In early 2011, Russian state-owned ARMZ made a $1.16 billion all-cash takeover for Mantra Resources, while Rio Tinto completed a $4 billion takeover of Riversdale Mining.

The key projects in both were nearby and in similar geological settings to Uranex's uranium and coal projects area in southern Tanzania.

Since then, the company has focused heavily on its flagship 8500 square kilometre Mkuju uranium project and Songea coal project.

Uranex managing director Matthew Gauci told RESOURCESTOCKS the company's new focus was unwavering, despite some industry observers viewing it as risky and too aggressive.

"We understand the investment community may have taken that view, particularly after the Fukishima incident wiped an average of 30 per cent of the uranium industry's value in one week," Gauci said, adding the initial decision to focus on Mkuju and Songea was driven by various factors.

"However the company was encouraged by the project's mineralisation, mineralogy, grades and deposit type which, once defined, we envisage operating in the lower quartile of the cost curve," he said.

"We think we could deliver a higher enterprise value per pound of uranium oxide [U3O8] to our shareholders while diversifying commodity risk by developing uranium and coal.

"In addition, we think this decision has been vindicated, with the substantial high grade results from drilling now reflected in the company's value.

We have outperformed the uranium sector by

approximately 20 per cent, and the recent identification of the Lumecha coalfield covering 300 square kilometres should add further value."

In addition, Gauci said the company realised there was extraordinary market growth for companies in the region and that East African countries like Tanzania, Mozambique and Malawi were emerging as globally significant uranium and coal districts.

"With the recent takeovers of Mantra and Riversdale and the high valuations attributed to these projects by respected global miners such as ARMZ and Rio Tinto, it is clear East Africa is attractive," Gauci said.

He said Mkuju was located in one of the most prospective uranium districts in the world.

Situated nearby are key projects including ARMZ/Uranium One's Nyota prospect (101.4 million pounds at 422 parts per million U3O8) which is the subject of a definitive feasibility study.

Also close by is Paladin Energy's Kayelakera mine, which hosts 46Mlb at 802ppm U3O8 and is currently in production.

"Additionally, Mkuju is located in mining-friendly Tanzania, which has solid GDP growth, a modern and expanding mining industry, strong government support for resources projects and operates on British Common Law, so sovereign risk is low compared to many other jurisdictions" Gauci said.

At present, a drilling program is being carried out at Mkuju's Likuyu North prospect.

The results have confirmed the prospect as a major new uranium discovery along a one kilometre mineralised strike of the 5km-long uranium anomaly at the Likuyu North prospect. This is one of five anomalies with a total strike of approximately 69km length.

Significant results include:

68m at 1094ppm U3O8 (including 2m at 3612ppm U3O8),

64m at 748ppm U3O8 (including 2m at 3881ppm U3O8),

50m at 327ppm U3O8 (including 5m at 833ppm U3O8),

85m at 474ppm U3O8 (including 13m at 1511ppm and 7m at 2160ppm U3O8),

42m at 605ppm U3O8 (including 19m at 1068ppm U3O8),

8m at 894ppm U3O8 (including 2m at 1738ppm U3O8),

33m at 419ppm U3O8 (including 5m at 1150ppm U3O8),

12m at 1068ppm U3O8 (including 2m at 4100ppm U3O8), and

7m at 1008ppm U3O8 (including 1m at 2756ppm U3O8).

"The widths and grades of the intersections are globally significant," Gauci said.

"In fact only Extract Resources has reported better widths and grades from the uranium exploration sector, and that was from a total of 170,000 metres of drilling.

"That company is valued at $1.95 billion."

Uranex is planning an aggressive drilling program at Mkuju for the remainder of 2011.

"We have only drilled one kilometre of a five kilometre long anomaly - covering 60 holes, with more than 80 per cent of those holes being mineralised," Gauci said.

"Sixty per cent of the holes also have a grades and thickness greater than one to 10 metres at 200 parts per million, so the decision to launch into a 20,000 metre drilling program to define an initial resource at the Lkuyu North prospect towards the end of 2011 or early 2012 was unanimously supported by the board."

But Mjuku is not the only string to Uranex's bow.

The Songea coal project covers a total area of 3500sq.km in the Ruhuhu coal basin, where eight Karoo basins containing 11 recognised coalfields have been identified.

The two most significant coalfields are Ketewaka-Mchuchuma (804Mt) and Ngaka (250Mt).

Recent desktop studies, geological mapping and field traverses have identified the Lumecha coalfield, which is interpreted to extend over 250-300sq.km.

A 3000m drilling program is being completed on prospective Karoo sandstone at Lumecha, to obtain early indications of the potential resource structure and quality.

The mining and infrastructure investment into the region is reported to be more than $US4 billion, including upgrades to roads, rail, port, power and water for the development of significant bulk commodities such as iron ore and coal.

Export markets are developing to bordering Malawi, Mozambique, Zambia, Democratic Republic of the Congo and Kenya, as well as customers in China and India via the Indian Ocean. A freight advantage for Tanzania over Australian and South African coal mines is also anticipated to China and India.

China and India are expected tobe the largest importers of thermal coal by 2015.

"Ultimately, the company would like to have a global resource of greater than 100 million pounds of uranium and greater than one billion tonnes of coal," Gauci said.

And Gauci believes, with Mkuju and Songea, that Uranex is on the right path to achieve it.

*A version of this report, first published in the September 2011 edition of RESOURCESTOCKS magazine, was commissioned by Uranex