THE possibility of a new uranium mine opening in the Territory has taken a giant step forward.

Mining conglomerate Rio Tinto said it was finalising negotiations with traditional owners of land on the Queensland border, 200km southwest of Borroloola.

Rio has entered a $10 million joint venture with Canadian-based Laramide Resources.

Laramide said the money would be used for exploration over the next four years.

The Territory uranium province is in two tenements totalling 1000sq km and is known as Murphy. It adjoins Laramide's much larger, flagship Westmoreland project across the border.

A single cross-border mine would be bigger - although not more productive - than the Territory's only uranium mine, the Rio Tinto-owned Ranger near Jabiru.

Laramide said Murphy produced high-grade uranium in the 1950s.

Chief executive Marc Henderson said: "It stands out among the world's attractive underexplored uranium provinces".

Exploration is expected to start this dry season.

"We believe continuing exploration will result in further discoveries in the district, and exploration costs and ultimately operating parameters should benefit significantly from the proximity to Westmoreland," Mr Henderson said.

He said the location of Murphy was an "important aspect" of the Rio Tinto deal because the NT Government supported uranium mining and mining in general.

Laramide's 100 per cent-owned Westmoreland is only 350km west of Mt Isa, which means any future mine would most likely send uranium oxide to the east coast by train, although this could change if a 600km link was built between Queensland and the AustralAsia railway north of Tennant Creek.

Westmoreland has an estimated resource of 52 million pounds, which would be worth $2.5 billion at today's spot price.

The Queensland Government is opposed to uranium mining, but it is under pressure from the Federal Government to change its policy.