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Aflease - Strategic Update and Cautionary Announcement Aflease Gold and Uranium Resources Limited (Formerly 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`) Strategic update and cautionary announcement Aflease held a strategic update session and launched the new branding of the company, which can be seen on the website, www.aflease.com. This strategic update outlines the salient details thereof. Uranium market fundamentals With the uranium spot price at $21 per pound, the underlying fundamentals remain bullish. Working from numbers obtained from International Nuclear Inc, the company showed shareholders that the supply gap, taking account of both anticipated production and above ground stockpile supply, will widen from 2005 onwards. The anticipated shortfall is expected to increase annually and should be in excess of 80m pounds per annum in 2020. Uranium project Feasibility and mine design studies are currently underway and are expected to be completed by June 2005. These studies are part of a R21m project approved by the board of the company. The results of these studies will be used to decide on implementation of the mine in Q3 2005. Although the study has not been completed, the indications are positive for the start of construction during Q3 2005. Aflease`s uranium mining will initially focus on mining areas less than 500m deep for the first ten years. This project was previously mined by AngloGold, is not a green fields project and current geological information from 250+ boreholes and 46,000 data points from previous mining and the seismic surveys forms the basis of the resource estimates. Uranium resource base The company has started the process of converting its resource to a SAMREC compliant one. As part of a five-year process, the company will be converting its anticipated 330m pounds of AngloGold information-based uranium resource estimate to comply with the SAMREC code. As a first step, 136m pounds of the total 330m pounds have already been found to comply. This SAMREC compliant part of the resource is equivalent to 34 years of production. Mining models The company has progressed with the development of its mining models. These models are used to summarise information presented to shareholders and the media. Copies of the company`s presentations and the resultant mine model summaries are available on the company`s website. The company has elected to make conservative estimates of these models available in its presentations. Modder East Exploration continued on this excellent ore body located on the East Rand. The company is expected to announce an increase in its resource base at this ore body when it releases its detailed annual financial statements later in 2005. Randgold investment The company has decided not to liquidate its Randgold investment at this stage. With reference to the Randgold half-year financial statements published on 16 September 2004, the current share price is undervalued. The company will be looking towards realising better values from its Randgold investment. Capital raising The company expects to raise capital for its uranium mine along the following initial estimated time-lines: Q3 2005: 20% Q2 2006: 20% Q3 2006: 60% Capital requirements are expected to be in the order of $75m - $100m. Final numbers can only be presented as and when the feasibility and mine design studies are completed. The company expects to introduce a debt component to its financing starting 2006. With high returns registering from its projects, the company will attempt to minimise dilution through the responsible use of hybrid debt instruments such as convertible debentures. Black Economic Empowerment (BEE) and cautionary announcement The company is about to conclude a transaction in terms of which it will form a joint venture with a number of broad based empowerment groups. The empowerment grouping will hold 26% of the company`s assets as a joint venture partner. The empowerment partner will have substantial portions of its own equity structured in favour of the company`s workers and the communities from which the company sources it labourers. The rest of the equity will be structured in favour of credible BEE partners with whom Aflease has a history. Details of the innovative structure preserving shareholder value will be presented to shareholders and analysts at the launch presentation scheduled for 22 February 2005. Accordingly, shareholders are advised to exercise caution when dealing in their Aflease shares, until a further announcement has been made. International listings The company has terminated its plans to upgrade its level 1 listing to a level 2 listing on the NASDAQ. With the extraordinary requirements posed by Sarbranes Oxley legislation and the small size of the company, the board decided to focus its efforts on a secondary TSX listing. ADR holders are able to see a real-time level II montage on the Aflease sponsored program available on the Aflease and Pinksheets website. The information can be accessed either at www.aflease.com or at www.pinksheets.com. Johannesburg 28 January 2005 Investment Bank and Sponsor Nedbank Capital Date: 28/01/2005 11:59:05 AM Produced by the JSE SENS Department
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