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Harmony Gold’s uranium project boost for West Rand’s fortunes

Publication: Business Day
Journalist: Charlotte Mathews

THE West Rand will get a major boost for jobs and environmental rehabilitation as Harmony Gold Mining has reached a decision on treating the slimes dams in the area to extract their uranium.

Uranium prices are at about $92/lb , compared with less than $10/lb five years ago, and Harmony expects to be able to extract its uranium at a cost of $30-$35/lb. Uranium prices have soared on increased global energy demand and a shortage of supply.

Harmony said yesterday it would put its Randfontein uranium assets into a new company valued at $420m and realise $252m (about R1,6bn) by selling a 60% stake to the Pamodzi Resources Fund. The new company, provisionally Newco, will be the world’s ninth-largest uranium producer, with planned output of 2,2-million pounds of uranium a year to Uranium One’s 2,6-million pounds. Newco assets include the Cooke 1, 2 and 3 shafts and associated infrastructure as well as the Randfontein section’s Lindum dumps and infrastructure.

These assets contain about 108-million pounds of uranium resources and about 30-million ounces of gold resources, which together convert to about 40-million gold equivalent ounces.

A capital injection of about R2,3bn, raising through project financing from banks, will be made into Newco, of which R1,7bn would be spent on building a new uranium processing plant with a capacity of 500000 tons of material a month and the remainder on processing the dumps, Harmony acting CEO Graham Briggs said.

Processing of the tailings in the dumps would also involve some environmental rehabilitation. “It is a great deal for Harmony. It crystallises some value for our uranium and we will be looking at our other uranium resources for which there is more potential,” he said.

“It puts these assets into a vehicle which will look after its own capital and puts money into Harmony’s pocket to support its existing capital projects. It is a great deal for Harmony, for Newco and for employment opportunities on the West Rand.”

Pamodzi Resources Fund chief investment officer Gerard Kemp said it was important that Harmony was retained as a partner in Newco because of its management skills and knowledge of the mines and people.

“We see this as a growth vehicle going forward in the uranium industry,” he said. “We will be looking for synergies in the West Rand to grow the company.”

After Newco built its uranium plant and reached full production in about two years, shareholders would assess market conditions with a view to listing it separately on a major stock exchange.

Pamodzi Resources Fund, which is part of black empowerment group Pamodzi Investment Holdings, was established in October and holds $1,3bn for investment in sub-Saharan resources companies. This is its first transaction.

Briggs said a number of conditions needed to be met but it was envisaged the transaction could be completed by the second quarter of next year.

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Harmony Investor brief, Sep 2017
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Harmony Investor brief

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