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AFG
AFG
AFGEM LIMITED - Operational Upgrade Of Simolotse Mine And Cautionary
Announcement
AFGEM LIMITED
(formerly African Gem Resources Limited)
(Incorporated in the Republic of South Africa)
(Registration number 1998/007292/06)
JSE code: AFG & ISIN: ZAE000067757
("Afgem" or "the Company")
OPERATIONAL UPGRADE OF SIMOLOTSE MINE AND CAUTIONARY ANNOUNCEMENT
Shareholders are hereby informed that a decision has been taken by the directors
of Afgem to complete an operational upgrade of Simolotse Mine. This process
involves the completion and commissioning of the No. 2 Shaft (where a
refurbished winder has been commissioned) and completion of the installation of
a new 50 tonne per hour ("tph") plant at Simolotse Mine. This plant, partially
installed by previous management, was never completed and commissioned, due to
various design faults. Financing arrangements for both of these strategic
upgrades are currently being finalised.
However, management at Simolotse Mine has advised that it is not possible to
recommission the No. 2 Shaft without compromising the production from the No. 1
Shaft and the safety of the underground employees. An additional concern is the
unsatisfactory security arrangements at the various production points, all of
which are to be improved, as well as the transition from the current portable
DMS plant to the new 50 tph plant. Accordingly, the decision has been taken to
temporarily cease production at the Simolotse Mine for an expected three-month
period commencing 1 April 2006. The mine will be placed on a care and
maintenance programme, which will include the continued pumping of water from
underground.
The directors of the Company and management of the Simolotse Mine regret the
inconvenience the temporary situation may cause to employees but firmly believe
that it is in the best interests of the Company both from a financial and safety
point of view and will prove to be a worthwhile investment for the Company and
its employees. Discussions with the respective trade unions are ongoing in this
regard.
Cautionary announcement
In view of the above and the potential impact it may have on the price at which
Afgem"s shares trade on the JSE Limited ("the JSE"), shareholders are advised to
exercise caution in dealing in their securities in Afgem. The JSE has agreed
that this cautionary does not have to be renewed every six weeks, but only on 5
July 2006, or withdrawn on the date on which production resumes, whichever
occurs first.
Melrose Arch
5 April 2006
Sponsor
ABSA
Corporate and Merchant Bank
Corporate Finance
ABSA Bank Limited
(Registration number 1986/004794/06)
Date: 05/04/2006 03:44:19 PM Produced by the JSE SENS Department
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