http://www.theaustralian.com.au/bus...exploration-hunt/story-fnciil7d-1227240616400
Alliance Resources (AGS)
STRANGE times for Ian Gandel’s 28 per cent-owned Alliance Resources, the 25 per cent owner of our newest uranium mine, the Four Mile operation in South Australia.
Relations between Alliance and the 75 per cent Four Mile owner and manager, the privately held US defence contractor General Atomics, have been frosty for longer than anyone cares to remember.
So no one was surprised last year when Alliance said it would seek a buyer for its 25 per cent stake. And there was no surprise when a $57.6m offer for Alliance’s Four Mile stake from General Atomics’ local arm, Quasar, was rejected this week by Alliance as being “significantly below fair value’’.
While rejected, the Quasar offer nevertheless establishes some sort of floor price for Alliance. But given that at today’s price of 8.6c a share Alliance is a $32m company, there is some major value disconnect going on.
Alliance has just finished up placing the shortfall shares from last year’s rights issue at 8c a share. That in itself could explain the value gap.
But it is done and dusted now, so something else must be at play. And there is — a South Australian Supreme Court action due to get underway in early April.
Alliance will be seeking a declaration to validate its decision in November last year to terminate Quasar as the sales and marketing agent for its share of Four Mile’s production.
What’s more, Alliance wants its share of uranium to be returned because — get this — it hasn’t been sold. Quasar has been sending the stuff to Canada for processing, and stockpiling it, as well as holding some at the mine site back in South Australia.
So no sales revenue to date for Alliance, which is why it had to have that rights issue last year. The uranium/nuclear world is as murky as they come, so Quasar’s/General Atomics’ answers on why there have been no sales recorded will be fascinating stuff.
Alliance estimates its share of mine product it now wants back stands at more than 414,000 pounds, with a market value of about $20m. It is also a major clue in why Alliance spurned that $57.6m offer from Quasar.
