First Reserve invests in Harmony Gold Mining's uranium ore assets in South Africa

Our Corporate Bureau
11 January 2008

First Reserve Corporation, an energy-focused private equity firm, and its partners AMCI Capital and Pamodzi Investment Holdings, announced on 10 January 2008 that they are picking up 60 per cent of the equity capital of a new uranium company in South Africa.

The new company, Cooke Section, is acquiring uranium and gold assets owned by Randfontein Estates Ltd, a subsidiary of Harmony Gold Mining Company Ltd. Randfontein will get $420 million for the sale. Harmony will retain a 40% interest in Cooke.

The new company will focus on developing both the uranium and gold resources of the mining assets. The Cooke assets include three operational gold mines, a gold milling plant, a large tailings dump with significant uranium content and lower-grade gold and uranium dumps. Uranium, a by-product of gold production from the mines, has accumulated in the dumps for over 20 years, and is today a significant above-ground resource which can be reprocessed and sold as a fuel source for the nuclear power industry.

According to Alex Krueger, managing director of First Reserve Corporation, "The business plan involves purchasing the existing gold mine infrastructure and tailings dumps and constructing a new large-scale plant to reprocess the dumps for the significant uranium content. The gold assets will provide near term cash flow and represent additional upside through redevelopment and expansion of the mines to produce both the gold and uranium resources."

At a planned production level of over 2.2 million pounds per year, Cooke would be one of the 10 largest producers of uranium in operation, according to First Reserve. Worldwide demand for uranium is expected to increase from 175 million pounds in 2007 to between 235 million to 275 million pounds by 2020 as a result of significant growth in nuclear power generation assets.

"The strategic plan for this investment is to create a platform for a new world-class uranium producer at a time when uranium demand is increasing substantially," said Jeffrey Quake, a director at First Reserve. "This investment also continues to expand First Reserve's coal and iron ore mining expertise to include uranium and gold commodities with attractive growth opportunities."