Alliance’s uranium deal with Itochu
By Barry Fitzgerald
JAPAN remains interested in Australian uranium despite the closure of its nuclear power industry following last year’s Fukushima disaster.
That became clear yesterday with the announcement by Melbourne’s Alliance Resources that it had struck a strategic alliance with Itochu, under which the trading house giant could own about 40 per cent of Alliance’s stake in the Four Mile uranium project in South Australia.
Alliance’s stake in Four Mile, one of the biggest uranium discoveries in recent times, is pegged at 25 per cent, but success in a long-running legal action against the 75 per cent partner, an affiliate of General Atomics of the US, could move it to 100 per cent.
Itochu has taken an option to acquire a 14.9 per cent stake in Alliance or its wholly owned subsidiary that holds the Four Mile interest, Alliance Craton Explorer. Itochu will have an option to subscribe for an additional 25.1 per cent of ACE.
Both options can be converted under certain circumstances, including the completion of litigation over Four Mile.
If the options were exercised yesterday, the deal would have had an imputed value of about $37 million, but that ignores the prospect of Alliance winning its legal action and moving to full ownership of Four Mile.
The 32,000 tonne deposit was given critical environmental clearance by former anti-uranium campaigner and Midnight Oil frontman Peter Garrett when he was federal environment minister in 2009.
Its development has been delayed by legal action between the joint-venture partners.
Under a development scenario using General Atomics’ wholly owned Beverley uranium processing plant (7km from the Four Mile deposit) — production costs have previously been estimated at $38.80 a pound of uranium.
But Alliance has put forward a standalone option for Four Mile. It said yesterday its deal with Itochu meant it would be sufficiently funded for the standalone option, if that proved the best option.