DANEROS AND LARK ROYAL

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The Daneros uranium deposit is a “brownfields” virgin exploration discovery in close proximity to major past producing uranium mines of the Red Canyon mining area, including Lark, Bullseye, Spook and Radium King. The area is well endowed with production infrastructure and 100 km by road from the White Mesa Uranium Mill (Denison Mines).

The Daneros Deposit was discovered by Utah Power & Light in exploration that concluded in the 1980s with an historical “reserve” calculation (details can be found in White Canyon's Dec 2007 IPO Prospectus). The deposit was not mined due to a fall in the uranium price.

Mining Operations and Toll Milling Agreement with Denison Mines Corp

White Canyon received final approvals from the Bureau of Land Management in the State of Utah to commence mining operations at it's Daneros Mine, 100 kilometres from Blanding, Utah. Mining operations commenced as outlined in the Company's ASX Announcement on 27 May 2009.

Mining is being undertaken in a conventional underground mining operation accessed from the surface by decline. A project production rate of 500,000 lb per annum U₃O₈ is envisaged. On 18 January 2010 the Company signed a toll milling agreement with Denison Mines Corp in which Denison will process up to 55,000 tons per annum at its White Mesa Mill which is within trucking distance (100 kms) of the Daneros Mine. The agreement is for a term of 3 years with an optional 2 year extension and commences in January 2010. For further details please see the Company's ASX announcement dated 18 January 2010.

Lark-Royal

In December 2008 White Canyon completed the purchase of 33 mining claims, known as the Lark-Royal Project, covering an area of 276 hectares (682 acres), adjacent to the Daneros mine development project, from Canadian-based Uranium One Inc.

Lark-Royal covers the northern extensions of the Company’s Daneros uranium deposit. The Lark-Royal claims also cover the location of the Daneros decline portal as well as the surface facilities, including waste dump and an ore pad, for the Daneros mine. There will be considerable cost and operational benefits from the location of these facilities on the Lark-Royal claims rather on the original Daneros claims.

Geology

At Daneros, shallowly dipping sandstone units of the basal Shinarump Member of the Chinle Formation host the bulk of the uranium mineralisation. The deposits are generally tabular bodies ranging to five hundred metres in length and from 0.3m to 4m in thickness. The uranium mineralisation is mostly associated with the contact between the Shinarump Member and the underlying sedimentary sequence of the Moenkopi Formation.

Drilling

Diamond drilling completed by the Company during 2008 extended the high grade core of the deposit, defined by the 0.25% U₃O₈.ft contour, by over 250 metres in length. The deposit is now shown to be open to the north and south. An intersection in hole DAN052 (2.6m of 1.07% U3O8) illustrates future new potential to extend the ore body and its high grade core beyond the boundary of the previously defined deposit.

Significant recent drilling results from Daneros include: