Alliance Resources (ASX: AGS) has advised that Quasar Resources, an affiliate of Heathgate Resources, has approved the revised start-up plan and budget for the Four Mile Uranium project in the Frome Basin, South Australia.
In-situ recovery mining operations will start in April 2014 with uranium capture at Heathgate’s Pannikan satellite plant and precipitation, drying and packing at Heathgate’s Beverley processing plant.
Uranium oxide sales are expected to start in July 2014.
Quasar expects to produce 1.886 million pounds of uranium oxide and sales of 1.5 million pounds from 1 November 2013 to 31 December 2014.
Cash expenditure for 2014 are expected to be $76.9 million.
At a cost price of $40.13 per lb uranium oxide, the joint venture expects to make $74 million with an expected selling price of US$44.42 per lb. However, with an expected lift in the uranium price in 2015/16, this could rise but it would depend on the term of the contracts struck.
Cashflow will be a negative $13.5 million though this is expected to become positive in the first half of 2015.
Allliance, which has a 25% interest in the project, voted against the proposal because it considers the parties should construct an appropriately sized stand-alone plant at Four Mile in order to reduce operating costs to the parties.
It also considers some of the costs included in the Budget to be exploration, rather than mining, costs for which Quasar should be solely responsible.
Four Mile is located 550 kilometres north of Adelaide and just 8 kilometres from the Beverley uranium mine.
It has a total Resource of 9.8 million tonnes grading 0.33% U3O8 for 71 million pounds of U3O8.
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