Alliance turns down Four Mile offer
Alliance Resources has rejected a AUD 57.6 million ($44.7 million) offer from Quasar Resources for its 25% interest in the Four Mile uranium project in South Australia, ahead of announcing an updated exploration target for the prospective Four Mile North East (FMNE) project.
In a statement, Alliance said that its board considered Quasar's offer to be "significantly below fair value". The company's interest in Four Mile is held through its wholly-owned subsidiary Alliance Craton Explorer (ACE). Alliance said that, based on a spot market price of US$38.38 per pound U3O8, ACE's own share of uranium concentrates mined at Four Mile to the end of 2014 has a market value of approximately AUD 20 million ($15.5 million).
Quasar Resources owns 75% of Four Mile, where in situ leach production of uranium began in mid-2014. Quasar is an affiliate of Heathgate Resources, itself an affiliate of US company General Atomics. The relationship between the joint venture partners has been a complicated one, with legal disputes between Alliance, Quasar and Heathgate in the run-up to production.
ACE disagreed with Quasar's decision to start production at Four Mile with ore processing at Heathgate's Beverley mine: ACE wanted Four Mile to have its own stand-alone processing plant. Recent months have seen ACE terminate its appointment of Quasar the as sales and marketing agent for its share of output from project after querying Quasar's efforts to secure sales.
Last summer, Alliance appointed Deloitte Corporate Finance to lead the sale of its 25% stake in the project. The company says that ACE remains open to selling its interest in the project "should an appropriate offer by made by Quasar (or others)" but also said that Quasar had indicated that it was not prepared to increase its offer to a level that its board would consider recommending to shareholders.
FMNE target grows
Alliance followed its rejection of Quasar's offer with the announcement of an updated exploration target for the FMNE prospect. As defined by the Joint Ore Reserves Committee of The Australasian Institute of Mining and Metallurgy, Australian Institute of Geoscientists and Minerals Council of Australia (JORC), an exploration target is a statement or estimate of the exploration potential of a mineral deposit relating to mineralisation for which there has been insufficient exploration to estimate a mineral resource.
The new target stands at 14 million tonnes of mineralisation at grades of 0.23-0.30% U3O8, representing 32,000 to 35,500 tonnes of contained U3O8 (27,100-29,700 tU). Alliance notes that the main change is to the lower limit of the exploration target, with the upper limit remaining largely unaltered.
The company says the latest drilling data may be sufficient to make an inferred mineral resource estimate over a large part of the FMNE area. Alliance has based its announcement on information supplied by Quasar to ACE.
Researched and written
by World Nuclear News
