Rand Uranium plans R3.5bn project

Allan Seccombe | Thu, 04 Feb 2010 11:03
[miningmx.com] -- RAND Uranium, the unlisted venture held by funds and Harmony Gold, plans to build a R3.5bn uranium project to supply up to 2.5 million pounds of U3O8 from 2013 and could increase that four times if it has the feedstock, said CEO John Munro.

Rand Uranium incorporates three operating gold mines and a tailings dump with the richest source of surface uranium on South Africa’s western gold fields, Munro said. It plans to take 30 months to build a plant starting in the second half of this year.

It is working carefully on securing permits for new deposition sites to avoid the pitfalls have encountered, he said.

Funding will come from issuing equity to a strategic partner, debt and using its gold output as a source of capital. The plant will be commissioned in late 2012 and ramp up to full production during 2013.

The Cooke mine and dump were owned by Harmony Gold which vended the assets into the newly formed Rand Uranium in exchange for $209m cash and a stake in the company. Harmony owns 40% of the group and funds the remainder.

Rand Uranium produces 220,000 oz of gold a year, providing a source of cash. Munro said having the operating mine and plant infrastructure is one of the major factors setting Rand Uranium apart from other companies venturing into uranium production.

The mine is working and relatively shallow, unlike many companies which have to either sink a mine or revive an old mine, said Munro, who used to head up Gold Fields’ international business division. It also has a large tailings dump with 200 grams/tonne (g/t) of U3O8 and 0.3 g/t of gold, which will give a nice little sweetener to the project.

The tailings dump will supply 90% of the feed to the uranium plant, with underground workings the remainder as Rand Uranium moves into areas with a higher grade of uranium than it is currently mining. The underground grade is 400 g/t, he said, which will be blended with surface material.

Some of these higher grade areas have already been pre-developed by Harmony and the shallowness of the mine – 600 to 800 metres below surface – means these tunnels have not deteriorated, he said.

The plant will be designed with a capacity to treat 5.4 million tonnes of material a year and space will be left to double capacity to 10.8 million tonnes/year depending on whether Rand Uranium can source the feedstock from an estimated two billion tonnes of tailings in an 80km radius, and which are owned by other mining companies.

There is a potential for the area to supply seven to ten million pounds a year of U3O8, Munro said.

Gold Fields has tailings with a relatively high grade of uranium too and it is advancing feasibility study work and environmental studies into creating what CEO Nick Holland has called Gold Fields’ fifth South African mine.

Other companies are unlikely to build their own uranium treatment plants and this is where Rand Uranium sees its growth by offering to treat tailings.

The most important aspect of the project is securing deposition sites. First Uranium, which has a surface treatment project, has run afoul of permitting and has forced it to suspend the construction and commissioning of the third gold plant at its subsidiary Mine Waste Solution and reduce production from two gold plants to one gold plant at the end of March this year.

Rand Uranium has a brown field deposition site that can take seven years’ worth of material and it is working on securing a permit for a green field site. “The social side of this process is absolutely critical,” said Munro.