Saddle Hills drilling confirms uranium grades

Vancouver – Initial drilling by Western Prospector Group (WNP-V) at its Saddle Hills uranium project in northeastern Mongolia substantiates past results from Russian operators.

The first three holes, on the Gurvanbulag deposit, intersected significant intervals of uranium mineralization, including:

• Hole 5001 Targeting the northwest up-dip portion of the deposit, drilling returned 2.2 metres (from 186 metres down hole depth) grading 0.21% U₃O₈;
• Hole 5002 Positioned 250 metres east of hole 5001, drilling returned 2.8 metres (from 252 metres down hole) averaging 0.29% U₃O₈, including 2.2 metres of 0.35% U₃O₈ in the Gurvanbulag zone just above the 200-metre level underground workings;
• Hole 5003 Targeting a reported low grade zone at the 200-metre level, N-core drilling cut 6.8 metres (from 310 metres down hole) of 0.57% U₃O₈, including a high-grade interval of 3.3 metres averaging 0.98% U₃O₈.

The company experienced poor recoveries in its first two holes due to rock and drilling conditions, requiring down-hole size reductions. Hole 3, an N-core diameter hole from surface, returned much better recovery and was drilled to a downhole depth of over 300 metres. Higher core recovery increases potential to fully sample the actual mineralization, resulting in possible grade enhancement over the prior Russian drilling, which only averaged 50-60% recovery.

Western Prospector has completed 15 holes of its planned 100 holes scheduled for this year. The company noted some initial delays in permitting for drilling at the project attributable to the government’s unfamiliarity with uranium projects. Two rigs are currently active at Saddle Hills with a third rig to be added in September.

Western Prospector president and CEO John Brock reviewed, “The cash that we have on hand (about $23 million) fully satisfies our budgetary requirement and work plan, that being to take the Saddle Hills project through preliminary feasibility by the end of 2006 (for the Gurvanbulag deposit).”

Permitting is also in place for dewatering of the old underground workings and is expected to commence in March-2006. Settling ponds are under construction and a head frame, sourced from Ivanhoe Mines’ (IVN-T) Oyu Tolgoi project, is scheduled to be moved to Saddle Hills over the winter.

Addressing Mongolia’s political situation, John Brock continued, “We anticipate there is going to be changes to the mining legislation, in particular to the mining tax act, which is going to the Mongolian Parliament in September and October. We expect the current 5-year tax free period will be reduced to a period to accommodate payback of capital and that the current royalty of 2.5% will remain the same.”

The higher grade uranium results delighted investors, who pushed up the company’s share price about 9% to the $3.55 level. Given its 31.3 million shares outstanding, Western Prospector Group posts a $111 million market capitalization.