Randfontein uranium resurrection?

20 December 2007

Another long dormant South African uranium venture could be enjoying a new lease of life following the proposed sale of uranium and gold assets at Randfontein.

The assets, known as the Cooke Section and the Old Randfontein Section, include the existing Cooke 1, 2 and 3 gold mines as well as plant and various tailing dumps. The Cooke 3 mine produced uranium in the past but the uranium section was closed down in the late 1980s due to the market conditions at the time. Now, says Randfontein parent Harmony, the current higher uranium price makes the uranium resources economical again and provides a new lease of life for the Cooke Section.

The assets will first be sold as a going concern to a newly established company, Newco, for $420 million. Pamodzi Resources Fund (PRF) will then acquire 60% Newco for $252 million, with Harmony retaining the remaining 40%. The transaction is subject to various conditions and approvals, but Harmony anticipates that all conditions should be met in the second quarter of 2008.

The assets contain total uranium resources of 108,367 pounds U3O8 (41,682 tU) including measured, indicated and inferred resources.

Harmony's presentation on the proposed deal foresees the construction of a plant to handle 500,000 tonnes of excavated material per month and a new dump site at an estimated cost of R1.7 billion (about $245 million). Sources of mill feed would include tailings as well as underground sources, and uranium production is anticipated at 185,000 pounds per month (2.2 million pounds per year) at a cash cost of $30-35 per pound, excluding tailings gold credits. According to Harmony, this would put Newco in the top ten of the world's uranium producers.

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