Australia | Apr 02 2007
By Greg Peel
FNArena was right to assume the announcement today of a substantial new uranium find was mostly hype. Not hype in the sense of exaggeration, but hype in implying that someone kicked a rock yesterday and there, suddenly, was the next Olympic Dam.
This is not the case. What South Australian premier Mike Rann was referring to when he said (according to The Advertiser) “We are talking about a massive new find in South Australia” was the Four Mile project – part of the Arkaroola joint venture between Heathgate subsidiary Quasar Resources (75%) and Alliance Resources (AGS) (25%) – which has been undergoing extensive drill testing since late last year. The find is thus not a new one, but the results of testing have provided, however, fresh information.
Rann was closer to the mark when he reportedly said “It is an incredibly exciting discovery. I am told it is uranium of the highest grade and has the potential to be a significant major mine.”
What was released today was the maiden mineral resource estimate, which is indeed “exciting” and will now lead to a scoping study on the project. Quasar MD Geoff McConachy was quoted as saying that “[Four Mile] has the potential to be the best discovery of uranium in 25 years, but we’ll wait and see. The significance of the find has been gradually evolving. We’re still working there”.
This is a significant milestone for the Arkaroola JV partners, if not a “new” discovery.
Unfortunately another uranium junior, Adelaide Resources (ADN), was caught up in the wash when The Advertiser’s report hit further news services. Adelaide was incorrectly reported to be involved in the joint venture, but is not. While Adelaide does have a uranium project in northern South Australia, director John Horan has told FNArena it is “nowhere near” Four Mile.
Adelaide Resources was very quick to make an announcement to the ASX in an attempt to clarify the situation and avoid further interest in the company based simply on misinformation. Adelaide’s share price closed at $0.475 yesterday and hit $0.70 this morning before the mistake was realised.
John Horan is not laying any blame on Premier Rann, who he says does a wonderful job in promoting the state’s resource industry. Clearly there was something lost in the translation. Horan was not, however, particularly upset with the sudden attention the company has received, if only for the wrong reasons. While quick to inform the market of the mistake, Horan has been previously disappointed that the focus to date has been on the company’s mineral sands project, and not on its uranium prospects. While he laments that someone has paid 70c for the stock by mistake, he suggests that 70c is what the current value of Adelaide Resources should be on comparison with the other uranium juniors in the market which have been getting all the attention.
The Alliance Resources share price has settled at around $2.30 this afternoon, up 12% on the day. This adds to the 4475% Alliance has rallied since January 2005, as noted in FNArena’s recent article (Is There Value Left In The Uranium Sector?; Sell&Buyology; 27/03/07). The article also noted the Arkaroola project is estimated to take three to four years to reach production.