Alliance Resources is selling its 25 per cent stake in a brand new uranium mine as the value of yellow-cake continues its downward trend.
The Four Mile uranium mine, located 550 kilometres north of Adelaide, only started production in April with first sales not expected until the September quarter.
However Alliance wants out and has hired Deloitte to handle the sale of its 25 per cent stake in the project, which amounts to a resource base of around 17.75 million pounds.
Alliance’s announcement came on the same day as the spot price of uranium fell to a new low of $28.35/lb.
The uranium industry is still reeling from the Fukushima disaster in 2011 which saw prices plummet and with no recovery in sight, many operations around the world have shut down.
Some analysts say a recovery is unlikely until at least 2021 as an excess in uranium inventories leads an oversupply in the market.
The Four Mile mine is 75 per cent owned by Quasar resources, an affiliate of Heathgate Resources, owner and operator of the adjacent Beverley uranium mine.
The joint venture partners have not had a smooth relationship to date with Alliance announcing to the ASX in its September quarterly report that its claim of misleading and deceptive conduct against Quasar is set down for trial in June 2014.
Alliance is seeking damages and the return of the 75 per cent interest in the exploration licence over Four Mile from Quasar, claiming it failed to disclose ACE information concerning the prospectivity of part of the tenement.
Previous legal proceedings for access to books, records and agreements relating to the Four Mile joint venture had been refused, with costs awarded to Quasar and Heathgate.
In 2013 Alliance voted against launching construction of Four Mile mine, but was overruled by Quasar.