Uranium asset drops on market fluctuations

Wednesday, Oct 29, 2008

The property in question is the Cooke Section of the Randfontein mine in South Africa, owned by Harmony Gold Mining. Uranium operations at Cooke, which saw the mineral extracted from mine tailings, were stopped in the 1980s "due to the poor state of the uranium market," Harmony said.

However, the mine still holds resources of 41,000 tonnes of uranium and in December 2007 the $90 per pound price of uranium on spot markets prompted the operation of the mine to be reconsidered. "The recent rise in uranium prices has made the uranium resource economical," Harmony had said.

An agreement was made for Pamzodi Resources to take a 60% stake in a joint holding company created to "develop the full potential" of the mine. The price for this at the time was $420 million, but now this has been revised downwardly to $348 million.

Harmony said the renegotiation with Pamzodi was triggered by two things: first that Harmony had benefited from income from the mine for a period when conditions for the sale were being put in place; second were market factors.

The spot price of uranium rocketed to $137 per pound in mid 2007, only to fall back just as quickly after a surge of exploration made the future supply situation much more clear. In recent weeks, many of the speculators that drove the price so high have dumped their stocks, causing a rapid drop of about $20 to $45 per pound.

Similarly, the price of gold climbed to a record $1000 per ounce early this year and has dropped over $150 per ounce in the last month.

Source: World-Nuclear-News