| Tue 24 Jun 2008, 10:56 | | AFO - Aflease Gold Provides a Strategic and Operations Update |
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AFO
AFO
AFO - Aflease Gold Provides a Strategic and Operations Update
AFLEASE GOLD LIMITED
Incorporated in the Republic of South Africa
(Registration number: 1984/006179/06)
Share code: AFO (JSE) AFSGY - International PrimeQX (OTCQX)
ISIN: ZAE000075867
("Aflease Gold" or "the company")
NEWS RELEASE
24 June 2008
Aflease Gold Provides a Strategic and Operations Update
Johannesburg, South Africa - Aflease Gold Limited is pleased to provide the
following strategic and operations update.
Highlights:
The first gold pour at Modder East is planned for Q4 2009.
Sub Nigel 1 is to resume mining operations.
Ventersburg and Sub Nigel 6 resources are now also Canadian National Instrument
43-101 compliant.
Aflease Gold`s CEO Neal Froneman commented:
"Modder East remains our flagship project and our primary focus area. With cash
costs expected to be below USD 250 per ounce, this project reflects the benefits
of our strategic approach. The reopening of Sub Nigel 1 confirms our status as
a near term gold producer and this project opens up a number of exciting
opportunities in this particular area of the East Rand Basin"
STRATEGIC UPDATE
Aflease Gold will continue to focus on the development of shallow low technical
risk gold opportunities. This will result in a high margin business model and a
company that enjoys a premium rating by the market. The development of our
exciting pipeline of projects will require efficient funding. Aflease Gold has
identified an appropriate strategy to ensure a suitable capital markets profile
and management will keep shareholders appraised in this regard.
In March 2008 Uranium One, a major Aflease Gold shareholder, entered into a
share purchase agreement with African Global Capital Fund I, LP ("AGC") in terms
of which Uranium One sold to AGC 152,195,122 of its total of 339,011,680 shares
in Aflease Gold, resulting in AGC becoming a 29% shareholder. Simultaneous to
the sale agreement, Uranium One granted AGC an option to acquire the remaining
186,816,558 Aflease Gold shares held by Uranium One. AGC elected not to acquire
the shares under the option, which is of no further force or effect.
The acquisition by AGC is an important milestone in the corporate development of
Aflease Gold. Aflease Gold is now no longer a subsidiary and is in the process
of transitioning to an independent organization. As a result the company is
pleased to announce the following senior appointments:
Christopher Chadwick has been appointed as Chief Financial Officer. Christopher
is a CA (SA) with significant financial and operational expertise. He was
previously employed for seven years by the Peu Group as Group Finance Executive
and Divisional Head of Finance and Administration.
Martin Collins has been appointed as the Group Financial Manager. Martin is an
experienced financial manager having been employed for 26 years by Anglogold. He
has a wide range of experience in the financial, IT and procurement fields.
Johan Bruwer, a Mechanical Engineer with extensive experience in the underground
trackless mining environment was appointed as Engineering Manager in May, and
his appointment consolidates the focus that is placed on the engineering
availabilitiy of our capital equipment.
OPERATIONAL UPDATE
Modder East Gold Project
Aflease Gold continues to make good progress on the development of its Modder
East project, situated approximately 30 kilometres east of Johannesburg, South
Africa.
The trackless decline development has advanced a total of 1685 metres and is
only 358 metres away from the first footwall drive and the dedicated return
airway which has now been established from 210 metres below collar to surface,
ensures excellent environmental conditions. The current return airway position
is approximately 52 metres above the reef intersection and equates to just less
than 300 metres of development to the reef horizon.
The decline and return airway are being developed through a dolomite formation.
The dolomites are water bearing and fissure water is encountered from time to
time in both the decline and return airway. More recently the development
advance through the dolomite has been significantly slower than planned due to
larger water intersections in cover drilling holes. Management has adopted a
cautious approach to the possible ingress of water by carrying out full face
cementation cover drilling and sealing for some 36 metres ahead of the
development ends. Once sealed, the development end is then advanced for 30
metres and the cover drilling and sealing process is again repeated. The current
occurrence of water intersections is expected to reduce significantly or even
cease as the development ends progress from the dolomite into the underlying
quartzite formation.
As a result of the delay caused by cementation cover drilling and sealing
operations, management expects the ore production build up to be slower than
anticipated in the Bankable Feasibility Study. If the average development
advance rate of the past 4 months is maintained going forward, the first gold
pour will occur before the end of 2009. Due to the slower production build up
Aflease Gold will produce less gold in 2009 than originally forecast in the
Bankable Feasibility Study. The gold production forecasts for Modder East have
accordingly been revised as follows:
2009 - 20 000 ounces
2010 - 140 000 ounces
2011 onwards - 180 000 ounces per annum over the reserve life of the project.
No additional resource delineation drilling is planned at Modder East for 2008.
The company is planning on further exploring the UK9A reef utilising on-reef
development perpendicular to the payshoot direction. This exploration is
expected to delineate the channels and payshoots present in the UK9A reef and
delineate higher grade areas of the deposit. The company is also completing an
assessment of the higher grade section of the extensive Blanket facies. The
Blanket facies can be accessed from the existing footwall development and can
possibly be mined by using trackless mining methods. It is anticipated that this
will have a positive effect on the life of mine.
The 6.5 metres diameter vertical shaft, which is being sunk by Grinaker-LTA is
on schedule to be completed in Q4 2008. The pre-sinking has been completed, the
sinking headgear erected and both the kibble and stage winder have been
commissioned and licenced. The shaft has already reached a depth of 61 metres
from surface and will be 345 metres deep when completed. The shaft will be
connected with the current decline development, and will provide the primary
access for personnel to the underground workings and will be used for downcast
ventilation purposes. The vertical shaft will be completed before being
connected to the decline and provides the opportunity for the development and
early completion of infrastructure. This will enhance flexibility for the ramp
up of production.
Construction of the 100,000 tonnes per month processing plant commenced in Q4
2007 and is expected to be completed at the end of Q1 2009. Ground stabilization
work has been completed and the mill and tank foundations cast. The CIL tanks
are currently being erected. The major long lead items for the plant have been
ordered and no major delays are anticipated. In particular, the mill which was
manufactured in China has arrived in Durban Harbor and will be delivered to site
in the near future.. The company is pleased to announce that the Department of
Minerals and Energy (DME) approved the tailings disposal facility (TDF) design
on 11 June 2008. The company will immediately commence earthworks and
construction of the TDF, benefiting from the dry winter season.
Management remains vigilant in its endeavours to constantly find the best
cost/benefit options, but the continuous escalations in commodity prices cannot
be escaped entirely. To this end, a capital cost escalation of 20% can be
expected. Management has accordingly revised its forecasts and the construction
capital expenditure is expected to be approximately ZAR 814 million and the cash
costs of production are expected to increase to approximately ZAR 57, 000 per
kilogram.
Despite the cost escalation and slower production build up, the Modder East
project remains a robust, high margin project. The Bankable Feasibility Study,
which was reviewed by SRK Consulting in November 2007, calculated the NPV of
the Modder East project at ZAR925 million (at a discount rate of 8%), with an
IRR of 41.7%. Current economic parameters including the increased costs
indicate an NPV of just under ZAR1.4 billion and an IRR of 49% at a gold price
of USD 800 per ounce and an exchange rate of ZAR 7.50 per USD. With a current
market capitalization of ZAR1.15 billion the company continues to have an
attractive valuation.
Background information on Modder East can be obtained from the report titled An
Independent Technical Report on the Modder East Gold Project, located near
Springs, Gauteng Province, Republic of South Africa dated August 31, 2006 as
amended October 26, 2006 compiled by SRK Consulting and a SENS announcement
titled Aflease Gold Announces an Enlarged 180 000 Oz Per Annum Modder East Gold
Project. Both the report and the announcement can be accessed via the Aflease
Gold website (www.afleasegold.com).
Sub Nigel 1 Project
Aflease Gold is pleased to announce that it has been granted a new order mining
right for gold and associated minerals for its Sub Nigel 1 Project.
Phase 1
On 18 June 2008 the Board of Aflease Gold approved the first phase of the
recommissioning of Sub Nigel at a capital cost of ZAR 28.9 million after a
detailed study showed a reasonable return for a relatively small investment in
infrastructure. The investment will serve to establish a number of underground
production areas over a six month period. Production ramp up will take place
over a further 6 month period, to produce 6000 ounces of gold per annum from a
production rate of 6000 tonnes of ore per month at a steady state cash cost of
ZAR138,000 per kilogram
The project will utilize the current infrastructure at Sub Nigel which is in
excellent condition and will access stoping areas from existing development.
The ore from Sub Nigel will initially be processed through the Modder East plant
which will have excess capacity until the latter reaches full production in
2011.
The recommisioning of Sub Nigel opens the door for the establishing of an
underground training centre, which will provide quality training for production
teams to be deployed at Modder East during the production build up.
Phase 2
A second phase during which mine production will be increased to 12,000 tonnes
per month is envisaged to follow the successful implementation of phase 1.
Management has sufficient confidence in the long term viability of the Sub Nigel
project area to have begun the procurement of some of the long lead time items
for the metallurgical plant. The mill for the proposed Sub Nigel plant has been
ordered. A third phase could potentially see run of mine production increase to
20,000 tonnes per month.
Ventersburg Project
In February 2008 Aflease Gold announced a new SAMREC (South African Code for
Reporting of Mineral Resources and Mineral Reserves) compliant inferred mineral
resource estimate for its Ventersburg 1 project, located approximately 25
kilometres southeast of Welkom in the Free State Goldfields. The Ventersburg 1
prospecting permit covers an area of approximately 9,760 hectares and is located
18km from Harmony Gold Mine # 2 shaft and 25 km east of President Steyn Gold
Mine # 2 shaft, both of which are currently mining the `A` Reef.
Aflease Gold is pleased to announce that the inferred resource is now also
Canadian National Instrument 43-101 compliant.
Ventersburg Audited Inferred Resource
Inferred Tonnes Gold Grade Gold Content
(Mt) (g/t) (Moz)
NI 43-101- April 08
`A` Reef 30.374 4.76 4.64
Notes:
1. The mineral resources have been reported in accordance with the
classification criteria of the SAMREC Code and the CIM standards of Canadian
National Instrument 43-101.
2. Snowden Mining Industry Consultants prepared the resource estimate applying
the SAMREC Code.
3. Charles Muller, B.Sc. (Hons), Pr.Sci.Nat., of Minxcon, an independent
geoscience consultant, prepared the resource estimate applying the Canadian 43-
101 National Instrument. Charles Muller is a qualified person for the purposes
of NI 43-101.
4. Mineral reserves are included in mineral resources.
5. Mineral resources are not mineral reserves and do not have demonstrated
economic viability.
6. No cut-off was applied in determining the Ventersburg resource.
7. The resource estimation process was managed by Piet van Straaten, B.Sc.,
Pr.Sci.Nat., Vice-President, Geology and Exploration, Aflease Gold and a
qualified person for the purposes of NI 43-101.
Aflease Gold commenced with a diamond drilling program at Ventersburg in May
2007 to establish continuity of the reef horizon as well as the economic
feasibility of the `A` Reef. Results of this ongoing drilling programme have
not been included in the new inferred mineral resource estimate at Ventersburg
and the resource potential of the `A` Reef will be evaluated upon completion of
this drilling programme. The company currently has 6 drill rigs in the field
working on the drilling programme.
In Q4 2007, Aflease Gold was granted a new prospecting permit covering 2,800
hectares adjacent to the company`s existing Ventersburg project, to be known as
Ventersburg 2. The company has commenced with exploration activities to assess
the potential of this area.
In addition the company has lodged a third prospecting application with the
Department of Minerals and Energy ("the DME") for an area adjacent to the
existing projects to be known as Ventersburg 3. The application has been
accepted by the DME and the required Environmental Management Plan lodged.
Bothaville Prospecting Right
During Q4 2007, Aflease Gold was granted a new prospecting right covering 8,500
hectares in the Bothaville district of the Free State province, approximately 25
kilometres east of the town of Bothaville.
The Bothaville prospect is geologically similar to the company`s Ventersburg
project. The target consists of a relatively shallow horst block which Aflease
Gold believes has good potential to define economic reef horizons, namely the
`A` and Leader Reefs. The `A` and Leader reefs are typical of highly-
channelised conglomerates. Rand Mines drilled approximately 30 diamond drill
holes in the area over a 50km2 extent between 1981 and 1983.
Geo-Consult International has been commissioned to carry out an in depth Desktop
Study on all the available data on the Bothaville project. An extensive diamond
drilling program will be planned for the area of interest.
Sub Nigel 6 Project
Aflease Gold is also pleased to declare a NI 43 - 101 compliant resource for its
Sub Nigel 6 Project,(West Vlakfontein area). There is a decrease in the NI 43 -
101 resource due to an increase in allowance for geological losses, from 30% to
between 54% and 70%, depending on the particular geological zone in question.
Sub Nigel 6 Inferred Resources
NI 43-101
Reef Tonnes Grade Gold Content
(Mt) (g/t) Moz)
Main Reef 36,39 2.90 3.339
BPM 11.86 4.89 1.805
TOTAL 48.25 3.39 5.144
Notes:
1. The mineral resources have been reported in accordance with the
classification criteria of the SAMREC Code and the CIM standards of Canadian
National Instrument 43-101.
2. Snowden Mining Industry Consultants prepared the resource estimate applying
the SAMREC Code.
3. Charles Muller, B.Sc. (Hons), Pr.Sci.Nat., of Minxcon, an independent
geoscience consultant, prepared the resource estimate applying the Canadian
National Instrument 43-101. Charles Muller is a qualified person for the
purposes of NI 43-101.
4. A cut-off of 300 cmg/t was applied by both Snowden and Minxcon.
5. A geological loss of 30% was applied by Snowden in terms of the SAMREC code
whereas a geological loss of between 54 - 70% (dependent on the various
geozones) was applied by Minxcon in terms of NI 43-101
6. Mineral reserves are included in mineral resources.
7. Mineral resources are not mineral reserves and do not have demonstrated
economic viability.
8. The resource estimation process was managed by Piet van Straaten, B.Sc.,
Pr.Sci.Nat., Vice-President, Geology and Exploration, Aflease Gold and a
qualified person for the purposes of NI 43-101.
Management has decided that all future resources as well as all resources
currently signed off under the SAMREC code will be subjected to the N1 43-101
Canadian code. The new Aflease Gold revised resource statement is listed below:
Aflease Gold Audited Resources (April 08)
Tonnes Grade Gold
Content
(Mt) (g/t) (Moz)
Indicated
Modder East 28.83 2.84 2.63
Sub Nigel 1,2,3 ** 2.98 3.21 0.31
SubTotal Indicated 31.81 2.87 2.94
Inferred
Modder East 14.98 2.16 1.04
Sub Nigel 1,2,3 ** 2.92 4.46 0.42
Sub Nigel 6 48.25 3.39 5.14
Turnbridge/New 4.27 6.05 0.83
Kleinfontein **
Ventersburg 30.37 4.76 4.64
SubTotal Inferred 100.79 3.73 12.07
Total Indicated & 132.60 3.52 15.01
Inferred
Note: **
The highlighted resources are SAMREC compliant and will be converted to the NI
43-101 code shortly
Etendeka
Aflease Gold holds a 100% interest in Etendeka Prospecting and Mining Company
(Pty) Ltd (Etendeka), a company incorporated in the Republic of Namibia.
Etendeka holds an Exclusive Prospecting Licence for an area 65, 000 hectares in
extent in respect of base and rare metals, precious metals and precious stones.
The property is located in the Outjo district of north-western Namibia.
The potential for granites of the Fransfontein Granite Suite to host iron-oxide-
copper-gold (IOCG) mineralization has been recognized and two exploration phases
completed to date.
On completion of phase two Dr. Trevor Pearton, a recognised expert in
geochemistry was commissioned to review and validate all the exploration
results, with the specific purpose of identifying potential target areas
amenable for drilling.
Two drill target areas have been identified and drilling is planned to commence
Q3, 2008 and should be completed in Q4, 2008
About Aflease Gold
Aflease Gold is a South African gold resource company listed on the JSE Limited
(the Johannesburg Stock Exchange). The company owns the Modder East Gold
Project, currently under construction, as well as the Sub Nigel, New
Kleinfontein, Turnbridge and the Holfontein Gold Projects, all on the East Rand;
the Ventersburg Gold Project in the Free State gold field; and the Etendeka Gold
Project in Namibia. Aflease Gold was formed in January 2006 through the reverse
takeover of Sub Nigel Gold Mining Company Limited by New Kleinfontein Mining
Company, then a wholly-owned subsidiary of Uranium One Inc.
For further information, please contact:
Neal Froneman Chief Executive Officer
Aflease Gold Limited
Tel +27 83 628 0226
Cautionary Statement
This News Release includes certain "forward-looking statements" and "forward-
looking information". All statements other than statements of historical fact
included in this release including, without limitation, statements regarding
future plans and objectives of Aflease Gold are forward-looking statements (or
forward-looking information) that involve various risks and uncertainties. There
can be no assurance that such statements will prove to be accurate and actual
results and future events could differ materially from those anticipated in such
statements. Important factors could cause actual results to differ materially
from Aflease Gold`s expectations. Such factors include, among others, the actual
results of exploration activities, actual results of reclamation activities, the
estimation or realization of mineral reserves and resources, the timing and
amount of estimated future production, costs of production, capital
expenditures, costs and timing of the development of Modder East and new
deposits, availability of capital required to place Aflease Gold`s properties
into production, the ability to obtain a listing in Europe, Australia or North
America, conclusions of economic evaluations, changes in project parameters as
plans continue to be refined, future prices of gold and other commodities,
possible variations in ore grade or recovery rates, failure of plant, equipment
or processes to operate as anticipated, accidents, labour disputes and other
risks of the mining industry, delays in obtaining governmental approvals,
permits or financing or in the completion of development or construction
activities, Aflease Gold`s hedging practices, currency fluctuations, title
disputes or claims limitations on insurance coverage, Although Aflease Gold has
attempted to identify important factors that could cause actual results to
differ materially, there may be other factors that cause results not to be as
anticipated, estimated or intended.
There can be no assurance that such statements will prove to be accurate as
actual results and future events could differ materially from those anticipated
in such statements. Accordingly, readers should not place undue reliance on
forward-looking statements. Aflease Gold does not undertake to update any
forward-looking statements that are included herein, except in accordance with
applicable securities laws.
In addition, this news release uses the terms "indicated resources" and
"inferred resources" as defined in accordance with the SAMREC Code (South
African Code for Reporting of Mineral Resources and Mineral Reserves prepared by
the South African Mineral Resource Committee) (SAMREC) under the auspices of the
South African Institute of Mining and Metallurgy effective March 2000 or as
amended from time to time and where indicated in accordance with the Canadian
National Instrument 43-101 - Standards for Disclosure for Mineral Projects.
A mineral reserve is the economically mineable part of a measured or indicated
resource demonstrated by at least a preliminary feasibility study. This study
must include adequate information on mining, processing, metallurgical, economic
and other relevant factors that demonstrate at the time of reporting that
economic extraction can be justified. A mineral reserve includes diluting
materials and allows for losses that may occur when the material is mined. A
proven mineral reserve is the economically mineable part of a measured resource
for which quantity, grade or quality, densities, shape and physical
characteristics are so well established that they can be estimated with
confidence sufficient to allow the appropriate application of technical and
economic parameters to support production planning and evaluation of the
economic viability of the deposit. A probable mineral reserve is the
economically mineable part of an indicated mineral resource for which quantity,
grade or quality, densities, shape and physical characteristics can be estimated
with a level of confidence sufficient to allow the appropriate application of
technical and economic parameters to support mine planning and evaluation of the
economic viability of the deposit.
A mineral resource is a concentration or occurrence of natural, solid, inorganic
or fossilized organic material in or on the earth`s crust in such form and
quantity and of such a grade or quality that it has reasonable prospects for
economic extraction. The location, quantity, grade, geological characteristics
and continuity of a mineral resource are known, estimated or interpreted from
specific geological evidence and knowledge. A measured mineral resource is that
part of a mineral resource for which quantity, grade or quality, densities,
shape and physical characteristics can be estimated with a level of confidence
sufficient to allow the appropriate application of technical and economic
parameters to support mine planning and evaluation of the economic viability of
the deposit. The estimate is based on detailed and reliable exploration,
sampling and testing information gathered through appropriate techniques from
locations such as outcrops, trenches, pits, workings and drill holes that are
spaced closely enough to confirm both geological and grade continuity. An
indicated mineral resource is that part of a mineral resource for which
quantity, grade or quality, densities, shape and physical characteristics can be
estimated with a level of confidence sufficient to allow the appropriate
application of technical and economic parameters to support mine planning and
evaluation of the economic viability of the deposit. The estimate is based on
detailed and reliable exploration and testing information gathered through
appropriate techniques from locations such as outcrops, trenches, pits, workings
and drill holes that are spaced closely enough for geological and grade
continuity to be reasonably assumed. An inferred mineral resource is that part
of a mineral resource for which quantity and grade or quality can be estimated
on the basis of geological evidence and limited sampling and reasonably assumed,
but not verified, geological and grade continuity. The estimate is based on
limited exploration and sampling gathered through appropriate techniques from
locations such as outcrops, trenches, pits, workings and drill holes. Mineral
resources which are not mineral reserves do not have demonstrated economic
viability. Investors are cautioned not to assume that all or any part of the
mineral deposits in the measured and indicated resource categories will ever be
converted into reserves. In addition, "inferred resources" have a great amount
of uncertainty as to their existence and economic and legal feasibility. It
cannot be assumed that all or any part of an inferred mineral resource will be
ever be upgraded to a higher category. Under South African rules, estimates of
inferred mineral resources may not form the basis of feasibility or pre-
feasibility studies or economic studies except under conditions noted in the
SAMREC Code.
Investors are cautioned not to assume that all or any part of an inferred
resource exists or is economically or legally mineable. Exploration data is
acquired by the Corporation and its consultants under strict quality assurance
and quality control protocols.
No stock exchange, securities commission or other regulatory authority has
approved or disapproved the information contained herein.
Date: 24/06/2008 10:56:17 Produced by the JSE SENS Department.
The SENS service is an information dissemination service administered by the
JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or
implicitly, represent, warrant or in any way guarantee the truth, accuracy or
completeness of the information published on SENS. The JSE, their officers,
employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature,
howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
