Flirting with sexy uranium
18 February 2007
http://www.sundaytimes.co.za/article.aspx?ID=388386

Neal Froneman, known as Mr Fix It, has come a long way since his mine-manager days, writes Julie Bain

Neal Froneman, chief executive of sxr Uranium One, was a mine manager only a few years ago — and now he’s the head of what will soon be one of the world’s largest uranium producers.

This week Froneman, 48, announced a R22-billion deal which will catapult sxr Uranium One into the position of a major player in the increasingly sexy global uranium market.

Three years ago his plan to head his own business looked to be in jeopardy after the gold company he headed, Afrikander Lease, closed its gold operation.

It pretty much got down to the wire and Froneman — known as “Mr Fix It” for his success in turning around a number of gold mining operations — had to come up with an alternative strategy, fast.

“It was a very difficult period when we had to close down the marginal mine,” said Froneman.

“I realised it [the gold company], at that time, was not a sustainable gold mining business and that we had to reposition ourselves.

“This involved looking at assets in the company that could potentially be high-margin. We recognised uranium. I then was off on leave for Christmas and spent time studying the uranium market and getting to understand the business.”

Froneman is not one to sing his own praises. Still, you can’t help but think his soft-spoken manner and personable nature is masking a steely resolve and a willingness to take risks.

This, perhaps, explains his passion for flying and speed — he has a few planes, a helicopter and super- bikes. Froneman laments the fact he has little time to pursue this addiction, although he uses his helicopter and planes for work. In contrast, one of his other interests is wild life and he has a small game farm, with a pet zebra called Bertie.

sxr Uranium One, which is listed in Toronto and on the JSE, announced a merger with Toronto- and AIM-listed UrAsia Energy. The merged company will be called Uranium One.

If the deal is completed, Froneman will be president and CEO of the new R36-billion company. It will have uranium resources in South Africa, Kazakhstan, Australia and Canada.

In Toronto earlier this week, on the first leg of a rigorous investor road show which will take him from North America to Europe and back again, Froneman admits that building businesses takes a lot of hard work.

“I always wanted to run my own business. I realised, given the amount of capital involved, to do that in a private capacity would be very difficult.”

He attributes the rapid growth of sxr Uranium One to his team. But he has to take much credit for his drive and vision.

“In the early 1990s I went and got a mine manager’s certificate, leading to a diploma in mining engineering. I had to do it from the bottom up. I developed a very good background,” he said.

As well as working with Harmony Gold, where he first became known as Mr Fix It, Froneman went on to work at Western Areas. He later moved to Gold Fields to run the company’s key Kloof operation.

He left Gold Fields to head Afrikander Lease (Aflease) in 2003.

Froneman was a major shareholder in that company after Aflease bought his stake in New Kleinfontein Mining Company.

His move from Gold Fields, after only 11 months, was somewhat of a surprise but he has no regrets.

“One thing about business, there are ceratin opportunities that come along that you have to take. I was very happy at Gold Fields but I got the opportunity to buy New Kleinfontein and it was then bought by Aflease and I was asked to become CEO,” Froneman said.

Initially he had a tough time at Aflease. In December 2003 the share price crashed when the company said it was mothballing its core Klerksdorp gold mining operation.

A weak gold price, the strong rand and lower than expected grades lay behind the decision.

“The toughest time was when we had just done the deal with Aflease and the fallout around that. There were a lot of hidden agendas and underhand tactics.”

If UrAsia shareholders approve the deal, Froneman should be heading up the new company by the middle of the year.

“It [the deal] should be completed towards the end of April. So far the reaction to the transaction has been very positive.”

The highlight of his career so far is “being able to put a transaction like this together and see the company grow in a very short space of time”.

He has grander plans, though, and once the merger is bedded down, Froneman would like to build Uranium One into an energy company.

An increasing number of governments are promoting nuclear as a future provider of energy .

In the longer term, Froneman wants to see Uranium One become a vertically integrated energy company. This may involve mining uranium right up to the construction of nuclear plants, and the processing of nuclear fuel, perhaps, in the mould of French nuclear company Areva.

This week government said it would go ahead with plans to build a second nuclear power station in the Cape. Alec Erwin, public enterprises minister, said government would decide on a preferred bidder in the first quarter of this year.

This week the French industry minister , Francois Loos, will be in SA building relations designed to strengthen business cooperation between the two countries. Areva is keen to win more business in SA.

Erwin also said SA is considering developing a uranium mining and beneficiation strategy, which could include enriching uranium to be used as nuclear fuel in SA.

Although sxr Uranium One takes up most of his time, Froneman is still CEO of Aflease Gold, which may be sold.

“If I intended to exit the gold business it would really be through mergers and acquisitions and diluting ourselves.”

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