Max’s Early-Stage Drilling Success Confirms Historic Drill Data

The presence of well-mineralized uranium zones at relatively shallow depths (less than 500 feet) at C de Baca was confirmed by way of a late spring 14-hole drill program, for which the final assays were announced as recently as July 09. Of equal importance, the drill results thus far mirror those of the project’s past operator, which we will discuss in a moment.

To date, Max’s drilling highlights include 6.5 feet of 0.136% uranium (U3O8), beginning at a depth of 155.5 feet (including 0.368% U3O8 from 157.5-159.0 feet), and 5 feet of 0.167% U3O8 from 170 -175 feet. Other noteworthy intercepts include 2.0 feet of 0.065% U308 at a depth of 295.5 feet. (By way of a reference point, the world average grade from producing uranium mines is 0.15% U308).

Assay results for the remaining seven drill holes are expected to be released within the coming weeks. Assuming that they, too, continue to validate the property’s historic drilling results, then Max intends to follow-up with more in-fill drilling to better determine the overall grade, size and scope of the property’s core mineralized zones.

Similarly, Max also intends to embark upon a program of step-out drilling in several directions to assess the deposit’s considerable potential for expansion along a lateral plane. This strategy opens up the possibility of outlining a much more prolifically sized deposit than has been historically indicated by the property’s previous operator.

On this last note, Max has been fortunate enough to acquire an invaluable asset in the form of Oxymin’s historic exploration data, which includes drill logs and thickness maps to guide the Company in its updated geological modeling of the deposit.

C de Baca’s Drilling History Attests to Robust Economic Potential

The property was previously explored in the 1980’s by OxyMin, a subsidiary of the major uranium miner, Occidental Petroleum Company. OxyMin drilled 216 holes that were mainly concentrated at the eastern margins of the property, where some of the better grades were encountered. The best of which was 7.5 feet of 0.20% U3O8 at a depth of 291 feet.

All told, OxyMin’s drilling was comprehensive enough for an exploration target/resource estimate of 1.67 million tons grading 0.18% U3O8 to be well-established (translating into approximately six million pounds of uranium).

OxyMin’s drill-delineated resource estimates pre-date the advent of NI 43-101 guidelines and therefore cannot be relied upon as sufficiently accurate to conform with modern-day reporting standards. This historic information is therefore provided for reference purposes only.

Furthermore, OxyMin determined that the deposit may be amenable to "in-situ leaching” (ISL), subject to further exploration. This involves an underground mineral extraction technique that leaves only a tiny environmental footprint. Specifically, there is little surface disturbance and no tailings or waste rock generated. Max is of the same opinion that the shallow extent of the deposit’s mineralization makes it very amenable to ISL mining.

By way of explanation, ISR (also known as “solution mining”) leaves the ore where it is in the ground and uses non-toxic liquids which are pumped through the mineralized system to recover the uranium by way of leaching. Not only is this an environmentally-conscious form of mining, but it is also very cost-effective. According to the World Nuclear Association, 21% of the world's uranium production came about through ISR mining in 2004 (the last year for which records are available).

Other Key Considerations

The property’s 108 claims have excellent road access by way of graveled and cross county roads. Other infrastructure considerations involve the proximity of transportable water supplies and a nearby power grid. The project can also be worked year-round.

The claims are also located on U.S. Forest Service Lands which negates any future need to negotiate for the land with the region’s First Nations peoples.

Drilling the Lustrous Gold Hill Project in Alaska

By adhering to a strategy of strength through diversification, Max has also entered into a number of option agreements to jointly develop some of the Company’s best prospects. This includes the Gold Hill project in Alaska – in which Max can earn up to a 90% interest – and where a 6,000 foot drill program was commenced in late July.  

Located along the southern portion of the prolific Tintina Gold Belt, and approximately 145 miles north of Anchorage, the 9,570-acre Gold Hill property can be found about 10 miles away from a highway that leads to the nearby town of Cantwell.

The property has quite a history, including plenty of drill results that attest to its potential for a major discovery – one that has proved illusive so far. In fact, several past operators all found significant gold, copper and molybdenum mineralization but abandoned the property during cyclical downturns in the mining industry.

In stark contrast, these days gold is trading at 25-year-plus highs, while copper is near its all-time highs. Meanwhile, molybdenum has recently rocketed to previously unimagined multiples of its price of several years ago (translating into record-shattering all-time highs).  Most recently, it has been trading in the $35 range, compared to around $2 in 2002.

Highlights include one drill hole that intersected 536 feet of 0.48% molybdenite, beginning at surface. This is where a significant magnetic geophysical anomaly coincides with the mineralization. Notably, previous drilling never tested this magnetic feature and the surrounding sedimentary rocks.

Other drill highlights from the late 80’s include intersections of 20.01 feet of 0.19 oz/ton of gold and 9.84 feet of 0.47 oz/ton of gold from the same hole. A nearby hole also intersected a bonanza grade of 11.48 feet of 0.82 oz/ton gold.

Some of the gold and molybdenum has been found in vein systems while the rest occurs as disseminations and fractures that suggest that the mineralization is structurally-controlled. It appears to cover a “strike length” (mineralized horizon) that spans at least two square miles. Also, the property’s drainage systems have historically provided rich rewards for placer gold miners.

Extensive trenching and channel sampling covering nearly 3,000 feet, as well as extensive grab sampling and soil sampling, were conducted on the property two years ago. This data is being used in conjunction with the interpretation of geophysical surveying to best determine drill targets.

All of these corroborative exploration findings suggest that the property hosts a number of buried intrusives (deep-seated mineralized structures) which have not been explored – ones that may also be related to the infusion of gold and other mineralization into overlying, high-grade vein systems. Such a compelling geological model should generate plenty of excitement when the drilling is completed in September, 2007.

Zeroing-in on the Nustar Project’s Best Uranium Targets 

Another of Max’s leading projects is the Nustar uranium property, which is comprised of 427 mineral claims totaling 8,540 acres in the Arizona Strip in Mohave County, Arizona. Max has the right to earn up to a 100% interest in the project.

Max has identified 34 circular or collapsed structures on the property that will be investigated as potential uranium-bearing breccia pipes. The claims in the Nustar prospect area are located on the northwestern trend of a uranium-rich mineral belt. There are also two undeveloped economic breccia pipes within ten miles of the Nustar property. Additionally, a past-producing breccia pipe, the Hacks Canyon mine, is located only 20 miles away.

All told, there are nearly three dozen well-mineralized breccia pipes in this geologically very fertile territory. They include several larger ones that account for 9-25 million pounds of production and remaining reserves. Most of the smaller pipes host between two and four million pounds of uranium.

Furthermore, the average grade of the uranium ore that has been mined in the Arizona Strip is high compared to the other deposits in the United States and ranges from 0.40% to 0.80% U3O8.

With such promising odds in Max’s favour, the Company is embarking upon a systematic and comprehensive exploration program to prioritize drill targets, while also seeking out additional ones.

The MacInnis Lake Uranium Project: A Potentially World-Class Prospect

Max's management believes the MacInnis Lake area of the Northwest Territories has the potential to host a world-class uranium deposit, similar to those at Saskatchewan's McArthur River and Cigar Lake.  This is why the Company acquired an option to earn up to a 50% interest in 15 mineral claims totaling an expansive 26,184 acres. The property is located 275 kilometres southeast of the city of Yellowknife.

Significantly, the property is known to have widespread surface uranium mineralization and contains 28 high grade uranium showings that were discovered between 1954 and 1988. They include the Cole showing or outcropping which assayed as high as 6.58% U308 and 0.12 oz/ton of gold. Other highlights include assay results of 3.4% U308 and 7% copper at the Kult showing.

Results from an airborne survey in 2005 will be combined with archived historical drill and rock sampling results to assist the Company in its drill targeting during subsequent surface exploration.

The style of deposit that is being targeted is typical of an Athabasca Basin type occurrence. The Athabasca Basin, which is located about 280 kilometres to the south of MacInnis Lake in northern Saskatchewan, is host to Canada’s largest concentration of major uranium mines. With an estimated in-situ value of at least U.S. $30 billion, this puts the Athabasca Basin on par with the world's major mining districts.

Hunting for Carlin-Style Deposits in Nevada’s “Elephant Country”

Max also has an option agreement to acquire up to a 100% interest in the Diamond Peak property in Eureka County, Nevada. In turn, a soon-to-be-public company named Kokanee Placer Ltd. has signed an option agreement with Max to earn up to a 51% interest in the same property in return for undertaking most of the exploration costs, involving a commitment of at least U.S. $1 million over three years.

The Diamond Peak project is an historic gold/base metals property that was explored during the late 1990's and is located at the southern end of the prolific Carlin trend – home to an estimated U.S. $70 billion worth of gold mines and in-development deposits. Specifically, the property comprises 38 claims located 32 miles north of the town of Eureka, Nevada and the Archimedes gold deposit, which is owned by Barrick Gold Corporation.

Current prices of zinc, silver, and lead make this a very important target for further exploration, especially due to what is known about the property to date. For instance, strong surface mineralization occurs in a two-mile long mineralized horizon, measuring 200 to 300 feet wide.

The property also hosts three intrusive mineralized bodies that contain significant base and precious metal signatures along their edges. They have not yet been drilled but the Company believes that they could involve skarn deposits with meaningfully economic mineralization. Future exploration would include conducting geophysical surveys to better define the intrusive contacts and define drill targets for future work.

Historic exploration highlights include the drilling in 1999 of 17 holes spanning 10,085 feet, which encountered significant values of gold and base metals. They included 5 feet of 0.067 oz/ton of gold and 0.062 oz/ton of gold in two drill holes and 11.6 % of zinc over 5 feet within 60 feet of surface in another hole.

Kokanee completed a three-dimensional induced polarization geophysical survey in 2006 in order to better define the intrusive contacts and to establish defined drill targets for the next phase of exploration.

Investment Summary

From a technical perspective, the Company has approximately 21.07 million shares outstanding (about 28.26 million fully diluted). As previously mentioned, such a tight share structure should help to power the stock’s upwards trajectory in the wake of plenty of positive exploration news this summer and fall.

On a strategic note, Max’s diversified portfolio of projects provides investors with ample exposure to an across-the-board bull market for precious and base metals, alike. In particular, the imminent drilling of the Gold Hill project means that the ongoing delineation of meaningful gold, copper and molybdenum resources may be very much in the offing.

Meanwhile, North America’s overwhelming need to develop proven, environmentally-clean fuels as alternatives to an over-dependence on foreign oil underscores the need to develop uranium discoveries on an expedited basis. To this end, all levels of government are expected to help pave the way for the commercialization of such strategic mineral assets.

This scenario promises to validate Max Resource’s business model while setting the stage for a very successful future and a buoyant share price during the balance of 2007 and beyond.