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In April 2007 MAX entered into an Agreement with NUSTAR Exploration LLC, a private Arizona limited liability corporation, for the acquisition of a 100% interest in 427 mineral claims located in the Arizona Strip of the Colorado Plateau in northwest Arizona.
The NUSTAR uranium claim block is comprised of 427 mineral claims totaling 8,540 acres and is located in the highly prospective Arizona Strip in Mohave County, Arizona. The targets are uranium-bearing solution-collapse "breccia pipes" that were mined during the early 1980's.
The claims in the NUSTAR prospect area are located on the northwestern trend of uranium deposits in this area of Arizona. This trend contains the high-grade past producing Hacks Canyon mines, the Arizona 1 mine (currently on standby) and the EZ-1 and EZ-2 breccia pipes recently purchased by Denison Mines Corp. (DML:TSX) from Pathfinder Mines. The average grade of the uranium ore that has been mined in the Arizona Strip is high compared to the other deposits in the Colorado Plateau and ranges from 0.40% to 0.80% U3O8. The size of the deposits has historically varied from 400,000 kg (880,000 lbs) to 2,000,000 kg (4,400,000 lbs) of recovered U3O8. Uranium exploration on the Arizona Strip started in the 1950's with the discovery of uranium outcrops and surface uranium mineralization. Exploration continued periodically, depending on the price of uranium, until the middle 1980's when essentially all uranium exploration in the U.S. stopped. Results on much of the work done on this area of the Colorado Plateau is reported in various publications by the USGS and State agencies in Arizona. Uranium exploration involved companies such as Energy Fuels, Pathfinder Mines, Western Mines (a division of Phelps Dodge), Uranerz, and others.
The NUSTAR uranium occurrences are characterized as a breccia pipe which is thought to be caused by the movement of water through strata creating "rubble" zones and solution collapses. The uranium is precipitated within these zones at a reduction/oxidation interface due to changes of the ground water chemistry and/or pressure gradients. The mineralogy of the breccia pipes is, generally, pyrite, copper, molybdenum, lead, zinc and pitchblende. The NUSTAR project area is located about 8-10 miles from the EZ pipes and about 20 miles from the Hacks Canyon Mines. MAX Resources has initiated plans to explore and expand known uranium drill targets, with preparations underway for a spring and summer exploration season consisting of regional mapping, soil gas acquisition, reviewing archived geologic data and completing a comprehensive regional geologic survey. Drill targeting will focus on testing known geologic targets and uranium showings.
Under the terms of the Agreement with NUSTAR, MAX can purchase a 100% interest in the NUSTAR Claims by making a cash payment to NUSTAR of US$128,100 and issuing 200,000 shares of MAX's common stock, subject to a gross royalty of 4% (the "Royalty") of sales revenue from commercial production of uranium from the NUSTAR Claims. For each breccia pipe identified on the NUSTAR Claims that goes into commercial production, MAX shall have the right to purchase 3% of the 4% Royalty on that breccia pipe by payment to NUSTAR of $1,000,000.
