what is going on with alliance resources?

AGS looks to be well and truly undervalued.


http://www.theaustralian.news.com.au/business/story/0,28124,25717840-36418,00.html

Print Robin Bromby | July 01, 2009
Article from: The Australian
First, a puzzle. What is going on with Alliance Resources?

Alliance Resources , which owns 25 per cent of the Four Mile uranium deposit in South Australia, is regarded as one of the most attractive uranium investments in the country, mainly because Four Mile is seen as probably the next mine to be developed.

The company has been talked up by the South Australian government, and has been given most of the ticks by analysts. The resource has just doubled. Yet the stock has gone from $2.85 in 2007 to 68.5c now.

Some of that drop would be caused by, first, the deflating of the uranium bubble and, second, by the general market malaise.

There you could leave it except for the latest development: Alliance Resources has just closed its 1 for 12 rights issue at 60c for each new share. Remember, this is a uranium star - so why did shareholders apply for only 52 per cent of the stock on offer? That leaves a shortfall of 12.57 million shares.

Then there’s the case of Black Range Minerals and its Colorado uranium strategy. For some time, the share price has been appreciating without any announcement. On June 11, in response to an ASX query, BLR issued the standard we-know-nothing response.

On June 24, the stock rose 15.7 per cent, and was up again by 19 per cent on Monday. It retreated a little on Tuesday, but a massive 17.14 million shares went through. This morning all was made clear: the company is buying 49 per cent of the Hansen uranium project in Colorado. This deposit was discovered in 1977 and by 1982 there was an estimated resource of a contained 13,600tonnes of U3O8 at an average grade of 0.08 per cent. But mining never eventuated due to the collapse in the uranium price in the 1980s.

Okay, remember this in The Dirt on June 1? “China stockpiling uranium certainly would be a surprise but, on the local scene, investors might like to keep an eye out for the maiden resource estimate from the Firawa deposit in Guinea. It could be a wake-up call for those who have not been watching Forte Energy .”

Then the stock was trading around 11c or 12c but soon hit 18c. Then the story was, some weeks later, “discovered” by our competition and the Melbourne and Sydney Fairfax dailies published their “scoop” about FTE. But, of course, readers of The Dirt were well across the story by that time.

Today we saw the maiden resource at FTE’s Firawa deposit in Guinea, 526 tonnes of contained U3O8 at an average grade of 0.029 per cent.

Was the market disappointed by the grade or was it the market dragging down everything this morning? At the time of writing, the All Ords was down 74 points and FTE fell back by 3c to 13.5c. FTE is very bullish about the potential to prove up more, given the deposit is open along strike and at depth.

And the other interesting announcement today came from Toro Energy with news that it has been given a state government drilling grant of $75,000 for work on its Lake Mackay uranium project. So what, you ask. Well, this is Western Australia and the new government is not only allowing uranium mining but now encouraging exploration for the mineral. That is a sea change.

Lake Mackay is located 700km west of Alice Springs but just inside the WA border. It doesn’t get much more remote.

The writer implies no investment recommendation and this report contains material that is speculative in nature. Investors should seek professional investment advice.