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Rand Uranium set on West Rand mine

Publication: Business Report
Journalist: Justin Brown

Johannesburg - Newly formed uranium company Rand Uranium is planning to be the first company to mine uranium on the West Rand in 18 years when it starts producing the metal in 2011.

Rand Uranium is a $420 million (R3.34 billion) joint venture between Harmony Gold and Pamodzi Resources Fund (PRF).

John Munro, Rand Uranium's chief executive, said yesterday during a media tour of the Rand Uranium assets near Randfontein that the new company would first focus on determining the viability of uranium mining and would look to list in about three years when uranium production was under way.

A prefeasibility study was expected to be completed by the end of July. “We want to demonstrate value quickly,” said Munro.

The new company, which has plans to become the world’s ninth-largest uranium mining company, is looking to achieve full production of 2.22 million pounds of uranium.

“Rand Uranium is going to become a substantial international uranium producer,” Munro said.

The only local producers of uranium at present are AngloGold Ashanti and Uranium One. First Uranium also plans to start producing uranium.

Graham Briggs, Harmony’s chief executive, said that the conditions for the completion of the establishment of Rand Uranium were likely to be completed by the end of June when PRF would pay Harmony R1.9 billion for its stake in the joint venture.

Briggs said the new company could take up a primary listing in Toronto or London as well as a secondary listing on the JSE.

Rand Uranium’s assets consist of three shafts from the Cooke mine as well as two mine dumps near Randfontein.

Munro said the Cooke mine and the mine dumps’ processing were likely to produce about 260 000 ounces of gold a year.

“There is a significant margin to be had despite fairly aging assets,” he added.

The new company is likely to invest R2.3 billion in the project and create 128 permanent jobs. Included in this investment will be R1.7 billion that will be spent on building a uranium processing plant with a throughput of 500 000 tons a month and a new dump site.

Rand Uranium is expecting that it will produce uranium at an operating cost of $30 to $35 a pound, excluding gold production credits. This compares with the prevailing uranium price of $71 a pound.

Munro said the outlook for the price of uranium was “very positive”. “Uranium is in the early stage of a bull market. The uranium price is strong because there have been a lot of disappointments with new supply,” he added.

Bob Atkinson, Harmony’s operations director, said that Rand Uranium could need 15 megawatts of power, which it could generate itself.

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