Japanese trading house Itochu Corporation has agreed to form a strategic alliance with Australia's Alliance Resources. The transaction could, pending the results on ongoing litigation, fund the construction of a stand-alone in-situ leach operation at the Four Mile uranium deposit in South Australia.
|Drilling at Four Mile (Image: Quasar)
Alliance holds 25% of the Four Mile project, which has total indicated and inferred resources of 32,000 tonnes U3O8 (27,000 tU) at an average ore grade of 0.33%. The project is managed by Quasar Resources, the registered holder of the remaining 75%. Quasar applied for a mining lease for the project in 2008, which was eventually issued last month.
The start of production from the in-situ leach (ISL) project had been stymied by legal disputes between Alliance, Quasar and Quasar's affiliate Heathgate Resources, operator of the nearby Beverley mine. Quasar and Heathgate are both subsidiaries of US-based General Atomic Technologies Corp.
Alliance issued proceedings against Quasar and Heathgate over alleged breaches in the native title agreement process in November 2009. The company instituted further legal proceedings with Australia's federal court in 2010 over alleged failure to disclose information related to exploration of the Four Mile project. Alliance is seeking damages and the return from Quasar of its 75% interest in the exploration licence over the Four Mile property. The company contends that Quasar "engaged in misleading or deceptive conduct" in contravention of Australian trading laws and that Heathgate "assisted or participated in the contraventions committed by Quasar." Those proceedings are still ongoing.
Alliance has now announced that it has formed a strategic alliance with Itochu. Under the terms of the strategic alliance, Itochu will have the right to acquire a 14.9% shareholding in Alliance within six months of all litigation in relation to the Four Mile project being finally determined. Furthermore, within 12 months of that final determination, Itochu will have an option to acquire a further 25.1% shareholding in Alliance.
If Itochu exercises both options, Alliance said that the funds raised would be sufficient to fully fund the construction of a stand-alone ISL and uranium processing plant at Four Mile, independently of Heathgate Resources and removing the need for toll treatment at Heathgate's adjacent Beverley plant.
Alliance noted that the transaction remains subject to approval from shareholders, from whom it will seek such approval at its next general meeting in July. The deal is also subject to approval from Australia's Foreign Investment Review Board.
According to Alliance, once in operation, Four Mile will "rank amongst the top ten producing uranium mines in the Western world and deliver outstanding benefits to South Australia and the nation."
Researched and written
by World Nuclear News