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Athabasca Uranium Signs Option Agreement for McGregor Lake Property

Athabasca Uranium Inc. has announced that it has entered into an agreement with an arm's-length vendor by which the Company has the option to earn a 100% interest in the McGregor Lake Property in northeast Saskatchewan.

The Property consists of five claims totaling 18,699 hectares located on the eastern margin of the uranium-rich Athabasca Basin, adjacent to the Denison/JNR Resources Moore Lake Project.

The Company can earn a 100% interest in the Property by paying $60,000 and issuing 1,500,000 common shares to the Vendor upon receipt of regulatory approval, by making additional payments totalling $750,000 over the next 42 months and filing $3,000,000 in exploration expenditures on the Property within four years. A 1% net smelter return has also been granted to the Vendor, which may be purchased by the Company for $1,500,000. The Agreement is subject to regulatory approval.

The McGregor Lake Property is located on the eastern edge of the Athabasca Basin, the most productive uranium-producing region in the world. The property is adjacent to JNR/Denison's Moore Lake Project, and is approximately 3 miles from the Moore Lake U3O8 deposit on which JNR/Denison is actively exploring with the intention of defining a mineable resource.

"McGregor Lake is an excellent addition to our portfolio of properties, and conforms perfectly to our corporate strategy of acquisitions in the Basin on which we can employ our exploration partner's leading-edge uranium-finding technology. Due to its proximity to Moore Lake, we could not forego the opportunity of acquiring this property," commented Gil Schneider, UAX President & CEO.

The Moore Lake Project is JNR Resources' most advanced project in the eastern Athabasca Basin. The following information on Moore Lake is taken from JNR's website

"The JNR/Denison joint venture has undertaken a series of aggressive exploration programs on the Maverick Zone and on numerous historic and newly identified regional prospects. In 2004, 51 holes were drilled totaling 19,393 metres. A further 90 holes totaling 32,628 metres were drilled during two drilling campaigns in 2005. The joint venture has also carried out extensive geophysical programs including 32 km of ground TEM, 67 km of gravity, and 23.3 km of seismic work over the Maverick Zone, as well as 303 km of ground TEM on seven regional targets, 5 of which were drill tested.

The better mineralization to date is located in the vicinity of the original Maverick discovery, centered about ML-03 and ML-25. The mineralization is intimately associated with graphitic pelites, reactivated faulting and extensive clay replacement associated with hydrothermal alteration in the sandstone and basement rocks. This classic unconformity-style mineralization is best exemplified by holes ML-61, ML-54 and ML-55, where respective intervals of 4.03% eU3O8/10 m (incl. 1.4 m @ 20% eU3O8), 3.5% U3O8/5.0 m and 5.14% U3O8/6.2 m were obtained. In ML-29, returning 1.61% eU3O8/7.5 m, a 0.5 m intersection graded 7.91% U3O8, 3.65% Ni, 2.8% As, 1.6% Cu, 0.9% Co, 0.35% REE and 5.3g/t Ag, confirming the polymetallic nature of the mineralization.

In the winter of 2005, the joint venture identified an impressive, 10-kilometre long, 500- metre wide conductive corridor that wraps around the northern boundary of the granitic body that forms the northern contact of the Maverick Zone. The corridor encompasses portions of the Nutana, West-Venice and Venice grids and is interpreted to be an extension of the conductive system associated with the Maverick mineralization. The geochemical and geological signature that was obtained from the few holes on this system was highly prospective, with trace element enrichment, illitic clay geochemistry and significant graphitic intercepts occurring, features consistently associated with mineralized systems.

In 2006, infill drilling on the Maverick Main zone continued to intersect high-grade uranium mineralization. ML-140 returned 3.20% U3O8 over 6.5 metres including a 3.5-metre intercept of 5.25% U3O8, 2.1% nickel and 0.65% cobalt. ML-139 returned 1.23% U3O8 over 8.5 metres, including a 1.5-metre intercept of 4.20% U3O8. ML-133 intersected two zones of mineralization.

A high-grade zone at the unconformity returned 2.72% U3O8, 2.30% nickel and 0.905% cobalt over 5.0 metres, including a 2.0-metre intercept of 4.25% U3O8. ML-133 also intersected mineralization in the basement associated with clay-altered graphitic pelites, returning 0.611% U3O8 over 3.5 metres. Uranium mineralization was intersected in all three holes that tested the '527' area in 2006, with the best result obtained from ML-136 returning 0.50% eU3O8 over 7.0 metres."

In October, 2005, Fugro Airborne Surveys conducted a GEOTEM(R) electromagnetic and magnetic survey of the McGregor Lake area on behalf of International Uranium Corporation. Several conductive bodies were identified. Zone 9, which spans the McGregor Lake Project, is a large conductive body following trends seen mainly on the total energy envelope grid. Profile response for these zones is limited to broad early to mid-time B-field Z signal. The zones lie along the edge of the Athabasca Basin, with the eastern part of zone 9 lying over the more magnetic rocks of the Wollaston Domain. Correlation to a magnetic low as seen with most of the conductors in this block is not seen along these bodies.

The Company will be developing an exploration program for McGregor Lake as quickly as possible, and will announce plans as they become available.

Geological information contained in this release has been reviewed by the Company's Qualified Person, Dr. Peter Born, P.Geo. Dr. Born has not reviewed the drilling logs or assay results of Moore Lake, however the information herein is derived from sources believed to be credible and reliable.


Athabasca Uranium Inc.

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