Other related coverage Nuclear resurgence boosts uranium AUSTRALIA'S inventory on uranium is set to be boosted by an initial resource estimate for the Four Mile discovery of US group Heathgate and Melbourne-based Alliance Resources near Heathgate's Beverley uranium mine in South Australia's outback.
High-grade uranium hits at the discovery and betting by the market that it could eventually be the biggest uranium deposit of its type in the world (roll-front, sandstone-hosted), put a rocket under the Alliance share price last year. Its shares rose from 17¢ at the start of the year to $1.83 by year end.
Yesterday Alliance shares rose 8¢ to $1.91, valuing the company at $467 million. Melbourne businessman Ian Gandel controls about 36 per cent of the company that before the 2005 discovery of Four Mile was best known for its Maldon gold project in Victoria. Alliance has a 25 per cent free-carried interest in Four Mile, named for its distance from the Beverley mine.
Operator and 75 per cent partner is Quasar Resources, the exploration arm of Heathgate (itself part of US group General Atomics), owner-operator of Beverley, which produced 854 tonnes of uranium in 2005-06.
Quasar has been working towards producing a compliant inferred resource estimate for the high-grade part of the Four Mile West zone. The resource estimate was originally expected to be released last month, but it has been delayed to "early in the new year".
The delay was blamed on hold-ups in receiving chemical analyses from the Lucas Heights laboratories of the Australian Nuclear Science and Technology Organisation, as well as what Alliance has told the market — the need to "complete the data verification process".
Alliance would not comment yesterday on what the initial resource estimate might be. But it has in the past referred to Four Mile as "Australia's premier uranium discovery".
While the initial resource estimate will be based on a small section of the Four Mile West area, which has been drilled on spacings of 100 metres by 100 metres, it will be the expected high grade of the initial resource estimate that could again fire up market interest in the find.
And while Alliance has not made any estimate on the eventual size of Four Mile, there has been speculation — and that is all it is — that it could eventually weigh in at more than 40,000 tonnes of uranium — equivalent to four years of Australian production (Olympic Dam, Ranger and Beverley).
Among Australia's undeveloped uranium deposits, only Kintyre (Rio Tinto) and Yeelirrie (BHP Billiton) in Western Australia would rank bigger. Both date from the 1970s uranium exploration boom/bust and cannot be developed because of the WA Labor Government's ban on uranium mine developments.
About 20 per cent of the world's uranium production comes from roll-front deposits, mainly in the US and Kazakhstan. Spot prices recently hit $US72 a pound, double the price at the start of 2006 and a 605 per cent increase on the December 2002 price of $US10.20 a pound.
The surge reflects the possibility of near-term supply shortages.
AGS Price at posting:
0.0¢ Sentiment: Buy Disclosure: Held
