SOUTHERN CROSS EXPLORATION NL - ASX: SXX

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Description

Southern Cross Exploration N L was incorporated in 1970 and listed on the Sydney Stock Exchange in that year. It is a public company quoted on the Australian Securities Exchange (ASX). Southern Cross had two categories of shares - fully paid (ASX code SXX), and partly paid (ASX code SXXCA) on which two cents remained unpaid. In March 2010, a call of two cents on 60,000,000 partly paid shares was payable. The Company will have 116,000,000 shares on issue when all shares will become fully paid.

The Company has about 900 shareholders and is about 98% Australian-owned. Exploration for oil and gas, gold and other metals and minerals has been its principal activity over many years. The Company also invested in property, loans, shares and other securities. In recent years, the Company has sought to obtain overseas exploration projects with early development potential.

BIGRLYI Uranium Joint Venture - NORTHERN TERRITORY

The Company's interest in the Bigrlyi Uranium Joint Venture, which is a pre-development mineral project, is classified in the accounts as "Investment in Joint Venture". The Bigrlyi project is located in the Ngalia Basin, approximately 390 km northwest of Alice Springs, in the Northern Territory. The project is characterised by relatively high uranium grades (with vanadium credits) and excellent metallurgical recoveries.

The Bigrlyi Uranium Joint Venture is an important asset which Southern Cross first acquired in 1981 in a purchase from the Commonwealth Atomic Energy Commission in a joint venture with a number of other companies. The project was subject to significant exploration activity in the period 1974 to 1982 and then remained on a care and maintenance basis for many years. Energy Metals Ltd (EME) obtained a majority interest in the project in November 2005 and became Operator. An active drilling and exploration programme has been underway since then.

In a recent Circular to Shareholders in respect of the call made on the Company's partly paid shares, it was stated that the Southern Cross interest in the Bigrlyi Uranium Joint Venture is 5%. It should be noted that this is subject to the formal completion of a settlement agreed with the other Bigrlyi Uranium Joint Venture parties. Although Southern Cross held a 5% interest for many years, there has been some uncertainty regarding the Company's interest due to a purported dilution from 5% to 4.2%, the validity of which was not accepted by the Company. Pending finalisation of the agreed settlement, Energy Metals Ltd (EME) continues to show the Company's interest in the project at 4.2%, even though the Operator’s recent cash calls have been made, and have been paid, on the basis of a 5% interest in the project being held by Southern Cross.

A JORC compliant uranium and vanadium resource estimate of 7.27Mt @ 0.13% U3O8 and 0.24% V2O5 at a 0.5kg/t U3O8 cut-off grade was announced to the ASX in May 2009. At cut-off grade 0.5kg/t U3O8 the uranium mineral resource totals 22.7Mlb of U3O8. Using a lower cut-off grade of 0.25kg/t U3O8 the resource increases to 29.4Mlb of U3O8 with most of this resource lying within 200m of the surface and potentially amenable to open cut mining. At both of these cut-off grades, approximately 55% of the contained uranium metal reports to the Indicated Resource category.

During the latter part of 2009, 67 RC holes (total 8,118m) and 9 diamond holes (total 750m) were drilled to infill resource positions at the A4 and A15 deposits, and to investigate untested positions west of A4 and A15. Large diameter core from the diamond drilling programme has been dispatched to the ANSTO Lucas Heights facility for initial heap leach testwork.

The JV Operator has advised that a new resource estimate for the Bigrlyi project incorporating the 2009 drilling results is scheduled for release in the June 2010 quarter.

URANIUM: BURKINA FASO , WEST AFRICA

In 2008, Southern Cross was granted two Exploration Permits for uranium located near the town of Oursi in northeastern Burkina Faso. The Tin Dioulaf No 07-205 and Agalsa No 07-209 tenements cover an area of 500 sq kms and embrace a major unconformity structure considered to be prospective for uranium deposits.

A consortium of companies was formed to carry out exploration. Current interests in the consortium are: Southern Cross (original applicant) - 45%; Longreach Oil Ltd - 20% and CrossContinental Uranium Limited (having now earned 35%). CrossContinental is a Canadian company jointly-owned by ASX-listed Crossland Uranium Mines Limited (CUX) and Toronto-listed Pancontinental Uranium Corp (PUC).

In October 2008, CrossContinental (Operator) completed a high resolution airborne spectrometer and magnetometer survey over the tenements. Magnetic data clearly defined a major unconformity with cross-cutting faults, a setting which is prospective for uranium deposits. Several discrete uranium anomalies approximately 8 to 9 times background were discovered in this potentially favourable geological setting. During 2009, field inspections were carried out and over 200 samples collected. The anomalies were interpreted as resulting from surficial ironstones which have scavenged uranium and, in themselves, not likely to have economic significance. The Operator is reviewing these results in the context of other uranium exploration activity in Burkina Faso.

GOLD: PHILIPPINES

The Company holds a 20% interest in the old gold mining area known as the Gold Cross Gold Project. This project is located about 100 kms north-east of Manila, on the main island of Luzon. Based on information available, the area is considered to have potential for large gold resources. Southern Cross can acquire an additional interest in the area by exercising its rights to purchase the balance of 80% in several tranches.

The issue of the Mineral Production Sharing Agreements remains pending. The Company understands that the Philippines Department of Energy and Natural Resources has advised on a consolidation of the applications for four Mineral Production Sharing Agreements and that action is being taken by the vendors to complete the licencing process. The continued strength in the gold price warrants the earliest commencement of a substantial exploration programme.

GOLD: VICTORIA

Application by a joint venture in which Southern Cross had a 50% interest for the grant and/or the renewal of these tenements, near Woods Point, was refused some years ago, after long delays due to unresolved Native Title claims. The matter remains under review by the joint venture parties.

MAGNESITE: IRAN

The company has a 10% interest in projects in Iran which comprise several exploration tenements with identified outcropping dolomite/magnesite deposits. Access to cheap power, which is available at the gate of one of the tenements, is critical for commercially successful magnesite and magnesium production. This project is being kept under review.

OIL AND GAS & OTHER ENERGY

The Company has an indirect interest in oil and gas exploration through its shareholding in Longreach Oil Ltd (LGO), an ASX-listed company. LGO has a direct interest of 50% in a prospective oil and gas area in Queensland and it also has 11% of three exploration permits areas in Western Australia. It also holds a 20% shareholding in unlisted Brisbane Petroleum Ltd which has two Petroleum Leases with some oil production in the Surat Basin. LGO has a significant interest in ASX-listed AusTex Oil Ltd (AOK) which has oil and gas producing leases in Oklahoma and Kansas, USA.

Oil and gas exploration opportunities in Australia and overseas are being evaluated on a continuing basis. Also, SXX proposes to participate in promoting a new oil and gas investment company, Offshore Oil Ltd, with a proposed capital raising of $250,000,000.

Mine For

uranium, gold, oil, gas, magnetite

Location of operation(s)

Northern Territory, Victoria, Burkina Faso, Phillipines, Iran

Address

Level 9, 82 Elizabeth St
SYDNEY, NSW, AUSTRALIA

Phone

(61 2) 9233 6022

Email

Website

http://www.sxxgroup.com/

Last Updated

27/01/2011