| Wed 9 Oct 2002, 17:25 | | The Afrikander Lease Limited - Sept 2002 Update |
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The Afrikander Lease Limited - Sept 2002 Update
The Afrikander Lease Limited
(Incorporated in the Republic of South Africa)
AFL (JSE) AFKDY (NASDAQ)
(Registration Number 1921/006955/06) Share Code: AFL
ISIN Code: ZAE000000253 ("Aflease" or "the company" of "AFL")
AFL 2002 CIL PLAN IMPLEMENTATION
The directors of Aflease are pleased to announce that the implementation of the
AFL 2002 CIL Plan has commenced after signature for the construction of the CIL
Plant was concluded at the end of September. The AFL 2002 plan will increase
ROM throughput from 165 000 tpm to 200 000 tpm from new underground operations,
increase recovery to 94% and increase gold production to in excess of 300 kg (10
000 oz) per month.
CAPITAL RAISING
In terms of the general authority to issue shares for cash granted by
shareholders to the directors of AFL at the General Meeting held on 16th July
2002, AFL is pleased to announce the successful subscription of 20,5 million AFL
shares at R6,50 per share to raise R133 million and the receipt of the first
tranche of these funds.
200 000 TPM CIL PLANT CONSTRUCTION
The contract to design, erect and commission the 200 000 tpm CIL Plant for
Aflease was signed with Metallurgical Design Management (Pty) Ltd ("MDM") in
September 2002, with completion of this plant due in Q2 2003.
PRODUCTION BENEFITS OF THE AFL 2002 CIL PLAN
The anticipated benefits of the AFL 2002 CIL Plan are as follows:
ROM monthly throughput to increase by 21% from 165 000 tpm to 200 000 tpm.
Average ROM grade to increase by 100% plus from 1.25 g/t to more than 2.50 g/t.
Average recovery to increase by 50% from approximately 60% (6 mths) to 94% (96
hrs).
Average revenue per ton to increase by 300% plus from R65,00/ton to more than
R200,00/ton.
Average monthly revenue to increase by over 300% from approximately R8 million
to R30 million.
Average cash cost to reduce by approximately 25% from approximately $200/oz to
less than $175/oz.
Average operating profit to increase by 600% + from approximately R30 million
per annum to more than R215 million per annum.
Average earnings per share to increase from approximately 13 cps to
approximately 125 cps.
METALLURGICAL TEST WORK
The completion of metallurgical test work-study undertaken by MDM, in
conjunction with Lakefield Research Africa (Pty) Ltd, has confirmed the
suitability of the Aflease ore for treatment by a CIL Plant. Results confirm a
higher than anticipated percentage of free gold for gravity separation. For
further details contact Mr. Hayward at 083 602 5776.
OTHER BENEFITS OF THE AFL 2002 CIL PLAN
The new CIL Plant will include gravity separation for increased efficiency;
The new CIL Plant will achieve a 94% recovery within 96 hours;
The approximate 4 200 000 tons of heap leach ore will be re-treated through the
CIL to further recover approximately 1 000 kgs (32 000 oz) of gold;
Cycle times will be reduced from 6 months to 96 hours;
The heap leach operation will be terminated in Q2 2003 concluding the heap leach
lock-up and recovery challenges of the past;
The commencement of shallow, low risk, underground mining operations;
The exploration of the Bonanza ore body which will yield additional higher-grade
reserves for the underground mining plan.
ADDITIONAL SOURCES OF ROM ORE
As a consequence of the requirements of the 200 000 tpm CIL Plant additional ROM
ore will be mined and is estimated as follows:
Bonanza underground to deliver 17 000 tpm at 6.5 g/t - new underground section.
Outer Basin Adits to deliver 5 000 tpm at 3.8 g/t - new underground section.
Outer Basin West to deliver 35 000 tpm at 2.5 g/t - new underground section.
Old Pads to be reworked at 10 000 tpm to 50 000 tpm at 0.45 g/t.
BONANZA EXPLORATION
An amount of R15 million has been budgeted to spend on an exploration program to
upgrade the Bonanza ore body from its present 2 million ounce resource to an
anticipated 7 million ounce resource, higher-grade ore body. Bonanza is a
massive, shallow ore body with numerous higher-grade core and reverse
circulation drilling intersections, which could more than double the AFL`s
resource base.
EMPOWERMENT
Aflease is pleased to announce that the company has discharged its
responsibility in terms of the Minerals & Energy Empowerment Bill, to make
available to previously disadvantaged citizens of South Africa, 26% of the
Company`s shareholding. This shareholding was sold to a Black Economic
Empowerment Company, Lwami Investments (Pty) Ltd. ("Lwami") in March 2002
Regrettably Lwami has seen fit to commence selling these empowerment shares on
receipt of the shares. To date Lwami has sold its entire empowerment
shareholding in Aflease, resulting in an approximate R120 million in profit in
the seven-month period, which profit unfortunately has not benefited empowerment
and consequently, has effectively dis-empowered Aflease.
The Afrikander Lease Employee Empowerment Trust ("AFLEET")
As a consequence of the above, Aflease has registered an Empowerment Trust,
namely AFLEET, which trust will be utilised to empower the employees of the
Aflease mine. With the anticipated assistance of the IDC this trust will be
structured to replace Lwami and the empowerment responsibilities which Lwami
undertook with the original acquisition of its shares. No preferential terms
will be given to the above trust that prejudices Aflease.
THE AFL SHARE PRICE
The ongoing selling of the AFL empowerment shares by Lwami during the period
March 2002 to September 2002 has unfortunately seen the AFL share price fall
from around R6.50 per share to a recent low of R3.85 per share. It is
understood that Lwami has now sold its entire empowerment shareholding. As a
consequence it is anticipated that the AFL share price will recover towards its
previous March 2002 levels of approximately R6.50.
FURTHER ISSUES
Further aspects of Aflease operation are summarised below:
AFL is not hedged
AFL has minimal debt
New acquisitions likely to be released in the short term
Resources are likely to increase substantially in the short term
Market Cap per reserve ounce is US$40/oz
Market Cap per resource oz is US$23/oz.
CONCLUSION
Given all the positive developments summarised in this release it is clear that
Aflease is presently well positioned to offer very exciting prospects, with the
likelihood of the share resuming its historical status of being one of the
highest performing gold shares on the JSE Securities Exchange South Africa for
the foreseeable future.
9 October 2002
Date: 09/10/2002 05:05:00 PM Produced by the JSE SENS Department
