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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")
TRADING AND OPERATIONAL UPDATE
The Board of Aflease publishes the following operational update.:
1. CIL Plant
The CIL plant commissioning is in progress with the primary and one of the
secondary mills in operation together with four of the six leach tanks. All the
components of the plant are expected to be in operation as forecast by the end
of June 2003.
The plant throughput is now up to 5000 tons per day with a total of 37 500 tons
having been milled in May. The plant will run with only one secondary mill for
the first half of June whilst the third mill is brought into commission and the
refurbishment of number two mill is complete. To minimize gold lock up, low
grade material was initially fed into the plant. Recoveries have increased from
88% on start up to just over 92%. The first gold from CIL plant will be smelted
during the first week of June.
It is still expected that the plant will be operating at full capacity (200 000
tons per month @ 95% recovery) by the end of the September quarter and will show
its full benefits in the December quarter.
2. Underground mining - Afrikander Section
Establishment of the Bonanza section is proceeding on track. The decline has
been sunk 440m and is now being equipped with a conveyor belt. The surface bins
have been installed and the belt system will be commissioned during June.
At the vertical shaft section, the first steeply dipping stope has been brought
into production. The rate of de-watering of the shaft complex has been expedited
with the installation of additional pumping capacity at the end of May
The inner and outer basin inclines are also being brought into production.
3. Surface Mining - Afrikander Section
Production is being ramped up to produce 140 000 tons per month at a head grade
of 1.1g/t from the inner basin pit. An additional shift has been started in
order to increase the utilisation of our equipment. Currently some 255 000 tons
of reef have been stockpiled for processing through our new plant.
4. New opportunities - Afrikander Section
We are pleased to advise that the mining of the Big Pebble basin has begun ahead
of schedule. It is intended that 60,000 tonnes per month will be mined and
treated on the heap leach pad. Initial results are exciting and the group
continues to apply resources to improve understanding and management of this
attractive resource. A significant departure from Afrikander tradition has been
the application of contract mining. In this particular application we have
found contractors to be more cost effective and as a result have avoided
additional capital outlay.
5. Underground Mining - New Kleinfontein Section
Following a reassessment of underground operations at New Kleinfontein and its
future prospects, the decision was taken to cease operations and to mothball
these assets. The workforce has been retrenched or where appropriate transferred
to the Afrikander operations. Work is currently taking place to identify how to
maximise the New Kleinfontein and the Turnbridge resources going forward.
Exploration continues at Modder East and UC Prospecting.
An empowerment joint venture is being explored relating to the non core East
Rand properties of New Kleinfontein and Turnbridge. We expect to announce
further details in due course.
6. Reserve & Resource Statement
The compilation and update of the Competent Persons Reports (CPR) in line with
preparations for the NASDAQ listing upgrade, have been completed. The new
Resource and Reserve Statement (R&R) now includes the East Rand as well. The R&R
also includes exploration results that have been converted into the resource and
reserve category. All declarations are fully compliant with the SAMREC code.
Aflease now reflects a substantial 2 m Oz reserve which at an annual production
of 200000 oz"s represents a reserve life in excess of 10 years. The Resource
declaration of 6 m oz"s now includes appropriate cut offs.
7. Exploration - Afrikander Section
The drilling program at Bonanza West Mine has increased the resource to 420 000
oz"s. The drilling has also resulted in the identification of the down dip
extension of the pay shoot from Bonanza West Mine into the greater Bonanza
Basin. This pay shoot has resulted in an exploration target of 10 million oz"s
which will be fast tracked as advised previously. Substantial additional
resources have yet to be explored.
8. East Rand - Exploration
Exploration on the Modder East property continues to exceed our expectations
with a reserve of over 700 000 oz"s having been delineated. The Black reef
shore line remains open ended to the east and as such there is still
considerable upside. More exploration needs to be conducted on the Kimberly
Reefs. Exploration targets of over 5 million ounces have been identified and
are being expedited.
The reserves defined to date more than justify a stand alone mine. Various
exciting options are currently being investigated and the Modder East deposit is
expected to be a highly profitable mine. Preliminary design work has been
contracted to consultants.
9. Funding
The delay in the commissioning of the new CIL plant and the premature decision
by previous management to cease the heap leaching operations has necessitated
limited bridging finance. Aflease has successfully secured the necessary funding
and a detailed announcement in this regard will follow in due course.
10. Trade Update
The group has already cautioned shareholders on the expected loss for the June
"03 quarter. The loss is a direct result of the commissioning of the CIL plant
and the management team is currently focused on the turn-around. The group"s
prospects remain in line with previously stated expectations and it is
anticipated that the group will achieve an increase of gold output from an
annualised 35 000oz to 100 000oz, and a decrease in cost of production from R80
000/Kg to R60 000/Kg by the end of December 2003. The company has the potential
in its current asset base to see the production number double again by the end
of 2004 to 200 000oz on an annualised basis.
Sponsor
Gensec Bank Limited
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