VANCOUVER, BRITISH COLUMBIA — (Marketwire) — 09/26/11 — Virginia Energy Resources Inc. (TSX VENTURE: VAE) is pleased to provide an update on metallurgical tests for the Coles Hill project located in southern Virginia, USA. The goal of this test work was to develop a processing strategy that maximizes uranium recovery with reasonable capital and operating costs while minimizing the volume of tailings material. This work was undertaken in accordance with the recommendations of the NI43-101 Preliminary Economic Assessment (PEA), which was announced on October 18, 2010 and posted on SEDAR December 2, 2010.
Alkaline leach tests by Resource Development Inc. (“RDI”) produced uranium extractions of approximately 90% in 48 hours at 90 degrees C. It is notable that nearly all of the leaching occurred during the first 12 hours, which is unusually rapid for alkaline leaching. The uranium extraction with alkaline leaching was significantly better than the 83% extraction demonstrated by previous metallurgical work completed by Colorado School of Mines Research Institute and Hazen Research in 1982. We have requested that RDI undertake another round of alkaline leach tests to provide a greater degree of confidence in these initial results, as well as to optimize leach conditions.
The encouraging outcome with the alkaline leach indicates the need for a larger scale test program, which will be on-going. Future investigations will also include an evaluation of radiometric ore sorting, which has the potential to significantly reduce the volume of tailings generated by the operation.
The technical information in this news release was reviewed by Dr. Terry McNulty who is a Consulting Metallurgist on the Coles Hill project and a Qualified Person as defined by National Instrument 43-101.
Dr. McNulty received a Doctor of Science degree from Colorado School of Mines and is a metallurgical engineer with five decades of involvement in the global mining industry. He was previously in operations and technical management for The Anaconda Company, as well as VP-Technical Operations for Kerr-McGee Chemical Corp., and served as President and CEO of Hazen Research, before founding his own consulting firm. Dr. McNulty has advised on 26 uranium projects during the last 5 years.
Walter Coles Jr., President and CEO of Virginia Energy Resources, commented that, “We are very pleased to see the 6-7% improvement in extractions via the alkaline leach option. If we are able to confirm these results with larger samples it could have a significant impact on the Net Present Value (NPV) of the Coles Hill project.” Every 1% improvement in recovery over the 83% rate used in the NI43-101 Preliminary Economic Assessment (announced on October 18, 2010) could increase the project NPV by approximately $15 million. Thus, a 7% improvement would add roughly $100 million to the value of the Coles Hill project.
The Preliminary Economic Assessment indicated a project NPV of $404 million, based on a 7% discount rate, a $65 per pound uranium selling price and an 83% recovery rate. If further alkaline leach tests confirm a 90% recovery rate, then the project NPV would increase to just over $500 million.
Virginia Energy Resources (TSX VENTURE: VAE) is the largest single outside shareholder with an almost 30% interest in Virginia Uranium Holdings, Inc. Virginia Uranium Holdings, Inc. owns 100% of Virginia Uranium, Inc., a company incorporated in the state of Virginia, which operates the Coles Hill project. Besides Virginia Energy Resources– indirect stake in the Coles Hill project, the company holds over 200,000 hectares of highly prospective claims in the Athabasca Basin of Saskatchewan and in the Otish Mountains of Quebec. Further, the company is actively marketing for sale its Hawk Ridge copper-nickel project in Quebec.
Virginia Energy Resources remains well capitalized to pursue its corporate goals. The company–s cash position is $2.3 million, versus an administrative burn rate of less than $500,000 per year. In addition, Virginia Energy Resources– holdings of marketable securities were valued at approximately $7.1 million as of September 23, 2011.
The company–s market capitalization is just under C$17 million (based on the C$0.17 closing stock price on September 23, 2011 multiplied by the company–s 97,514,238 shares outstanding), down from approximately $75 million in January 2011. We believe the negative impact of the Fukishima incident on the uranium industry will fade with time. China, South Korea, Russia and India have all reaffirmed their plans to build more nuclear power plants. Nuclear power remains the only option for base load power generation that does not generate CO2 gas.
The National Academy of Science (NAS) is continuing its study on the safety of a modern uranium mining industry in the state of Virginia. The study remains on track to be completed by December 2011. Pending a positive outcome from the NAS study, the state legislature would then be in a position to consider lifting the moratorium on uranium mining in Virginia, which would have positive implications for the Coles Hill project.
On Behalf of the Board of Directors
VIRGINIA ENERGY RESOURCES INC.
Walter Coles Jr., President & CEO
This news release includes certain “forward-looking statements” under applicable Canadian securities legislation. All statements other than statements of historical fact included in this release, including, without limitation, statements regarding future plans and objectives of the Company are forward-looking statements that involve various risks and uncertainties. There can be no assurance that such statements will prove to be accurate and actual results and future results, events and objectives could differ materially from those anticipated in such statements. Important factors that could cause actual results to differ materially from the Company–s expectations include exploration and other risks detailed from time to time in the filings made by the Company with securities regulators.
Neither TSX Venture Exchange nor the Investment Industry Regulatory Organization of Canada accepts responsibility for the adequacy or accuracy of this release.
Contacts:
Virginia Energy Resources Inc.
Walter Coles, Jr.
President/CEO
(604) 669-4799
Virginia Energy Resources Inc.
Tony Perri
Investor Relations, Manager
(604) 669-4799