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AFG
AFG
Afgem Limited - General issue of shares for cash and operational update
Afgem Limited(Incorporated in the Republic of South Africa)(Registration
number 1998/007292/06)JSE code: AFG & ISIN: ZAE000067757"Afgem" or "the
Company")
GENERAL ISSUE OF SHARES FOR CASH AND OPERATIONAL UPDATE
ISSUE OF SHARES FOR CASH
Shareholders are advised in terms of the Listings Requirements of the JSE
Limited that the Company has issued 23 654 166 shares for cash under the
general authority to issue shares for cash granted by shareholders at a
general meeting held on 27 July 2005. The shares were issued and allotted
to public shareholders on Thursday, 24 August 2006. The JSE has granted the
listing of these shares from the commencement of business on Friday, 25
August 2006. The shares were issued at a discount of 10% to the 30-day
volume-weighted average traded price of Afgem shares prior to the date of
issue. The proceeds amount to R5 677 000. The 23 654 166 shares represent
an increase of 10.1% in the issued share capital of the Company.
The table below sets out the unaudited pro forma effects on net asset value
and net tangible asset value per share of Afgem after the general issue of
shares for cash as at 31 March 2006. This information is the responsibility
of the directors of the Company. The unaudited pro forma financial effects
are provided for illustrative purposes only and, because of their pro forma
nature, the unaudited financial effects may not give a fair reflection of
Afgem"s financial position after the general issue of shares for cash.
Before the After the Percentage
general general change
issue issue
Net asset value and net
tangible asset value per 16,44 cents 17,14 cents 4.2%
share (cents)
Number of shares in issue 233 968 155 257 622 322 10.1%
Notes:
1. The "Before the general issue" net asset value and net tangible asset
value per share have been calculated based on the audited financial
statements of Afgem at 31 March 2006.2. The "After the general issue"
net asset value and net tangible asset value per share have been adjusted
to include the increase in cash received and shareholders" interest as a
result of the general issue.
OPERATIONAL UPDATE
In April 2006, Afgem"s operating mine Simolotse (formerly Loxton
Exploration Mine) was placed on care and maintenance. During this time the
mine underground water pumping activities continued as did the treating of
coarse reject stockpile material at Simolotse on a single shift basis. Due
to the fact that the tertiary crusher of the mobile Dense Media Seperator
("DMS") plant was not in place at the time of processing this material, the
material is now yielding economic quantities of diamonds which is providing
interim cash flow.
To date some 2341 tonnes have been treated and and 146 carats have been
recovered at an average grade of 6,24 cpht. The first parcel was sold at a
price of US$145 per carat and the balance should be sold shortly..
Contrary to previous plans, on 3 August 2006, Simolotse entered into an
agreement to sell its 50 tonne per hour DMS plant for R2 million. This
plant, which was too large for Simolotse, was installed by Bateman
Engineering on site in April 2003, prior to Afgem"s acquisition of
Simolotse, but was never commissioned due to design faults with the
crushing section. The decision was taken to sell the plant rather than
recommission it after a desktop study indicated that a smaller size plant
is more appropriate. The purchase price is to be paid in cash and is
expected to be settled in full by end of August.
Following the successful refinancing of the Simolotse Mine through the
issue of shares and sale of plant detailed above, planning is advanced to
re-open the mine on a phased basis. The phased recall of employees will be
done in consultation with NUM branch members. Initially the No.1 shaft
will be re-opened whilst the necessary capex is undertaken to recommission
the No.2 shaft. The recomissioning of the No.2 shaft is expected to return
Simolotse Mine to profitability. Once Simolotse has returned to
profitability, initial assessment work will begin on Bokang Mine with a
view undertaking a more extensive feasibility study. Furthermore, the
funds raised will enable Afgem to evaluate the numerous opportunities which
arise on a regular basis. This will increase the Group"s portfolio of
properties resulting in a more balanced risk profile from unproven
diamondiferous resources through to developed mines.
Melrose Arch
25 August 2006
SponsorABSA Capital - Corporate FinanceA division of Absa Bank Limited
(Reg No Reg. No. 1986/004794/06)
Date: 25/08/2006 12:39:07 PM Produced by the JSE SENS Department
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