Uranium holds growing allure for SA’s top gold-mining groups
Published: 2009/05/20 09:54:55 AM
businessday.co.za
A FUNDAMENTAL change in the base price for uranium is encouraging SA’s big three gold producers to realise more value from the uranium mined with gold in certain areas of the Witwatersrand reef.
When the price of uranium, used in nuclear power generation, stalled at 10/lb in the 1990s, it was not viable to invest in separate new processing plants.
Uranium prices started to pick up in 2003 and reached a peak of 135/lb in June 2007. In line with the general collapse in commodities and energy prices, they fell to a low of about 40/lb last year but have been gathering momentum in the past few months.
Spot uranium was quoted by UX Consulting and Trade Tech at 51/lb this week, strongly up from 44/lb at the end of last month.
Trade Tech said there was more speculative buying interest, suggesting spot prices had bottomed. Supply was sufficient but sellers were becoming more reluctant to conclude deals at these prices.
But new uranium projects and expansions are based on realistic longer-term contract price expectations of 65-70/lb, according to AngloGold Ashanti and Rand Uranium. For many years, AngloGold Ashanti was SA’s only significant uranium producer. The group is now planning a significant increase in uranium output to over 2-million pounds a year from about 1,2-million last year through expanding its Kopanang plant.
AngloGold Ashanti CE Mark Cutifani said last week the board would decide on the Kopanang plant expansion by the third quarter of this year. The original cost of Kopanang was budgeted at R2bn but it could be substantially less as engineers were busy improving the plant design, he said.
Last year Harmony Gold Mining formed a 40-60 joint venture with the Pamodzi Resources Fund, called Rand Uranium, to turn its Randfontein gold and uranium tailings dumps into the world’s ninth-largest uranium producer.
At the moment Rand Uranium is generating revenue from mining gold at Cooke while it completes a feasibility study on the project, due by October this year. CE John Munro says the original capital cost estimate of 500m is being revised as the world has changed significantly. It is hoped to get the capital cost closer to 400m, which would include a new processing plant and deposition facilities. First production is targeted for about 2012.
Rand Uranium is still exploring various funding options, ranging from internally generated cash to lending from commercial banks or equity from its current shareholders or external sources, he says. But at this stage there are no plans to list Rand Uranium on the JSE until the project is up and running and has demonstrated its viability.
Gold Fields CE Nick Holland said at the group’s recent March quarter presentation that Gold Fields had 13 tailings dams, containing gold, uranium and sulphur, and also had about 200-million tons of current arisings from Driefontein. It should be possible to present a proposal to the board on a reprocessing operation for a decision by the first quarter of next year.
There would still be environmental permitting issues, and he conceded this could take a very long time, but he said Gold Fields would like to be able to start construction of a new “mega plant” next year.
He said Gold Fields had held discussions with other uranium producers in the area which had not led to any deals but did not rule out future co-operation with other local companies or an international producer on offtake or marketing. |
