Harmony Gold gets $252M for uranium asset stake
SA gold miner Harmony has reached a deal with Pamodzi Resources Fund to sell a 60 percent stake in a new company it is setting up to exploit its uranium assets.
JOHANNESBURG (Reuters) -
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)
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,
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 Blackburn)
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