We talked about the Sweetwater Mill, which he informed us would use a solvent extraction circuit, not an ion exchange for stripping resins as would be found with an In Situ Recovery (ISR) operation. Does that rule out ISR? “No, not at all,” he told us. Froneman referred to the ISR method in a way we’ve not heard it previously described, “ISR is an elegant way of extracting uranium.” That’s a step up from being called a ‘water treatment plant,’ as some refer to ISR. But, he feels ISR is limited from a growth point of view. “In terms of the growth that we can expect, due to the increase in the uranium price, underground and open pit mining has to feature a lot more now,” he pointed out. “That is exactly where we have our core competency.”
Perhaps SXR’s focus on the company’s core competency is what led to this past January’s speculation that the company’s Honeymoon in-situ leach operation in Australia would be sold to interested Chinese parties. Froneman responded quickly with a news release, announcing, “The talks were not conclusive, and as far as Uranium One is concerned, Honeymoon is a core asset of our global company and is not up for sale.” He told us, “We do have an ISL mine in Australia. It’s not that we don’t have ISL skills, but it’s not something that I would promote strongly as one of our core competencies.”
At heart, he is a hard rock miner, through and through. Froneman doesn’t dislike ISR, “We could get more upside in open pit and underground mining, but we remain well aware of the benefits of in situ leaching.” As Patrick Drummond, plant superintendent for Cameco’s Smith Ranch told us, in situ uranium recovery is just not mining as he knows it from his coal mining days in Scotland. Froneman and Drummond are of like minds in that respect.
Turnarounds & Challenging Mines
What then would be included among the company’s core competencies? Froneman comes to SXR with bachelor’s degrees in mechanical engineering and accounting, arriving in his current position by way of executive positions at Harmony, JCI and Goldfields. He is known for taking on difficult projects, such as the Kloof underground gold mine about 60 kilometers outside Johannesburg. Assigned to turnaround the underperforming Goldfields asset, Froneman delivered a 40-percent increase in productivity and cutting unit costs by 13 percent. Along with increases in the gold price during that time frame, profits doubled.
Kloof wasn’t the first time Froneman faced a challenge and executed. He had delivered similar results for Harmony Gold, after the company acquired the Grootvlei and Modderfontein gold mines in 1997. As executive director for operations, Froneman slashed costs on the East Rand operations by more than 30 percent and doubled productivity. Revamping the high cost operations into one which was more efficient led to Harmony’s acquisition of low-producing Evander. Again, Froneman faced the challenge of transforming yet another high-cost operation into a profitable one. Within two years, he made the mine profitable by slicing expenses, increasing efficiency and getting more gold out of the ground.
Froneman seems to also have a knack for timing. He quickly jumped in and out of JCI, in early 2002, when he disagreed with “certain governance issues.” His decision led him to Aflease by April 2003. Just as the uranium sector was beginning to heat up, he engineered a reverse takeover of Southern Cross Resources, combining Aflease Gold and Uranium Resources Limited, into SXR Uranium One. Systematically since then, he has begun building a multi-national conglomerate with operations to mine in Australia, South Africa and the United States. The company’s share price has more than doubled since January, and held up strongly in the midst of the temporary price correction of uranium stocks.
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