| Thu 20 Dec 2007, 15:03 | | GEN - Pamodzi Resources Fund1 - PRF1 Debuts With A US$420-Million Uranium |
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GEN - Pamodzi Resources Fund1 - PRF1 Debuts With A US$420-Million Uranium
Company
PRF1 DEBUTS WITH A US$420-MILLION URANIUM COMPANY
Pamodzi Resources Fund Advisor (Proprietary) Limited ("PRF1") today announced
the acquisition of a controlling interest in a US$420-million new Uranium
company comprising Harmony Gold Mining Company Limited`s ("Harmony") Uranium
and Gold assets on the West Rand.
Marking PRF1`s debut deal since it went live on October 1, 2007, the
transaction will create South Africa`s largest black-controlled Uranium
company which the shareholders have agreed to list on a recognised securities
exchange in the medium term. PRF1`s equity providers are First Reserve
Corporation and AMCI Capital, both based in the US and have operations around
the globe.
The transaction will see the Uranium and Gold assets of Randfontein Estates
Limited ("Randfontein"), known as Cooke Section, sold into a special purpose
vehicle ("Newco") for US$420 million. PRF1, which is black-owned and
controlled, will acquire 60% shareholding in Newco for US$252 million, with
Harmony retaining the balance. The shareholders have agreed to recapitalise
the new business at a cost of approximately US$350 million over the next five
years.
Randfontein, a wholly owned subsidiary of Harmony, has agreed, with effect
from the date of successful fulfilment of the conditions precedent of the
transaction agreements, to sell Cooke Section as a going concern to Newco for
a purchase price of US$420 million.
"The new Uranium company is a natural fit with PRF1`s investment strategy. We
are bullish on the superior financial results which will accrue from
recapitalising and developing the full potential of both the Uranium and Gold
resources of Randfontein," said Gerard Kemp, chief investment officer of
PRF1.
"PR1 and Harmony have agreed to list Newco on a recognised securities
exchange, which will present an attractive investment opportunity to
investors seeking dual exposure to both Uranium and Gold," he said.
The shareholders have designed a common strategy where the initial focus will
be to recapitalise and develop the full potential of both the Uranium and
Gold resources at Cooke Section over the next five years, which is expected
to cost approximately US$350 million. The capital injection will extend the
life of the existing Gold operations through the joint exploitation of the
Uranium resource.
With the significant increase in the Uranium spot price over the past four
years from approximately US$10 per pound to the current spot price in excess
of US$90 per pound, the proposed transaction provides for a new lease of life
for Cooke Section.
According to market indicators for Uranium resource pounds, the transaction
will create a company with a substantial market valuation over the next 2-3
years. The company`s value creation depends on credible and experienced
management team, recapitalisation and development of Cooke Section and public
listing in the medium term.
Newco, Kemp said, could facilitate the consolidation of Uranium assets on the
West Rand of Johannesburg. While most of its competitors mine their resources
from underground, the Cooke Section has limited mining risk due to the fact
that more than half of its resources are on the surface. Further, through
the processing of various dumps within Cooke Section, a significant amount of
environmental rehabilitation will take place. This is one of the major
benefits for the company and the environment as the treatment processes will
significantly enhance the environmental management of old mine dumps, which
were not as environmentally sensitive as the new dumps being planned by
Newco.
There is significant opportunity for Newco to consolidate some of the Uranium
projects being planned in South Africa as economies of scale will become the
driver of value into the future.
Ndaba Ntsele, chairman of PRF1, hailed Newco as a bold debut that will create
tremendous upstream and downstream impact on the local economy. "A combined
injection of approximately US$600, mostly from offshore sources, in the area
is an overwhelming vote of confidence in our economy," he noted.
Ntsele is the group chief executive officer of Pamodzi Investment Holdings
(Proprietary) Limited ("Pamodzi") which is the fund advisor of PRF1.
PRF1, he remarked, complemented Pamodzi`s traditional private equity business
and provides the holding company with a diversified, risk-acceptable yet
lucrative investment footprint in sub-Saharan Africa. "Newco substantially
increases our participation in resources. However, we will continue to be a
vibrant player in traditional private equity through which we have
transformed our portfolio companies into market leaders in the past 10
years,`` Ntsele said.
With US$1.3 billion available for investment, PRF1 is targeting high-
potential opportunities in the resources and mine-to-market infrastructure
sectors in sub-Saharan Africa. Kemp, a 22-year veteran of Anglo American`s
Gold division and recent head of resources at Rand Merchant Bank, leads a
fund management with more than 100 years of local and global experience.
Overview of PRF1
Pamodzi Investment Holdings ("Pamodzi") is the fund advisor to PRF1, South
Africa`s largest private equity fund. With US$1.3 billion in funds available
for investment and a credible and experienced management team, PRF1 is well-
positioned as a strategic financial partner of choice to resource asset
owners and co-investors.
PRF1 is ably backed by First Reserve Corporation, the oldest and largest
private equity firm specializing in the energy industry, and AMCI Capital, a
resources and energy focused private equity venture managed by co-founder
Hans Mende, President and co-founder of AMCI, and Mike Salamon, former
executive director of BHP Billiton.
Pamodzi, recently named South Africa`s Black Management Forum Progressive
Company of 2007, is a leading diversified investment company. Founded in 1996
by black South African professionals and entrepreneurs, the company has
raised more than US$2.3 billion in equity and debt over the past decade, of
which US$1.7 billion has come from offshore investors.
The holding company has built a solid reputation of transforming its
portfolio companies into market leaders and delivering superior returns - a
fact supported by its average IRR of 37% since inception. www.pamodzi.co.za
Overview of First Reserve Corporation
First Reserve Corporation is the oldest and largest private equity firm
specializing in the energy industry. Founded in 1983, First Reserve was the
first private equity investment firm to actively pursue building a broadly
diversified global investment portfolio of energy companies. Since 1992,
First Reserve has raised over $12.5 billion for its buyout-focused funds.
Throughout its 25-year history, the strong franchise that the firm has
developed by investing exclusively in the energy industry has served as a
competitive advantage for First Reserve. For more information on First
Reserve Corporation, please visit www.firstreserve.com
Overview of AMCI Capital
AMCI Capital is a resources and energy focused private equity venture
established in late 2006 with $800mm in capital commitments. AMCI Capital is
managed by Hans Mende, President and co-founder of AMCI, and Mike Salamon,
former executive director of BHP Billiton. AMCI was formed in 1986 and is
active across the full range of ferrous and non-ferrous commodities and
associated infrastructure. It presently has operations in Australia, South
Africa, Mozambique, China, Europe and America. AMCI Capital is a
strategically oriented investor which brings to bear the industry experience
and insights of its staff and global network.
Overview of Cooke Section
The Cooke 1, 2 and 3 Gold mines, which are situated approximately 35
kilometres south-west of Johannesburg, are part of Randfontein. The mines are
serviced by an excellent network of mining and civil infrastructure, with
electrical power and water readily available. Tailings and waste disposal
sites have been identified and are currently in use.
Cooke Section was covered by an Old Order Mining Right, with a New Order
Mining Right been granted in December 2007. The Cooke 3 mine is a historical
producer of Gold and Uranium, with the Uranium section closing down in the
late 1980`s due to the poor state of the Uranium market. Production commenced
at the Cooke 1 mine in 1973, at the Cooke 2 mine in 1977 and in 1983 at the
Cooke 3 mine. The underground orebodies are exploited by means of
conventional hard rock mining involving drilling blasting, scraping tramming
and hoisting. Ore is currently treated at the Doornkop Plant which was
commissioned in 1985. This plant comprises Run of Mine ("ROM") milling,
thickening, cyanide leaching, CIP adsorption, carbon elution, electro-
winning, smelting, regeneration and tailings disposal. The Dump 20 sand
resources are currently treated at the Cooke Plant.
Current production for the financial year to June 2007 at Cooke 1 was 386,000
ton treated yielding 2,354 kg Gold, at Cooke 2 was 349,000 ton yielding 1,780
kg Gold and treatment at Cooke 3 was 564,000 ton yielding 2,841 kg Gold. The
surface operation at Cooke Plant treated 811,000 ton of sand yielding 590 kg
Gold. The Life of Mine ("LOM") plan for Cooke 1 includes mineable reserves to
2009, for Cooke 2 until 2011 and for Cooke 3 until 2019. However, the Cooke 3
LOM plan only considers the current reserve blocks and only considers the
mining of Gold. The impact that dual (Gold and Uranium) pay limits is
expected to increase the life of the operations.
The recent rise in Uranium prices has made the Uranium resources economical.
The tailings dumps will be mined using high-pressure water cannons to re-pulp
the slurry, which will then be pumped to processing plants and separated into
Gold and Uranium using a leach process. The location, ease of processing and
the dual commodity mix combine to make Cooke section a viable, low-cost
operation.
The following is a summary of the estimated mineral resources contained in
the various sections that comprise the Cooke Section assets:
Total Resources - Gold
MEASURED INDICATED
MINE TONNES GRADE TONNES GRADE
Au (g/t) Au (ounces) Au (g/t) Au (ounces)
Surface 311,468,916 0.269 2,690,362 890,781 0.480 13,743
Underground 36,400,000 5.392 6,310,000 32,200,000 3.680 3,810,000
Total 347,868,916 0.805 9,000,362 33,090,781 3.594 3,823,743
Table continues:...
INFERRED TOTAL
MINE TONNES GRADE TONNES GRADE
Au (g/t) Au (ounces) Au (g/t) Au (ounces)
Surface 0 0 0 312,359,697 0.269 2,704,105
Underground 224,800,000 2.389 17,264,000 293,400,000 2.903 27,384,000
Total 224,800,000 2.389 17,264,000 605,759,697 1.545 30,088,105
Underground Reserves - Gold
PROVEN PROBABLE
MINE TONNES GRADE TONNES GRADE
Au (g/t) Au (ounces) Au (g/t) Au (ounces)
Cooke 1 Mine 300,000 9.290 82,000 30,000 4.240 4,090
Cooke 2 Mine 500,000 7.140 108,000 200,000 9.870 71,000
Cooke 3 Mine 2,300,000 8.000 594,000 2,400,000 5.060 390,000
Total 3,100,000 7.866 784,000 2,630,000 5.500 465,090
Table continues:...
TOTAL
MINE TONNES GRADE
Au (g/t) Au (ounces)
Cooke 1 Mine 330,000 8.114 86,090
Cooke 2 Mine 700,000 7.954 179,000
Cooke 3 Mine 4,700,000 6.512 984,000
Total 5,730,000 6.780 1,249,090
Total Resources - Uranium
MEASURED INDICATED
MINE TONNES GRADE TONNES GRADE
U3O8 U3O8 (pounds) U3O8 U3O8
(Kg/t) (Kg/t) (pounds)
Surface 311,468,916 0.098 67,553,942 890,781 0.055 107,922
Underground 7,100,000 0.424 6,637,900 3,400,000 0.547 4,099,300
Total 318,568,916 0.106 74,191,842 4,290,781 0.445 4,207,222
Table continues:...
INFERRED TOTAL
MINE TONNES GRADE TONNES GRADE
U3O8 U3O8 (pounds) U3O8 U3O8
(Kg/t) (Kg/t) (pounds)
Surface 0 0.000 0 312,359,697 0.098 67,661,864
Underground 27,200,000 0.500 29,967,500 37,700,000 0.490 40,704,700
Total 27,200,000 0.500 29,967,500 350,059,697 0.140 108,366,564
Total Reserve - Uranium
PROVEN PROBABLE
MINE TONNES GRADE TONNES GRADE
U3O8 (Kg/t) U3O8 (pounds) U3O8 U3O8
(Kg/t) (pounds)
Cooke Dump 0 0.000 0 83,221,283 0.215 39,445,973
Underground 0 0.000 0 0 0.000 0
Total 0 0.000 0 83,221,283 0.215 39,445,973
Table continues:...
TOTAL
MINE TONNES GRADE
U3O8 (Kg/t) U3O8 (pounds)
Cooke Dump 83,221,283 0.215 39,445,973
Underground 0 0.000 0
Total 83,221,283 0.215 39,445,973
ENQUIRIES
Gerard Kemp
Chief Investment Officer
Pamodzi Resources Fund Advisor (Proprietary) Limited
Tel: +27 11 912 7525
Mobile: +27 82 453 1590
gerard@prf1.com
S`bu Mngadi
Executive Director, Corporate Development
Pamodzi Investment Holdings (Proprietary) Limited
Tel: +27 11 912 7500
Mobile: +27 82 320 4532
s`bu@pamodzi.co.za
Date: 20/12/2007 15:03:01 Produced by the JSE SENS Department.
