terminology are intended to identify forward-looking statements. Factors that could cause or contribute to such difference include, but are not limited to, limited operating history; speculative nature of mineral property exploration; need for additional financing; competition; dependence on management; and other factors discussed herein and in the Company’s other filings with the Securities and Exchange Commission.
PART I
ITEM 1. DESCRIPTION OF BUSINESS
Corporate Organization and History within Last Five Years
Uranium Star Corp. (formerly Yukon Resources Corp.) was incorporated in the State of Nevada on March 1, 2004. The fiscal year-end of the Company is June 30.
Until December 22, 2006, we were known as “Yukon Resources Corp”. At the annual meeting of stockholders of the Company on December 22, 2006, the stockholders authorized, among other things, the continuance of the Company under the laws of the State of Minnesota through a proposed merger of the Company with a newly-formed subsidiary of the Company to be incorporated under the laws of the State of Minnesota. The Company has not yet incorporated such subsidiary or completed the continuance, but may do so in the future.
There were no bankruptcy, receivership or similar proceedings since incorporation. There have been no material reclassifications, mergers, consolidations, purchases or sales of any significant amount of assets, other than in the ordinary course of business, since the date of the incorporation of the Company.
Business Development
The Company is an exploration stage company engaged in the search for uranium, gold and other minerals. The Company has an interest in properties located in Québec and British Columbia, Canada, Madagascar (since August 22, 2007), Arizona, USA and Finland. The property located in Québec, Canada (the “Sagar Property”) is the primary exploration target of the Company. None of the properties in which the Company holds an interest has known mineral reserves of any kind at this time. As such, the work programs planned by the Company are exploratory in nature
UNTIL WE CAN VALIDATE OTHERWISE, THE PROPERTIES OUTLINED BELOW HAVE NO KNOWN MINERAL RESERVES OF ANY KIND AND WE ARE PLANNING PROGRAMS THAT ARE EXPLORATORY IN NATURE.
Further details regarding the Company’s properties, including the comprehensive geological report prepared in compliance with Canada’s National Instrument 43-101 on the Company’s Sagar Property in Québec, can be found on the Company’s website: www.uraniumstar.com
Milestones
Sagar Property – Romanet Horst, Labrador Trough, Québec, Canada
A first stage drill program based on historical results and data has been completed for the Sagar Property, and a second phase of drilling and additional exploration work commenced in the summer of 2007. A land-based air strip has been completed on the Sagar Property and is currently in use with flights landing weekly. As of September 10, 2007, the summer 2007 program has resulted in the completion of 194 reverse circulation drill holes and 4,521 meters of drill holes. Additionally, in excess of 3,500 soil samples have been collected and are continuing to be analyzed onsite. In one of the more promising target areas on the Sagar Property, anomalous uranium was detected from soil samples using an InnovXsystems-X50 XRF mobile analyzer. Other target areas on the Sagar Property have also shown distinctly anomalous situations and will be followed up with either reverse circulation and/or diamond drilling. The above exploration activity is occurring as scheduled and is designed to identify the potential source area of the Mistamisk Boulder Field as well as other potential sources of gold and uranium mineralization. As at June 30, 2007, the Company incurred an aggregate of $3,755,451 of exploration expenditures on the Sagar Property. The Company intends to spend approximately an additional $4,000,000 on the Sagar Property and the area comprising the Company’s Ferderber claims (approximately 64 hectares located in the Central Labrador Trough Region of Northern Québec) over the next 12 months, bringing the cumulative total of such expenditures to $7,755,451.
Madagascar Property
On August 22, 2007, the Company acquired a 75% interest in approximately 954 sq. kilometres of mineral permits in the District of Toliara, Madagascar. This interest will be held by a limited liability company that will be formed under the laws of Madagascar that will be held as to 75% by the Company and 25% by Madagascar Minerals and Resources sarl. The Company has provided a budget of $1,517,000 for the exploration to December 2007 and $5,018,000 for the calendar year 2008. For a more detail discussion on the planned exploration activities, refer to “Management’s Discussion and Analysis”.
Workman Creek Uranium District Assets - Gila County, Arizona, USA
Based on the property assessment, the Company has decided to divest this property. On September 11, 2007, the Company entered into an agreement with Hawk Uranium Inc., a public company listed on the TSX Venture Exchange, in exchange for 200,000 common shares of Hawk Uranium Inc.
Competitive Conditions
The mineral exploration and mining industry is competitive in all phases of exploration, development and production. The Company competes with a number of other entities and individuals in the search for, and acquisition of, attractive mineral properties. As a result of this competition, the majority of which is with companies with greater financial resources than the Company, the Company may not in the future be able to acquire attractive properties on terms it considers acceptable. Furthermore, the Company competes with other resource companies, many of whom have greater financial resources and/or more advanced properties, that are better able to attract equity investments and other capital. Factors beyond the control of the Company may affect the marketability of minerals mined or discovered by the Company.
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SAGAR PROPERTY
![[uranium10ksb092707001.jpg]](uranium10ksb092707001.jpg)
Technical Report
On June 2, 2006, the Company announced that it had retained Hadyn Butler, P.Geo. and Craig Scherba, P.Geol. as independent qualified persons to author a technical report with respect to the Sagar Property in compliance with National Instrument 43-101 - Standards of Disclosure for Mineral Projects of the Canadian Securities Administrators (“NI 43-101”). Messrs. Butler and Scherba completed a NI 43-101 compliant report on the Sagar Property entitled “Technical (Geological) Report on the Sagar Property” and dated July 28, 2006 (the “Sagar Property Report”).
The description of the Sagar Property set forth herein is derived from the Sagar Property Report mentioned above, and has been included herein on the authority of Messrs. Butler and Scherba. Messrs. Butler and Scherba, the authors of the Sagar Property Report, are “Qualified Persons” as such term is defined in NI 43-101, and were independent of the Company as at the date of the Sagar Property Report. Mr. Butler joined the Company’s Board of Directors on December 22, 2006.
The most recent visit to the Sagar Property in connection with the Sagar Property Report was made on July 3, 2006 by Mr. Scherba in order to examine outcrops of mineralization, and to determine the parameters for the 2006 summer exploration campaign. Information used to compile the Sagar Property Report was derived from a number of sources, including published literature, geological maps and open-file reports, geophysical plans, site visits, drill core, diamond drill logs and assay certificates. Most of the Sagar Property data used in the Sagar Property Report was collected by provincial and federal
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government employees, public companies, their representatives and technical (geological and geophysical) contractors, as well as other professional experts known to Messrs. Butler and Scherba.
Portions of the following information, which are quoted verbatim or paraphrased and summarized herein, are based on the assumptions, qualifications and procedures which are set out in more detail in the Sagar Property Report. For a complete description of the assumptions, qualifications, procedures and the conclusions and recommendations of the authors of the Sagar Property Report associated with the following information, and to obtain further particulars on the Sagar Property, readers should consult the Sagar Property Report. All figures and tables contained herein have been extracted from the Sagar Property Report (although the table and figure reference numbers used herein may differ from those used in the Sagar Property Report).
Property Description and Location
The Sagar Property comprises blocks of claims in the Territory of Nunavik, Province of Québec, Canada. The approximate center of exploration activity is circa 56°22’ N latitude and circa 68° 00’ W longitude. Details on the individual claims are available on-line at the Government of Québec’s Ministère des ressources naturelles, de la faune et des parcs GESTIM website at https://gestim.mines.gouv.qc.ca/MRN_GestimP_Presentation/ODM02201 _menu_base.aspx.
The area comprising these claims is approximately 6,580 hectares. In this part of the Province of Québec, claim outlines are predetermined by “map staking.” Previously staked claims are superimposed upon by the map-staking grid, producing some of the small parcels. There are no carried environmental liabilities on the Property. All surface work requires provincial government permits, including camp construction permits. A former base campsite is to be revived.
Virginia Mines Inc. (“Virginia”) and the Company entered into a binding agreement whereby the Company was granted an option to acquire an undivided 75% participating interest in 200 claims constituting the Sagar Property located in the Labrador Trough in Northern Québec. Under the terms of this agreement, the Company had the option to earn a 75% interest in the Sagar Property by issuing to Virginia 2,000,000 Common Shares and 2,000,000 common share purchase warrants of the Company, each warrant entitling Virginia to acquire one Common Share of the Company at a price of US$1.00 for a period of three years from the date of issue thereof, and by incurring total exploration expenditures of $2,000,000 on the Sagar Property by August 2008. Furthermore, Virginia had the option, at any time, to sell its remaining 25% participating interest in the Sagar Property in consideration for the issue to it of 1,000,000 Common Shares and 1,000,000 common share purchase warrants of the Company. The common share purchase warrants shall be exercisable at a price equal to the 20-trading day weighted average closing price preceding the selling date, and shall be valid for a period of two years from the date of issuance. Upon the Company earning a 100% interest in the Sagar Property, Virginia shall retain a 1.5% royalty (NSR). In the event of a gold discovery on the Sagar Property with an NI 43-101 indicated resource of no less than 500,000 ounces, Virginia shall be entitled to exercise a back-in right to re-acquire a 51% interest in the Sagar Property by making a cash payment or issuing common shares equivalent to an amount equal to 250% of the expenditures incurred by the Company on the Sagar Property at such time. Upon the exercise of such back-in right, Virginia would become the operator of the Sagar Property.
On February 19, 2007, Virginia exercised its option to sell its 25% remaining interest in the Sagar Property to the Company and, in connection therewith, the Company issued to Virginia 1,000,000 Common Shares and 1,000,000 common share purchase warrants, with each such warrant being exercisable at a price of $1.24 for a period of two years from the date of issuance. As a result of this exercise, the Company now holds a 100% interest in the Sagar Property, subject to a royalty equal to 1% of net smelter returns on certain claims 0.5% on net smelter returns on other claims [previously?] owned by Pierre Poisson and Joanne Jones (the "P&J Royalty") (see below), and a royalty in favour of Virginia equal to 1.5% of net smelter returns. Under the agreement with Virginia, the Company must incur
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aggregate exploration expenditures of at least $2,000,000 on the Sagar Property on or before August 31, 2008.
The agreement with Virginia is subject to a royalty agreement dated May 27, 1992 (as amended by agreements dated May 10, 1993 and November 3, 1993, collectively, the "Virginia Royalty Agreement") between Virginia Gold Mines Inc. (predecessor to Virginia) and Pierre Poisson and Joanne Jones. Pursuant to the Virginia Royalty Agreement, Virginia acquired a 100% interest in the Sagar Property, subject to the P&O Royalties. Pursuant to the Virginia Royalty Agreement, Virginia had the right to buy back half of the 1% net smelter return royalty (0.5%) for $200,000, and half of the 0.5% net smelter return royalty (0.25%) for $100,000, such P&O Royalty repurchase are now held by the Company.
Accessibility, Climate, Local Resources, Infrastructure, and Physiography
The Sagar Property lies approximately 200 km south of Kuujjuaq, Territory of Nunavik, Québec, and 180 km north-west of Schefferville. Defined as being north of the 55th parallel, Nunavik comprises the northern third of the Province of Québec, covering an area of approximately 507,000 square km. The Sagar Property is accessible by float plane or by helicopter during the short summer, but only by helicopter during break-up and freeze-up periods. During the winter, access can be gained by prepared ski-plane airstrips on ice-covered lakes.
The Sagar Property lies within the Subarctic to near-Arctic transition zone near the boundary of the Canadian “Middle North – Far North”. Weather conditions across Nunavik are controlled by large-scale prevailing and synoptic winds crossing Hudson Bay to the west, Ungava Bay to the north, and the Labrador Sea to the east. Temperature and precipitation are the dominant elements of the Subarctic environment, affecting mechanical weathering, hydrology, soil development and human activity. The warmest and coldest days are characterized by mean temperatures of >25°C and <-30°C. Mean annual precipitation in the Subarctic is <0.45 m, which would normally classify the area as semi-arid, but the effects of low evaporation result in an abundance of surface water. Major deviations from this general climatic regime are the result of maritime influences. The frost-free period is short, typically 40 to 60 days. Most precipitation falls in the form of snow. First snow usually falls near the end of August. Much of the area has snow cover for over 200 days, with depth reaching between 0.50 to 0.75 m within discrete regional sub-zones such as open Taiga woods, Tundra hills and lakes.
There are no true timber resources on the Sagar Property. Hill tops comprise barren Tundra with lichens, mosses, sedges, perennial forbs and dwarfed shrubs. Tundra vegetation is typically ground-hugging warmth-preserving forms including tussocky graminoids, mats or cushion plants, evergreen members of the heath family and rosettes. Some dwarf shrubs are deciduous in habit. Trees occupy valleys and bowls. The most common trees are spruce and tamarack, while poplar and birch occupy some sheltered spots. Alder and willow thickets are common.
Most hunting and fishing is for local consumption, and restricted mainly to navigable rivers. The local fauna of note is comprised of caribou, bears, hares, wolves and waterfowl of various types, the latter especially in the short “summer” season.
No settlements are found within the vicinity. All exploration and mining experts have to be contracted from outside the region. Mineral exploration campaigns, an important potential source of local income, have been quite sporadic due to the nature of the business and the high-cost high-risk nature of exploring remote regions. All field camps have to be self-contained and all supplies have to be flown in by float or ski-plane. Communication is facilitated by satellite telephone. Lakes provide drinking water and float-plane access. Summer drainage may cause lake surfaces to drop from 0.5 to 1 m.
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The Sagar Property occurs within the Romanet Horst which, because of differential weathering, forms the Mistamisk Valley. Valley bottom elevation varies from 275 m (NW) and up to 360 m (SE). A “ribbed” plateau to the north has elevations around 440-480 m, and a similar “ribbed” plateau to the south has elevations around 440-560 m, with tops of approximately 680 m. Topographic ribbing on the plateaux is caused by volcanic and sedimentary stratigraphy as broad folds clearly visible on drainage maps and satellite images. The Romanet River (Rivière Romanet) occupies the valley and drains north-west into the Caniapiscau River (Rivière Caniapiscau), which then turns north-west to join the Larch River (Rivière aux Mélèzes), and both rivers becoming the Koksoak River draining past Kuujjuaq into Ungava Bay. The landscape was carved by Pleistocene icesheets.
History
No mine production has occurred on the Sagar Property, or anywhere within a radius of 150 km. There are, therefore, no carried mining environmental liabilities. Previous assessment work reports are confined mostly to the Romanet Horst and its immediate margins.
Regional geological mapping and descriptions of units in the Labrador Trough have been conducted from the 1960s to the 1980s, and geochemical investigations, including radioactivity, were conducted in the early 1980s. Other reports on uranium showings were made at about the same time.
Regional reconnaissance exploration really commenced in the Labrador Trough from 1929 to the late 1940s. The Romanet Horst was covered by intense exploration in the period from 1961 to 1966, leading to the discovery of Cu mineralization by Delhi-Pacific Resources Ltd. (with 12 diamond drill holes). The Taché Lake showing in the eastern portion of the Sagar Property was drilled by Rio Tinto Canadian Exploration in 1962 (five diamond drill holes). Saucon Development Corp. examined the area between Eagle Lake and Lake Mistamisk in 1962. Bornite Copper Corp. examined ground west of Lac Du Chambon in 1962, and Conwest Exploration Co. Ltd. (St. Joe Syndicate) examined the area around Lac Plisse in 1963.
During 1975, Canada Tungsten Mining Corp. (“Canada Tungsten”) re-examined gold-bearing radioactive albitite veins at the “Kish” showing. Track-etch and emanometer surveys were carried out over a circa one square km grid, and 20 diamond drill holes totalling 2,907 m were completed with limited results. During 1978, Leslie Kish found another showing located about 1 km south-east of the previous discovery – a showing comprised of Au-U-bearing albitite veins. In 1979, Société Québécoise d’Exploration Minière (“Soquem”) optioned the property from Canada Tungsten, mapped radioactive boulders, made detailed geological maps and conducted an emanometer survey as extensions of the previous Canada Tungsten surveys. In 1983, Saarberg-Interplan GmbH identified the Mistamisk boulder field (a.k.a. “Clandestine”) by ground follow-up of an airborne scintillometer survey. At that time, the boulder field was on the Canada Tungsten-Soquem ground so no work could be done.
In 1986, La Fosse Platinum Group Inc. (“La Fosse”) carried out preliminary sampling of all known showings, and 41 diamond drill holes for 1,585 m (5,200 feet) were completed. The Mistamisk (Clandestine) radioactive boulder field was relocated and a limited drill program (21 drill holes totalling 1,636 m or 5,367 feet) did not find the bedrock source. Further work narrowed targets down to 4 emanometer anomalies which were diamond drilled in 1990 (25 holes for a total of 1,117m or 3.664 feet), but again failed to trace the source of the mineralization. An unmineralized mudstone similar in appearance to the host of the radioactive boulders was intersected “up-ice” but yielded no mineralization results of note. Gamma ray logs were conducted down the drill holes.
In the winter of 1993, Virginia drilled 15 diamond holes for a total of 1,111.82 m, with little success. Also in 1994, Hemlo Gold Mines Inc. (“Hemlo Gold”) drilled six diamond drill holes for 1,081.9 m. The best results from such drilling were 0.5% Cu over 0.5 m in hole SA-94-1, and 0.7% Cu over 2.9 m in hole
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SA-94-6 including 2.9% Cu over 0.5 m. In 1994, Kennecott Canada Exploration Inc. (“Kennecott”) flew an airborne radiometric, electromagnetic and magnetic survey. In 1995, Kennecott drilled seven holes for 1,390 m, but had limited results. Virginia renamed the Clandestine boulder field the Mistamisk boulder field. In 1997, Inmet Mining Corporation (“Inmet”) drilled six diamond drill holes for 1,790 m, and the best assay was 0.5% Cu and 0.3 g/t Au over 1.5 m in hole SGR-0. In 1998, Inmet drilled 21 diamond drill holes for a total of 6,074 m. The best intersections from such drilling were 3.31 g/t Au and 0.11% U over 0.6 m in hole SGR-09; 3.33 g/t Au and 0.15% U over 0.61 m in hole SGR-09 as well as 31.2 g/t Ag over 1.5 m. As in other drilling campaigns, many small intervals with 0.1% to 0.4% Cu were also found.
The location of exploration performed in specific periods and a summary of the most significant exploration work is provided in Table 2 below.
Summary of Notable Exploration Work on the Sagar Property
Company | Year | Work Performed | Results Summary |
Delhi-Pacific Resources Ltd. | 1962 | Geology, sampling, drilling | Delhi-Pacific Cu-Au showings found and drilled -12 holes for 1,635 m* |
Rio Tinto Canadian Exploration | 1962 | Geology, drilling | Taché Cu showing found and drilled – 5 holes for 89 m (results lost)* |
Canada Tungsten | 1975 | Geology, sampling, drilling | Kish U-Au showing – 20 holes for 2,907 m,* no significant mineralization discovered |
Saarberg-Interplan GmbH | 1983 | Airborne spectrometer survey | Discovery of “Clandestine” U-Au radioactive boulder field |
Saarberg Interplan La Fosse Platinum | 1986 | Geology, Mag-VLF-IP, Powell tube scintillometer | Rediscovery of “Clandestine” U-Au boulder field – 21 holes for 1,636 m,* no significant mineralization discovered |
La Fosse | 1989 | Radon gas survey, pionjar drilling | Pionjar failed to test found anomalies due to poor drill penetration |
La Fosse | 1990 | Drilling and trenching | Trenching did not reach bedrock - 25 holes for 1,117 m,* no significant mineralization discovered |
Virginia | 1992 | Geology, georadar, soil geochem in Clandestine boulder field | 70 samples with average values of 65 g/t Au and 0.3% U; soil fines showed anomalous Au-U |
Virginia | 1993 | Drilling in Clandestine boulder field | Source of boulders not found - 15 holes for 1,112 m* |
Hemlo Gold | 1993 | Quaternary study of Clandestine boulders | Clandestine boulder source was interpreted to be to the SW |
Hemlo Gold | 1993 | Drilling | Boulder source not found - 6 holes for 1,082 m* |
Kennecott | 1994 | Dighem airborne survey | Radiometric, AEM and magnetic anomalies were found. An unexplained anomaly was found at Lac Mistamisk |
Kennecott | 1995 | Drilling, prospecting | 7 holes for 1,390 m* |
Virginia | 1996 | Quaternary study of Clandestine boulders | Boulders possibly due to mass flow from the NE |
Inmet, Denison Mines Corp. | 1997 | Geology, prospecting, gravity survey | Viking Au-U showing discovered – 6 holes for 1,790 m* |
Inmet, Denison Mines Corp. | 1998 | Drilling | Small mineralized intersections during drilling – 21 holes for 6,094 m* |
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Geological Setting
Regional, Local and Property Geology
Most of the surface of the Sagar Property is covered by unconsolidated material – the remains and reworked remains of Pleistocene till sheets. P. Poisson (1992) estimates the area to have around 1% outcrop, mainly on the slopes bordering the Mistamisk Valley. Beneath the unconsolidated material, the claim groups are underlain by supracrustal units of the Labrador Trough (a.k.a. New Québec Orogen), an Early Proterozoic continental margin sequence with remnants of large igneous provinces (“LIPs”) back-thrust onto its former depositional basement (the Early Proterozoic-peneplained Superior Province).
P. Kearey (1976) observed that the Labrador Trough was a linear fold-belt partly marking the junction of the Superior and Churchill provinces - a NNW-SSE trending belt roughly 160 km wide by 1,200 km long. Gravity profiles show gently decreasing anomalies over the Superior Province to the west reaching a minimum beneath the Trough, and thence increasing abruptly over the Churchill Province to the east (approximately 15 m Gal higher). Superimposed on this pattern are several broad gravity maxima parallel to the Trough, one corresponding to a zone of migmatites. P. Kearey interpreted this geophysical pattern in terms of a relatively elevated Conrad discontinuity beneath the eastern Churchill Province that was isostatically compensated by a thickened lower crust. The model is consistent with basement reactivation following the collision of the Superior and Churchill provinces which resulted in crustal thickening by ductile flow in the upper mantle and partial melting in the lower crust leading to a double-layered Churchillian crust (refractory lower portion and a more K-rich upper portion).
The Labrador Trough, the Torngat orogen and the Cape Smith belt are composed of Early Proterozoic units, occupying a significant portion of Nunavik and Labrador. Between the Torngat orogen and the Labrador Trough lies a common hinterland called the “Core Zone” of the south-eastern Churchill Province. The Core Zone contains a significant Archean protolith and has also been called the Rae Province. The Trough comprises folded (SW-verging), faulted (strike-slip and/or thrust faults), and metamorphosed sedimentary and igneous supracrustal units belonging to the Kaniapiskau Supergroup. The Kaniapiskau has been subdivided into three cycles separated by erosional unconformities. Lateral variations occur from west to east across the Trough. Zones to the west can consist of platform and marine basin sediments as well as fluviatile sediments. In the centre, zones may consist of volcanics and turbidites, and to the east, zones comprise gneiss and schist.
Geological mapping in the Romanet Horst by E. Dimroth (1970), S.R. Chevé (1985) and T. Clark (1986) established the various units of the Trough stratigraphy. The Montagnais Group gabbros on the table are not necessarily age-correlatives. Based on detailed mapping, the author of the Virginia internal report believes that age correlation among the various gabbro sills in the Horst is inappropriate. At the present time, Montagnais magmatism has been dated in the interval 1.88-1.66 Ga (Giga-annum – 1 billion years), and is thought by some to belong to the Trough’s second depositional cycle. The Romanet Horst consists of the following: the Mistamisk and Bacchus Formations, the Romanet Formation, du Chambon Formation, Uvé Formation, Alder Formation, Lace Lake Formation, Dunphy Formation and Chaponikau Formation.
Outcropping intrusions are not common within the Horst, but some pegmatite dykes and rare granite dykes have been found. Small gabbro bodies have been mapped, most commonly to the south-east. These gabbros are thought to be older than the Montagnais gabbros. Granite cobbles are abundant in the till to the north, but the source of the granite is not known. The abundance and uniformity of the cobbles lead R. Charbonneau (1996, 1997) to postulate that the granite was derived from within the horst, as opposed to outside Archean terrains.
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LIPs units on and beside the Sagar Property may explain the Cu-rich character of some drill intersections (e.g., Delhi-Pacific drill holes discussed below), since Cu deposits can occur in association with LIPs (e.g., on the Michigan Peninsula, and the Coppermine volcanics north of Yellowknife). Hydrothermal circulation of crustal fluids through the LIP basalts beside the Romanet Horst may have contributed Cu directly to the mineralization.
Deposit Types
According to Québec’s 2003 exploration overview, the economic potential of the Trough lies mainly in lithologies that host exhalative massive sulphides with Zn-Pb-Cu-Ag-Au, sediment-hosted stratiform Cu deposits, magmatic Cu-Ni-PGE deposits in picritic flows and sills, and lode Au deposits. According to this review, the Lac Romanet area constitutes a highly prospective area, especially in the Dunphy Formation, and offers promising potential for sedimentary Cu. Several Zn-Cu-Au-Ag sulphide deposits are known in sandy-pelitic units of the Trough’s second cycle. Showings appear to be similar to Besshi VMS deposits, but are not being targeted specifically on the Sagar Property.
The presence of uranium and gold along with chalcophile elements such as Cu and Co, and even trace Ni-sulphosalts, is fairly common in various ore deposit models. The models are: Sandstone Uranium Model, Albitization Gold-Uranium Model, Reaction Bed Replacement Model and the Iron-Oxide Copper Gold Model.
Mineralization
Delhi-Pacific and Taché Lake Cu-Au Showings
The Delhi-Pacific showings occur on the cliff north of the Romanet River, near the border shears and faults of the Romanet Horst. Mineralization consists of pyrite cubes with some chalcopyrite and pyrrhotite hosted in various silicified and albitized and/or carbonatized shear zones. Host rocks include sheared and altered basalts and gabbros, unfoliated albitites, albitite breccias composed of approximately 10 cm albitite fragments in a chlorite and/or albitite and/or carbonate matrix, and black translucent “cherts.” Most units could be described as hydrothermally altered mylonites. The quantity of sulphides seems to increase with degree of deformation and alteration, and locally massive sulphides have been seen. Delhi-Pacific drilled 12 holes in 1962. Taché Lake was similar to the Delhi-Pacific discovery but of smaller extent. Other showings were also found on the north side of the Romanet Horst outside the Sagar Property including the GM, Dillman and Cobalt Bloom discoveries.
Albitite Gold-Uranium Mineralization
The Kish and Eagle pegmatitic uranium-gold vein discoveries made by La Fosse strike N120-150°E. They comprise vertical albitite veins hosted by a massive green mudstone at the base of the Lace Lake formation, and appear to be in the axial plane and flanks of a recumbent isoclinal synform. Veins range from 1 to 50 cm thick and are up to 80 m long. They also crosscut foliation and generally stop at dolomite bed contacts within the green mudstone – that is, the veins appear to be post-intense deformation. The veins themselves consist of albite and quartz with patches of pitchblende, uraninite crystals, yellow uranium oxides, Pb and Ni tellurides and visible gold. Disseminated pyrite and chalcopyrite is common in the host mudstone. Samples collected in 1988 recorded values of 12 g/t Au over 0.2 m and 21.2 g/t Au over 0.1 m. Inmet reported values of 0.8% U and 5.4 g/t Au over 0.3 m at the Eagle showing, and 1% U and 1.0 g/t Au at the Kish Showing. Of particular interest is the recently discovered Viking showing located on the north bank of the Romanet River, roughly halfway between the Kish and Eagle Showings.
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Mistamisk (Clandestine) Boulder Field
In 1988, 157 radioactive boulders were mapped on a grid in an area approximately 500 x 200 m (long axis N-S). The boulder mineralization appears to be hosted by “replaced” albitized sediments showing evidence of structural control such as fracturing and brecciation. Mineralization consists of pitchblende, other uraniferous minerals, Pb and Ni tellurides and gold. The average grade from 31 assayed boulders was 50.7 g/t Au and 1.3% U.
To test this boulder field, a program of Quaternary geological mapping using boulder size and other features was conducted to find drill targets. Glaciation appears to have proceeded from south to north, and the mineralized boulders were thought to occur in an ablation till above a basal till. A very low frequency (VLF) survey was undertaken, and an induced polarization (IP) survey found an 800 m long anomaly. A Powell tube Radon gas survey on 50 m lines at intervals of 12.5 m was also conducted, suggesting that the source of the boulders was not close.
Exploration
Previous exploration on the Sagar Property is as described above under “Mineralization”, and also described below under “Drilling”.
Drilling
Delhi-Pacific and Taché Lake Showings
In 1962, Delhi-Pacific Resources Ltd. drilled a total of 12 holes for 5,072 feet (1,546 m) on this Cu-Au discovery. The showings at Delhi Pacific and Taché Lake consist of disseminated pyrite, pyrrhotite and chalcopyrite in sheared basalts and/or gabbros and various facies of albitites interpreted as hydrothermalized mylonites. Best values are 4.5 g/t Au and 0.75% Cu over 1.2 m at Delhi-Pacific and 3.5 g/t Au over 1 m at Taché Lake. These two showings which have been thoroughly sampled and are fairly well explored and do not present any potential for the development of economic mineralization.
Surface sampling (trenching) by La Fosse in 1988 resulted in 4.5 g/t Au and 0.75% Cu in “Trench D”, 1.1 g/t Au over 3.6 m in “Trench B”, 3.4 g/t Au over 0.5 m in “Trench A” and 1.7 g/t Au over 2m in “Trench G.” The Taché Lake showing was drilled by Rio Tinto Canadian Exploration in 1962 (five holes for 292.9 feet, or 89 m) – assay data was unavailable. Hole TA-01 reported 8.4 ft of green to black medium-grained chloritic rock with sulphide bands (massive pyrrhotite with blebs of pyrite and chalcopyrite). Hole TA-02 encountered a 2.3 ft section described as disseminated blebs to massive sulphide with pyrite, pyrrhotite and chalcopyrite.
Kish and Eagle Albitite Au-U Showings
In 1975, Canada Tungsten re-examined gold-bearing radioactive albitite veins at the “Kish” and Eagle Showings. Track-etch and emanometer surveys were carried out over a circa one square km grid, and 20 diamond drill holes totalling 2,907 m were completed with poor results (best result 0.02% U3O8). La Fosse drilled 41 short holes (total of 1,585 m), testing the albitite uranium-gold mineralization at the Kish and Eagle Showings. Best intersections returned 1.3 g/t Au over 0.7 m in Hole No. 6; 1.17 g/t Au over 0.4 m in Hole No. 10; 1.4 g/t Au over 0.5 m in hole No. 21. There was difficulty in establishing a relationship between U and Au grades, likely due to the fact that the mineralization is a combination of chalcophile and lithophile elements deposited in changing redox boundary conditions. The paragenetic mineral sequence should be established.
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Mistamisk (Clandestine) Boulder Field
Finding the source of the boulders has been difficult. Drilling by La Fosse (21 holes for 1,636 m on their 1988 grid) returned poor results. A three cm thick radioactive veinlet in Hole No. 57 returned an assay of 0.58% tungsten. On-going work in 1990 narrowed targets down to four emanometer anomalies which were then diamond drilled (25 holes for a total of 1,117 m), but this program also failed to trace the boulder source. During the winter of 1993, Virginia drilled 15 diamond holes for a total of 1,111.82 m and was met with little success. In 1994, Hemlo Gold drilled 6 diamond drill holes for a total of 1,081.9 m. Best obtained results were 0.5% Cu over 0.5 m in hole SA-94-1, and 0.7% Cu over 2.9 m in hole SA-94-6, including 2.9% Cu over 0.5 m.
The rationale of subsequent drilling was to test the Lace Lake Formation., host to the Viking Showing and a possible source of the Mistamisk boulder field. In 1997, Inmet drilled six diamond drill holes for 1790 m, and the best assay was 0.5% Cu and 0.3 g/t Au over 1.5 m in hole SGR-02. In 1998, Inmet drilled another 21 diamond drill holes for a total of 6,074 m. Best intersections in the 1998 campaign were 3.31 g/t Au and 0.11% U over 0.6 m in hole SGR-09, 3.33 g/t Au and 0.15% U over 0.61 m in hole SGR-09, as well as 31.2 g/t Ag over 1.5 m. Many small intervals with 0.1% to 0.4% Cu were also found.
Sampling Method and Approach
Previous sampling included the splitting of diamond drill core in-half over obviously mineralized intervals. This procedure is standard practice in mineral exploration and would be continued in any future drilling program. Half core is retained for future examination and evaluation in a secure location. Due diligence would be followed once a sampling campaign is commenced, whether the campaign be soil samples, grab samples, the cutting of diamond drill cores with a diamond saw or surface channel samples.
Sample Preparation, Analyses and Security
A qualified person (as defined in NI 43-101) would supervise future sample collection, and the samples themselves would be secured directly from the site to an ISO/IEC 17025 accredited laboratory and prepared at the laboratory. Drill core and assay certificates would be stored at a secure location. Laboratories to be used will have internal standard checks and upgrades to ensure quality and security following the latest industry standards and practice. For instance, uranium assays could be performed by an ISO/IEC 17025-compliant laboratory using x-ray fluorescence spectrometry on a pressed powder pellet or a borate fusion disc. Quality control procedures would follow industry-standard protocols and include the use of blind control samples.
For uranium mineralization, it is common practice to base grades on down-hole gamma ray logging tools. Commonly, there is a dispersion of results among the logs and chemical (fluorometric) analyses of drill core and direct neutron logging. An important consideration in uranium mineralization is the recoverable uranium content. “Refractory” uranium minerals may give good radiometric or fluorometric assay results, but may not be recovered in significant amounts by some production processes. If the uranium mineralization is not in equilibrium with its radioactive daughter elements, radiometric assays may not reflect recoverable uranium values.
The definitive document on radiation protection requirements for incidentally exposed workers such as field personnel is the Canadian Guidelines for the Management of Naturally Occurring Radioactive Materials (NORM) published by Health Canada at http://www.hc-sc.gc.ca/ewhsemt/alt_formats/hecs-sesc/pdf/pubs/contaminants/radiation/normmrn/00ehd245.pdf. This document was developed by the Federal-Provincial Territorial Radiation Protection Committee and has been endorsed by federal, provincial and territorial governments in Canada.
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Data Verification
None of assays seen in the various reports seemed to be outside of the norm for mineralization of this type with their visible mineral contents. Assay value ranges from different company exploration campaigns compare favourably with previous assays from the same location. There is no need to resample multiple sampled mineral occurrences.
Adjacent Properties
Mineralization outside the Sagar Property claim blocks is of similar kind to that seen within the claim blocks – a feature of the Romanet Horst environment. The general location of mineral discoveries in the north-western part of the Romanet Horst is shown in the Sagar Property Report. At the present time, claim ownership and targeted claim acquisition by various entities is confined to the Romanet Horst. Current discoveries, based on previous exploration campaigns, are also confined to the Horst.
Mineral Processing and Metallurgical Testing
Not applicable to the Sagar Property as at the date of the Sagar Property Report.
Mineral Resource and Mineral Reserve Estimates
Not applicable to the Sagar Property as at the date of the Sagar Property Report.
Other Relevant Data and Information
Not applicable to the Sagar Property as at the date of the Sagar Property Report.
Interpretations and Conclusions
The Property occurs in the Romanet Horst, a north-western cross-cutting fault-bounded structural feature astride the Early Proterozoic Labrador Trough – a supracrustal thrust-fold belt in Labrador-Nunavik. Several kinds of mineralization have been found on the Sagar Property characterized by an impressive number of U, Au, Cu, Zn and Pb showings of several different kinds. One discovery occurs as scattered boulders in an approximately 500 x 200 m area (the Miskamisk a.k.a. Clandestine boulder field), with 31 boulders grading an average of 50.7 g/t Au and 0.3% U. The source of the boulders is an important target. Albitites associated with gold mineralization are typical of other Proterozoic mesothermal-gold discoveries, and an association of copper in shears of the Delhi-Pacific showing on the Sagar Property suggests significant structural control on mineralization.
Several genetic models including a sandstone-uranium model, an albitization Cu-Au model, a reaction bed replacement model, and an iron oxide Cu-Au (±U) model, are being used for exploration on the Sagar Property. The authors of the Sagar Property Report concluded that showings found to date are evidence that the Sagar Property is worthy of further exploration because of: (i) the widely scattered mineralization found on the Sagar Property to date contains high-grades of U, Au, and Cu; (ii) new exploration models developed by GeoVector Management Inc. (“Geovector”) are worthy of testing; (iii) new methodologies, such as water sampling and new Quaternary studies of gold grain morphology, will aid in interpretation and narrow the exploration focus; and (iv) the geographic information system (“GIS”) stacks have and will create new targets.
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Recommendations
The proposed exploration work program for the summer of 2006 includes the obtaining of property-wide geochemical water sampling, maintaining and upgrading the new GIS database, new Quaternary stratigraphic investigations to trace boulder source and further prospecting/reconnaissance geology. GeoVector is working with Expedition Helicopters Inc. who have the responsibility for refurbishing the original base camp and providing a helicopter for the program. The Company has obtained permits for exploration and camp construction.
Targets of highest interest include U, U-Au, Cu-Au, and Cu mineralization types. In 1962, Delhi-Pacific found extensive Cu mineralization in shears, and low grade Cu-in-dolomite-argillite stratabound discoveries were made to the SE. A particularly interesting discovery occurs as mineralized boulders in an approximately 500 x 200 m area (the Miskamisk a.k.a. Clandestine boulder field), with 31 boulder samples averaging 50.7 g/t Au and 0.3% U. The boulder source represents a high-priority exploration target.
The water sampling survey will comprise collection from small streams and ponds at a density of 10 to 12 per sq km in designated target areas, and five to six samples per sq km over the rest of the Sagar Property (looking for anomalies that reflect a proximal source). This survey is regarded as critical in the sense that it will provide a new layer of potential targeting information. The Quaternary geology will to be re-evaluated, with emphasis on assessing targets three and four. Prospecting and reconnaissance geology will be carried out to further evaluate the differing targets.
The Sagar Property Report estimated that the cost of the exploration program for 2006 would be $700,000, with a further contingency budget of $250,000 to be added for 2006 should the initial exploration program prove positive. Subsequent to the Sagar Property Report, as at June 30, 2007, the Company incurred an aggregate of $3,755,451 of exploration expenditures on the Sagar Property. The Company intends to spend approximately and additional $4,000,000 on the Sagar Property and the area comprising the Ferderber claims over the next 12 months, bringing the cumulative total of such expenditures to $7,755,451.
We are currently up to date with all obligations required to maintain the property in good standing.
FERDERBER CLAIMS
Uranium Star has acquired a 100% undivided right, title and interest in and to 19 mining claims (0036315, 0036316, 0036317, 0036318, 0036319, 0036320, 0036321, 0036322, 0036323, 0036324, 0036325, 0036326, 0036327, 0030649, 0030650, 0030640, 0030638, 0030612, 0030613) held by Mr. Peter Ferderber, covering an area of approximately 64 hectares located in the Central Labrador Trough Region of Québec, 13 of which are contiguous to Uranium Star’s Sagar property.
In consideration of Uranium Star receiving a 100% interest in these claims (free and clear of all encumbrances), subject to any net smelter return royalties, Uranium Star paid Cdn$6,000, and issued 150,000 shares of Uranium Star’s common stock and a warrant exercisable for 75,000 of Uranium Star’s common shares, exercisable at $1.00 for a three year period from date of issuance.
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Underlying Royalty (NSR)
Mr. Ferderber retains a 1% net smelter return royalty on this property and agreed that Uranium Star shall have a first right of refusal to purchase the 1% net smelter return royalty should Mr. Ferderber, at his sole discretion, elect to sell the royalty.
MADAGASCAR PROPERTY
![[uranium10ksb092707002.jpg]](uranium10ksb092707002.jpg)
On August 22,2007, Uranium Star entered into a joint venture agreement with Madagascar Minerals and Resources sarl, a company incorporated under the laws of Madagascar. The joint venture, to be known as the “Three Horses Joint Venture”, will be operated through a Madagascar limited liability company in which Uranium Star will own a 75% undivided interest and Madagascar Minerals will own the remaining 25% interest. The consideration paid to Madagascar Minerals to acquire the 75% stake in the joint venture consists of:
(i)
a signing fee of $15,000 within 15 days of the properties vesting in the joint venture,
(ii)
a payment of $750,000 within 15 days of the properties vesting in the joint venture, and
(iii)
the issuance of 1,250,000 common shares of Uranium Star and 500,000 share purchase warrants within 30 days of the properties vesting in the company created for the joint venture under Madagascar law. Each share purchase warrants is exercisable at $1.00 per share for a period of 2 years from the date of issuance.
The properties held by the joint venture are comprised of mineral permits consisting of 36 “squares”, each square representing approximately 26.5 sq. kilometers. The properties are located in the District of Toliara and are referenced as TN 12,306,P(R); TN 12,814, P(R); TN 12,887 P(R); TN 12,888 P(R); TN 13,020 P(R); TN 13,021 P(R) as issued by the Bureau de Cadastre Minier de Madagascar (“BCMM”) pursuant to the Mining Code 1999 (as amended) and its implementing decrees.
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Uranium Star agreed to give Madagascar Minerals a free carried interest in the joint venture until completion of a pre-feasibility study.
Uranium Star will be the operator of the Three Horses Joint Venture, with exclusive rights to direct and manage all exploration and other activities of the Joint Venture.
Madagascar Minerals will assist in obtaining all necessary approvals relating to exploration permits, permission and exploitation rights from local and governmental agencies and institutions with regulatory and statutory authority at the expense of Uranium Star.
Uranium Star can terminate the joint venture agreement by giving 60 days advance written notice to Madagascar Minerals and Resources sarl, who then has a first right of refusal over the properties.
Following the completion of the pre-feasibility study for the Three Horses Joint Venture, each party will make their contributions pari passu. In the event that one or other of the parties is unable to make their contribution to funding, their interest will be diluted accordingly. In the event that a joint venture party’s interest in the joint venture is diluted below 10%, then that interest will be exchanged with the majority shareholder for a 2% net smelter return. Furthermore, that royalty may be acquired by the remaining joint venture party as follows:
(i)
the 1st 1% at US$1,000,000 in cash or shares of Uranium Star; and
(ii)
the 2nd 1% at US$ 1,500,000 in cash or shares of Uranium Star;
both at the option of the remaining shareholder.
Uranium Star may assign all or its part of its interest in the Three Horses Joint Venture to another party without the express consent from Madagascar Minerals and Resources sarl. Madagascar Minerals and Resources sarl may not assign its interest without express agreement of Uranium Star.
Initial exploration Program.
Uranium Star has budgeted $1,517,000 to conduct the first phase of the exploration program for the Three Horses Venture. The Company currently projects that this exploration will include the following elements:
·
Road Maintenance – As available road are in poor condition, the Company will institute a road maintenance program designed to reduce travel times and significantly reduce wear and tear on vehicles. The project will be supplied from Toliara, the capital of Toliara province. The Company will identify a supply route and select contractors to determine maintenance costs.
·
Camp – A suitable camp with generated power and running water will be constructed on the property, with easy access to water supply.
·
Environmental Study – Madagascar law requires that an environmental study be carried out before any significant exploration work begins. An environmental firm will be retained to complete an advance study that should allow the Company to proceed with its program without interruption.
·
Data Acquisition – The Company plans to review all available studies that have been completed with respect to the applicable properties. The Company also plans to acquire suitable satellite
15
imagery, carry out structural and alteration studies before field work commences. In addition, the Company has obtained and will analyze data for a recently completed 500 meter line spacing airborne magnetic survey.
·
Airborne Geophysical Survey – Several airborne geophysical contractors will be contacted to determine their availability to complete an airborne electro-magnetic and magnetometer survey of approximately 3,000 line kilometers, with a minimum line spacing of 100 meters.
·
Geological Mapping – The Company plans to have two geological teams carry out an initial 1:25,000 scale geological mapping program of the property. This will be expanded to a larger scale once specific target areas are defined.
·
Stream Sediment Survey – All significant streams near the property will be sampled at 500 meter spacings and analyzed for multi-elements by ICP-MS and gold.
·
Prospecting – Areas in which surface gossans located will be prospected and sampled in detail.
·
Mechanical Trenching – Mechanical trenching and sampling of gossans and other styles of mineralization will be carried out on a systematic basis to determine the precious and base metal content of surface materials.
·
Ground Geophysical Surveys – Known gossans and those defined during mapping and prospecting can have line grids established and surveyed with HLEM and magnetometer on lines 100 meters apart and at 25 meter stations. Gravity surveys may be completed once the airborne survey data is received and interpreted and all significant targets are covered with line grids.
·
Soil Sampling Surveys – Soil samples will be collected on all established lines at 100 meter line spacing and 25m stations along the lines. All samples will be analyzed for multi-elements by ICP-MS and gold. Consideration should be given to temporarily importing a spectrometer to carry out initial soil analysis. The exporting of soil samples (likely to South Africa) will have to be timely.
The Company anticipates employing four up to 10 technicians/geologists, approximately four of which would be foreign (non-Malagasy) geologists.
The Company also anticipates that its airborne survey of the property will be completed before the rainy season begins in October. The stream sediment sampling is anticipated to be completed and the basic geology determined with significant gossans outlined. Orientation soil surveys could be completed over known gossans to determine appropriate sampling medium and sieve size. Post rainy season would allow for a full ground exploration program to be implemented.
Peter’s Creek – Initial property holding for Uranium Star Corp.
The Company entered into an agreement dated May 14, 2004 with Thornton Donaldson to acquire a 100% interest in seven placer claims for the issuance of 2,500,000 shares of our common stock to him. The placer claims are located in the Cariboo Mining Division in east central British Columbia, Canada. The claims are registered in the name of Thornton Donaldson, who has executed several trust agreements with us, whereby he has agreed to hold the claims in trust on our behalf. The total cost of the placer claims is $1,700, and this figure represents the original cost incurred by Thornton Donaldson.
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On August 1, 2005, the Company entered into an agreement with Michael McCullagh to option two claims, tenure numbers 403736 and 403737 for a cash payment of $4,000 and issuance of 100,000 common shares. This agreement has a term of two years maturing August 1, 2007. For administrative purposes, the above nine claims have been converted to three placer claims, one placer lease and one placer cell.
The placer claims are unencumbered and in good standing and there are no competitive conditions which affect the claims. Further, there is no insurance covering the claims. The Company believes that no insurance is necessary since the claims are unimproved and contain no buildings or improvements.
There is no assurance that a commercially viable mineral deposit exists on the claims. Further exploration will be required before an evaluation as to the economic feasibility of the claims is determined. It is our intention to incorporate a British Columbia subsidiary company and record the deed of ownership in the name of our subsidiary if gold is discovered on the claim and it appears that it would be economically viable to commercially mine the claim.
Between August 22, 2006 and September 1, 2005, a preliminary bulk testing program was carried out on the property, at a cost of approximately $23,000 with the results documented in the Progress Report by W.G. Timmins dated November 28, 2005.
We are currently up to date with all obligations required to maintain our property holdings in good standing.
Workman Creek Claims
On August 9, 2006, Uranium Star acquired 69 mineral claims within the Workman Creek Uranium District of Central Arizona. These claims cover the strike extension of the northerly trending, uranium mineralized structures that crosscut the Dripping Spring Quartzite Formation in that district of Arizona.
On September 11, 2007, Uranium Star agreed to sell these claims to Hawk Uranium Inc, a public company listed on the TSX Venture Exchange. Uranium Star received 200,000 common shares of Hawk Uranium Inc. in consideration for these claims.
Finland
The Company entered into a letter of intent dated March 10, 2006 with Apofas Ltd., for an option to acquire a 100% interest in 20 mineral claims located in Finland covering an area of about 150 square kilometers. Seventeen of these claim reservations occur within the Paleo-Proterozoic Kusamo Schist Belt of northeastern Finland. Past drilling within our claim area by Agricola Resources has intersected 0.33% uranium oxide (U3O8) over 0.90 metres. The remaining reservations occur within the Koli geographic province of eastern Finland, which contains the past producing Paukkajanvaara unconformity style uranium deposit.
Of the 20 claim reservations identified in our letter of intent with Apofas, we were granted 19.5 by the Finnish government on April 12, 2006 totaling an area of approximately 150 square kilometers. Pursuant to the letter of intent, the Company acquired the exclusive right to stake claims on the reserved areas by making non-refundable cash payments of $50,000 and issuing 500,000 shares to Apofas.
Further to our agreement with Apofas, the Company has exclusivity over any reservation claims Apofas identified or filed for a further one year period. Apofas did identify an additional 7 areas totaling approximately 49 square kilometers and filed claim reservations with the Finnish Government on our
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behalf. The additional claim reservations were approved by the Government on October 3, 2006. This brings our total claim reservation land package to approximately 199 square kilometers.
We have one year to complete our evaluation and determine which claim reservations will be converted into mining claims. We are currently up to date with our obligations for maintaining these property holdings in good standing.
During June 2007, the Company after evaluation of its exploration commitment on hand decided not to proceed with exploration activities in Finland and accordingly abandoned its reservation claims.
ITEM 2. DESCRIPTION OF PROPERTY
The Company’s executive offices are currently located at 1000–141 Adelaide Street West, Toronto, Ontario M5H 3L5. These offices are leased, and the Company's monthly rental payments are currently approximately Cdn$3,000.
Sagar Property
200 claims located in the Romanet Horst of Labrador in Northern Québec, Canada as described in the Section "Description of Business"
Ferderber
19 claims located in the Romanest Horst of Labrador in Northern Québec, Canada, 13 of which are contiguous to the Sagar Property as described in the Section "Description of Business"
Madagascar Property (acquired August 22, 2007)
A 75% undivided interest in approximately 954 sq kilometers of mineral permits located in the District of Toliara, Madagascar.
Peter’s Creek
Three Placer claims, one Placer lease and one Placer cell located in the Cariboo Mining Division, British Columbia, Canada as described in the section "Description of Business".
Workman Creek
Until September 11, 2007, the Company held 69 claims located in the Gila County District of Arizona, USA as described in the Section "Description of Business".
ITEM 3. LEGAL PROCEEDINGS
There are no material legal proceedings that are currently pending or, to the Company’s knowledge, contemplated against the Company to which it is a party.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of shareholders of the Company during the fourth quarter of the fiscal year ended June 30, 2007.
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PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Market Information
The table below sets forth, for the respective periods indicated, the prices for the Company's common stock in the over-the-counter market as reported by the NASD's OTC Bulletin Board. The Company’s common stock is traded on the NASD’s OTC Bulletin Board under the symbol URST. This is the principal market where the Company's common stock is traded. The Company’s common stock is also listed on the Frankfurt Stock Exchange.
Quarter Ended
|
| High
|
| Low
|
|
|
|
|
|
June 30, 2005 |
| $0.433 |
| $0.433 |
September 30, 2005 |
| $0.45 |
| $0.25 |
December 31, 2005 |
| $0.60 |
| $0.41 |
March 30, 2006 |
| $1.05 |
| $0.43 |
June 30, 2006 |
| $1.75 |
| $0.91 |
September 30, 2006 |
| $1.25 |
| $0.60 |
December 31, 2006 |
| $1.35 |
| $0.60 |
March 31, 2007 |
| $1.65 |
| $1.01 |
June 30, 2007 |
| $1.42 |
| $0.42 |
At September 25, 2007, the Company's Common Stock was quoted on the OTC Bulletin Board at a closing price of $0.32 per share.
The quotations set forth above reflect inter-dealer prices, without retail markup, markdown, or commission, and may not necessarily represent actual transactions.
Since inception, the Company has not paid any dividends on Common Stock, and do not anticipate that any dividends will be paid in the foreseeable future. As at June 30, 2007, the Company had approximately 151 shareholders of record based on information provided by the transfer agent, Empire Stock Transfer Inc.
Recent Issuances of Unregistered Securities
All issuances of unregistered securities by the Company during the period from July 1, 2006 to June 30, 2007 were previously reported on the reports on Form 10-QSB and Form 8-K filed by the Company during that period.
Subsequent to June 30, 2007, the Company agreed that within 30 days following the formation of a company under Madagascar through which the Three Horses Joint Venture will be operated, the Company will issue 1,250,000 common shares to Madagascar Minerals and Resources sarl, as well as 500,000 share purchase warrants. Each share purchase warrants is exercisable at $1.00 per share for a period of 2 years from the date of issuance. As of the date of this report, these common shares and purchase warrants have not been issued. Such issuances shall be made pursuant to an appropriate exemption under the Securities Act of 1933, as amended.
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ITEM 6. MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Management’s Discussion and Analysis of Results of Financial Condition and Results of Operations (“MD&A”) should be read in conjunction with the financial statements included herein. Further, this MD&A should be read in conjunction with the Company’s Financial Statements and Notes to Financial Statements included in its Quarterly Reports on Form 10-QSB for the nine months ended March 31, 2007 and for the six months ended December 31, 2006.
The Company's financial statements have been prepared in accordance with United States generally accepted accounting principles. We urge you to read this report in conjunction with the risk factors described herein.
Plan of Operation
The Company’s plan of operations for the period until December 31, 2008 is to complete the following objectives within the time periods specified, subject to our obtaining the necessary funding and/or permits for continued exploration of the mineral properties. The following table summarizes the anticipated exploration expenditures on our current properties for the period until December 31, 2008.
ESTIMATED EXPLORATION BUDGET | |||
| 2007 | 2008 | Totals |
Sagar Project (includes Ferderber Claims) | 4,700,000 | 3,000,000 | 7,700,000 |
Madgascar | 1,517,000 | 5,018,000 | 6,535,000 |
Other | 300,000 | 300,000 | 600,000 |