Note that GIR have all the uranium around this project - and the same deal with General Atomic
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Four Mile could benefit from hot rocks Kate Haycock Tuesday, 5 May 2009
SOUTH Australia’s next planned uranium mine could be powered via geothermal energy.
Speaking at the Paydirt 2009 South Australian Resources & Energy Conference in Adelaide, Alliance Resources managing director Patrick Mutz said the company could eventually utilise geothermal power thanks to a memorandum of understanding between Petratherm and Heathgate Resources from 2005.
Alliance is a 25% joint venture partner in Four Mile’s development with the privately owned Quasar Resources, which is associated with Heathgate Resources, the operator of the Beverley uranium mine.
Mutz told the conference Petratherm’s Paralana project is 5 kilometres east of the Four Mile project and could potentially generate enough power to supply the mine.
Deep well heat exchanger drilling is going ahead at Petratherm’s project later this year.
“We believe the hot rocks pilot plant will have the capacity, if proven commercial, to provide Four Mile’s total power needs,” Mutz said.
“It would be the first uranium mine in the world to source its electricity requirements from a renewable energy source.”
The $A90 million Four Mile uranium mine should be commissioned by January next year after construction is completed in December and all outstanding environmental approvals and mining permits are approved.
Mutz said initial production from Four Mile would come in at around 1400 tonnes of contained uranium oxide per annum with cash costs at around $A38.80 per pound or about $US25/lb.
“At the current spot price of $US44 per pound, the margin is significant and, of course, the long-term uranium price is much higher,” Mutz said, adding that he believed the majority of Four Mile production will be sold on long-term contracts.
Mutz said Four Mile will emerge as the third-largest Australian uranium mine, and will rank within the top 10 uranium mines in the world.
A resource update is expected in 2-3 months.
It hasn’t all been plain sailing for Alliance, however, with the company last month claiming a feasibility study provided by Quasar was generated internally, and did not provide sufficient independently verified information for Alliance as a publicly listed company.
At the time, Alliance was required to make a $1 million payment to reserve its participatory rights in the project.
The company has strongly disputed the validity of the payment but went ahead with the payment anyway.
Alliance has commissioned independent studies at its own cost, including its own resource estimate. The company also commissioned an independent scoping study for the Four Mile project to determine capital and operating cost estimates for comparison to those already presented by Quasar, which has put these costs at $A90 million.
Despite these issues, analysts at Argonaut have initiated coverage of Alliance, rating it as a buy and saying the project offers investors “low-risk” exposure to the uranium sector.
Alliance will need to raise some money to complete the project, Argonaut said, and the relationship between the company and JV partner Quasar could be problematic as shown by the issues over resource generation.
Timelines are also tight, however, the broking house said the in-situ recovery mining method that will be used at Four Mile offers low-cost, low environmental impact mining methods and the operation has a long mine life as well.
Shares in Alliance, which had $12 million cash on hand at March 31, were last traded at 73.5c, up 7.5c or 11.4%.
GIR Price at posting:
64.0¢ Sentiment: LT Buy Disclosure: Held
