Harmony sees uranium unit IPO in 18-30 months

By Eric Onstad

JOHANNESBURG/LONDON (Reuters) - South Africa's Harmony Gold (HARJ.J: Quote, Profile, Research, Stock Buzz) wants to list its uranium assets, valued at 5 to 15 billion rand ($712 million to $2.1 billion), as a separate company in the next 18 to 30 months, its chief executive told a Reuters summit on Tuesday.

Bernard Swanepoel said a spin-off to existing shareholders was also a possibility but he would prefer an initial public offering in Johannesburg with a secondary listing in Toronto.

"Our preferred way of crystallizing the uranium value would be through an IPO of sorts, a separate uranium entity," Swanepoel told the Reuters Global Mining and Steel Summit by telephone from Cape Town.

"Certainly in my mind there's inevitability about that.. in time it will attract a different type of investor," he said when asked if the uranium assets would be spun off.

Swanepoel said 11 out of Harmony's 56 tailing dams of mining waste contain high amounts of uranium which have a net present value (NPV) of up to 15 billion rand depending on the price of uranium.

The project would need a minimum uranium price of around $65 per lb to be viable while the 15-billion-rand value was based on current high prices, he added.

Strong demand, supply disruptions, fund interest and the depletion of stockpiles pushed spot uranium to $120 per lb this week, compared to $7 in 2000 UX-U308-SPT.

DISTRIBUTE SHARES

Harmony, the world's fifth-biggest gold producer, was holding a "beauty parade" to choose an advisor for the uranium project, Swanepoel said.

"Construction of the facilities is likely to take two to three years, but that of course doesn't mean we can't create a separate corporate entity and spin it off and list it separately within the next 18 months to 30 months," Swanepoel said.

If uranium prices remain strong, the company could distribute some of the uranium shares to current shareholders and also raise some funds.

"If we can crystallize the value at the higher end, we can probably do three things. We can float this or distribute some of these shares to shareholders, sell some of it off, and use some of the cash to fund the next generation of gold projects."

Harmony has previously said it has signed a memorandum of understanding with Russian investment firm Renova, which has expressed interest in the uranium assets, but Swanepoel said it was unclear so far what role Renova might take.

"We would gladly leverage our relationship with the Russians or with anybody else into offtake agreements so we can concentrate on gold mining," he said.

As part of the Renova agreement, Harmony is also looking at possibly investing in Russian gold projects, but this was at an early stage, Swanepoel added.