News from South Australia that Australia’s fifth potential operational mine has gotten past regulatory approvals and will start production by 2014 has made for an interesting intersection of uranium-related news.
First, the 25%/75% respective joint venture between Alliance Craton Explorer, a 100% owned subsidiary of Alliance Resources (ASX: AGS), and Quasar Resources to develop the Four Mile uranium project has moved to the next stage of becoming a real producing mine by getting the last of government and regulatory approvals completed.
The SA Minister of Mineral Resources and Energy stated, “The $110 million Four Mile project, the most significant uranium discovery anywhere in the world in the past quarter century, is ready to go.”
The mine will become the fifth approved operational mine in all of Australia, and the fourth of the five to be located in South Australia. The others are Olympic Dam, owned by BHP Billiton (ASX: BHP); Beverley, owned by Heathgate Resources; Honeymoon, owned by Uranium One (TO: UUU); and Ranger, owned by Energy Resources of Australia (ASX: ERA), which is part owned itself by Rio Tinto (ASX: RIO)
Although Australia contains an estimated 31% of all known world reserves of uranium, it has no active nuclear energy generation industry, and regulatory barriers make starting a mine very long and difficult, as evidenced by the fact that there are only four operational mines at present for the whole country.
South Australia sees itself as the centre and capital of uranium mining, and suggested that in the future more potential mines may get the government go-ahead. The Four Mile mine project is located 10km from the Beverley mine and 300km north of Port Augusta.
The second piece of uranium news is that the Russian nuclear corporation Rosatom, which is buying out Canada’s Uranium One, will soon be the sole owner of the Honeymoon mine mentioned above.
Uranium One announced in August that it projects uranium commodity prices to almost double in a couple of years due to constrained supply of the ore. After the deadly Fukushima nuclear power plant disaster in Japan in 2011, uranium prices from about $70/pound to the current $34/pound, squeezing out high-cost producers from being profitable.
Between 2003-2007, uranium prices rose to as much as $135/pound.
As The Motley Fool reported in August (“Energy Resources Australia deserves a second look“), world uranium demand has slumped temporarily, but countries like China are ramping up their nuclear power generation, and they will need lots of the yellowcake to fuel their needs. Sometimes it’s just simply down to supply and demand.
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Motley Fool contributor Darryl Daté-Shappard does not own shares in any company mentioned.
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