Scratching the surface [04apr06]

FROM the muscle of mining behemoth BHP Billiton to Adelaide-based explorers more than a thousand times smaller, a growing band of companies is focusing on uranium in South Australia. ANTHONY KEANE looks at the players.

BHP BILLITON

THE world's biggest mining company is the sole owner of SA's Olympic Dam copper and uranium mine, 560km north of Adelaide.

Olympic Dam contains the world's biggest-known uranium resource and last financial year produced 4356 tonnes of uranium oxide. There is potential to dramatically increase annual production through BHP's proposed expansion, which is currently undergoing a feasibility study.

Olympic Dam was discovered by Western Mining Corporation in 1975 and first production was in 1988.

BHP took over WMC last year in a $9.2 billion deal.

Uranium is only a small part of BHP's production portfolio, which is dominated by iron ore, coal, copper, aluminium and petroleum.

HEATHGATE RESOURCES

Heathgate is the Australian arm of U.S. company General Atomics and owns the Beverley uranium mine in northern SA. The Beverley mine is Australia's third and smallest uranium mine after Olympic Dam and ERA's Ranger in the Northern Territory. It produced 1064 tonnes of uranium oxide in 2004-05.

Beverley generates annual export income of about $70 million and Heathgate directly employs 100 people. It pays royalties to the State Government and Aboriginal communities of about $3.4 million a year.

Heathgate is exploring for further uranium deposits near its mine.

sxr URANIUM ONE

The Canadian company, formed last year in a merger between Southern Cross Resources and a South African group, owns the Honeymoom uranium deposit in northern SA.

It is expected to make a decision on mining by July this year and says it is "ready to begin production with a short lead time of less than 18 months". If it proceeds, Honeymoon will be Australia's fourth uranium mine. It would cost an estimated $43 million to build and is expected to produce 400 tonnes of uranium each year.

MONAX MINING

Adelaide-based Monax said yesterday it had applied to almost double its uranium exploration portfolio in SA. Monax is another explorer that set the share market alight on debut. Its shares doubled in value when it listed in September.

TASMAN RESOURCES

Perth-based Tasman Resources plans to drill seven uranium targets in SA this year. Each target is within 30km of BHP's Olympic Dam mine.

Tasman executive chairman Greg Solomon says investors will see "some serious action by Tasman on the uranium front" within the next one to two years.

TORO ENERGY

Toro became the biggest SA-based uranium company after a sensational debut on the stock exchange late last month.

Toro shares, which were issued at 25c each in a heavily oversubscribed initial public offer, surged 244 per cent on their first day. The stock has traded as high as $1.60 and yesterday closed at $1.26, giving Toro a market capitalisation of $90.7 million. Toro expects to start drilling at several of its SA uranium prospects within two months.

HINDMARSH RESOURCES

Hindmarsh is likely to have one of the shortest lifespans on the stock exchange for an Adelaide-based company. The uranium explorer listed on the ASX in July last year and in January was the target of a friendly takeover bid from Canada's Mega Uranium. Hindmarsh has several exploration projects in SA.

MAXIMUS RESOURCES

Shares in Maximus leapt 14 per cent yesterday amid the rush for uranium stocks. The stock's 20c closing price brought it back to its issue price, after a subdued start since listing in October.

CURNAMONA ENERGY

The Adelaide-based explorer was spun out of Havilah Resources last year and its major focus is the Mongala project in SA's Curnamona Craton geological province. Its share price has more than tripled since listing almost a year ago, closing yesterday at 65c.

RED METAL

The Sydney-based company will begin drilling for uranium near Mt Gee in SA's Far North next month.

Managing director Rob Rutherford says granite source rocks in hills in the Mt Gee area are "very radiogenic".