Eyeing projects to meet future energy demand

Brendan Ryan | Fri, 22 May 2009 17:14
[miningmx.com] -- IT'S BEGINNING TO LOOK somewhat better on the uranium front, and mining groups such as Gold Fields and First Uranium are adapting their strategies to take advantage of the improving situation.

First Uranium is cashing in on its strengthening share price to raise funds, while the market has renewed appetite to invest in its stock. Gold Fields is rethinking the strategy behind its proposed scheme to recover uranium from slimes dams on the West Rand and may be open to a joint venture. Though it's far too soon to predict what could happen, DRDGold has already positioned itself for that eventuality through buying into what it believes could be a strategic asset on the West Rand.

First Uranium is dual listed on the Toronto and Johannesburg stock exchanges, but trading on the JSE is extremely illiquid and the true market value of the company is reflected through trading on the TSX. First Uranium collapsed to C$1,02/share in October last year from a 12-month high of C$8/share in June. Its price is almost back to that level, trading currently at around C$7,54/share.

First Uranium raised C$61,5m through a placing at C$3/share in February, which would fund its projects near Randfontein and Stilfontein to production. It's currently raising a further C$106,5m through another placing at C$7/share. That's intended to speed up construction of additional plant that will allow higher uranium and gold recoveries and for "potential consolidation opportunities".

Gold Fields is still assessing how it will build what it calls its "fifth mine" - a huge project to recover uranium from the waste tailings dams created near Carletonville and Randfontein from the operations of its Driefontein and Kloof mines. In January, Gold Fields CEO Nick Holland declared that Gold Fields had decided to "go it alone" on building a uranium/gold recovery plant to treat the dumps.

Holland didn't completely rule out a joint venture but did say management had decided the "stand alone" approach was the best option after holding discussions with other mining companies looking to set up similar operations in the region.

Holland commented at the time: "So far we haven't found anyone who shares our vision over what we want to create."

What Gold Fields is considering would be similar to the former East Rand Gold and Uranium (Ergo) operation, which treated dump material successfully on the East Rand for almost 30 years. One former Ergo treatment plant has been rehabilitated through a JV involving DRDGold and Australian-listed Mintails to recover gold from dumps in that area and the plant began producing gold in December 2008.

But DRDGold and Mintails believe they also own a critical asset on the West Rand that they could use to their advantage in future uranium developments in that region.

Holland sounded more open to possible developments at last week's briefing on Gold Fields's March quarterly results, when he commented: "If there were synergies to be gained from co-operating with another player in that area I'd be happy to do that. We decided we couldn't afford to sit around waiting for proposals but that we needed to crack ahead as if it would be our stand-alone project. If other people want to come to the party down the road, then I'm open to those possibilities."

One of the most important pieces of infrastructure that must be put in place is the site for the new "super dump" into which the hundreds of millions of tons of retreated material from the existing dumps must be re-deposited.

Though both Gold Fields and Rand Uranium reckon they have suitable sites for their projects, DRDGold and Mintails believe they're ahead of the game here. They own a site called Witfontein that's large enough to take all the material from the dumps they own on the West Rand, plus that generated by Gold Fields and other projects.

What's more, they're well advanced in the permitting process because they've been working on it for almost three years.

DRDGold CEO Niel Pretorius says: "Once we've secured the environmental permit for Witfontein and the right to establish the tailings facility their attitudes might change."