Harmony Gold said on
Wednesday it had sold a 60 percent stake of a new company it formed to house
uranium assets for $252 million in cash to Africa’s biggest private equity
fund, Pamodzi Resources Fund.

South Africa’s Harmony said it had sold
part of the uranium assets to take advantage of buoyant prices for the mineral
used to make nuclear fuel, and would retain a 40 percent stake in the new
company, which it said may be listed in the future.

Harmony, the world’s fifth biggest gold
producer, said proceeds from the sale would be used for capital expenditure and
to pay debt.

Harmony, which wants to revive uranium
production as a by-product of its core gold mining activity, valued the
newly-formed company at $420 million.

The new firm will be owned by Harmony
and ARMgold, a unit of African Rainbow Minerals (ARM) and a
minority shareholder in Harmony.

The new company will house some of
Harmony’s uranium and gold assets of its Randfontein mine, known as the Cooke
Section, located 35 km south-west of
Johannesburg. Harmony said uranium processing at Cooke would be a viable,
low-cost operation.

“The recent rise in uranium prices
has made the uranium resources economical,” Harmony said.

The company cited a sharp increase in
the uranium spot price over the past four years from about $10 per pound to the
current spot price of more than $90 per pound. The proposed transaction also
gave a new lease of life to the uranium and gold assets at Cooke, Harmony said.

Graham Briggs, acting chief executive,
had previously said Harmony was exploring three options — selling to a third
party, going into a partnership or processing the waste by itself.

Harmony’s South African rivals,
AngloGold Ashanti and Gold Fields are also
seeking to cash in on a bull market for uranium, whose prices have soared in
the last two years.

Pamodzi, which has $1.3 billion in
funds available for investment, is a prominent black-owned investment group
focused on the resource sector.

Pamodzi was launched in August, and is
supported by a consortium of U.S. investors including affiliates of American
Metals & Coal International, Inc. (AMCI) — a leading international energy
and resources sector investor. (Reporting by James Macharia, Editing by Peter


(c) Reuters 2007. All rights reserved.
Republication or redistribution of Reuters content, including by caching,
framing or similar means, is expressly prohibited without the prior written
consent of Reuters. Reuters and the Reuters sphere logo are registered
trademarks and trademarks of the Reuters group of companies around the world.