Callabonna Uranium has awarded Underdale drilling the contract for works at the Five Mile Creek prospect.

The drilling will be followed up on a Mobile Metal Ion survey over the Mt Denison project area, located 250km north-west of Alice Springs in the Northern Territory of Australia.

Expected to cost about $50,000, the proposed Arunta Mt Denison project will determine if ore grade uranium and a minable thickness is present at the location.

Callabonna Uranium said the 4,000m-long and 1,000m wide anomaly has uranium response ratios of about 150 times background and is situated near to a modern drainage system.

Callabonna is hopeful of a near surface concentration as nearby granite outcrops in the hills have been found to contain secondary uranium concentrations at a number of locations, marking the presence of a local source of uranium.

The company said a shallow calcrete style deposit would be an attractive target and is a reasonable anticipated cause of such an anomaly in this environment.

Drilling is scheduled to begin in early April 2012 after all the permits for track construction and drilling of 22 holes were been received from the Aboriginal Area Protection Authority (AAPA), following an October 2011 application.