| Mon 4 Dec 2006, 16:22 | | Aflease Gold - Increase in Resources and Reserves |
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AFO
AFO
Aflease Gold - Increase in Resources and Reserves
AFLEASE GOLD LIMITED
(Formerly Sub Nigel Gold Mining Company Limited)
(Incorporated in the Republic of South Africa)
(Registration number 1984/006179/06)
Share Code: AFO & ISIN Code: ZAE000075867
("Aflease Gold")
Aflease Gold Limited
PO Box 262, Dunnottar,
Gauteng 1590, South Africa
Trading Symbol: AFO - JSE (The Johannesburg Stock Exchange)
NEWS RELEASE
December 4, 2006 Johannesburg, Gauteng
Increase in Resources and Reserves at Aflease Gold"s Modder East and Sub Nigel
Gold Projects, South Africa Johannesburg, South Africa - Aflease Gold Limited
("Aflease Gold") announced today that it has released an updated mineral
resource and reserve statement for its Modder East Project and an updated
resource statement for its Sub Nigel Project. The updated statements show an
increase in both resources and reserves at Modder East and an upgrading of
resources at Sub Nigel. The Modder East and Sub Nigel Projects are located in
South Africa"s East Rand goldfields, 30km east and 35km east-southeast of the
city of Johannesburg, respectively.
Modder East Project
The revised statement shows a reserve tonnage of 7.69Mt grading 5.54g/t for 1.37
million contained ounces of gold in the probable category. This represents a 28%
increase over the estimates contained in the August 16, 2006 Modder East
feasibility study prepared by Turgis Consulting and audited by SRK Consulting
(available on the Aflease Gold website www.afleasegold.com and on SEDAR). In
addition, the revised statement shows a resource tonnage of 22.57Mt grading
3.31g/t for 2.40 million contained ounces of gold in the indicated category (a
19% increase from the 2.01 million ounces reported previously) and 13.32Mt
grading 2.31g/t for 0.99 million contained ounces of gold in the inferred
category (a 3% decrease from the 1.02 million ounces reported previously). The
indicated resource tonnage at Modder East has remained essentially unchanged
while the average grade has increased by 19% (from 2.79g/t to 3.31g/t). In all
cases, mineral reserves and resources have been reported in accordance with the
classification criteria of the South African Code for Reporting of Mineral
Resources and Mineral Reserves (the SAMREC Code).
The increase in reserves and resources at Modder East is as a result of the
Phase II drilling program conducted in 2006 on the property by Aflease Gold. The
cut-off grades (Table 1 refers), gold price (US$430/oz) and exchange rate
(US$1:R6.49) used in the assessment are the same as in the Modder East
feasibility study. This was considered necessary to allow for a direct
comparison to be made with the previous resource estimate, despite the recently
improved outlook for the gold price going forward.
The main components of the Modder East Mineral Resource are:
- The Black Reef Buckshot Pyrite Leader Zone (BPLZ).
- The Black Reef Channel Facies (CF).
- The Blanket Facies (BF).
- The UK9A Kimberley Reef.
- The UK5A Kimberley Reef.
The Black Reef comprises three facies. At the top is the higher grade BPLZ,
which averages 0.5 metres in width and is the primary mining target. The BPLZ is
a placer deposit, with gold present within a heavy mineral suite dominated by
pyrite and hosted within a conglomerate. Continuity of mineralization in the
target area has been confirmed, with the zone of mineralization clearly visible
within drillhole cores. The BPLZ overlies the BF, a 1.3 metre thick quartzite
which has not been targeted due to its very low gold grades. At the base of the
Black Reef is the 3 metre thick, erosional CF. The Black Reef dips at around 3
to the south.
The UK9A is a narrow channel reef, commonly characterized by the presence of
kerogen, either as lamina partings or as flyspeck carbon within the conglomerate
reef unit. The UK5A is a multi-stacked package of robust conglomerates. The
reefs dip at around 12 to the south.
The Black Reef is developed at approximately 300 metres below surface, while the
sub-cropping Kimberley (UK9A and UK5A) reefs reach depths of around 600 metres.
The mineralized horizons are considered to be structurally simple and generally
well understood, as a result of a long history of mining the underlying Main
Reef on the East Rand and the selective mining of the UK9A at the adjacent
Petrex operations.
The BPLZ resource estimate is based on diamond boreholes drilled by Aflease Gold
and the previous owners of the project Gencor, and declustered underground
channel samples from the adjacent UC prospect previously operated by Petrex
Mines ("Petrex"). The database consists of 51 drillholes (excluding deflections)
and 238 underground channel samples declustered (i.e. averaged) within 50m 50m
squares from 16,694 sample points. The methodology employed in the resource
estimation is similar to that applied in the previous resource estimate.
The CF consists of a sequence of pyrite-rich quartzites, pebbly quartzites and
conglomerates, is approximately 3m in thickness, and is separated from the
overlying BPLZ by the BF. The CF is erosional into its footwall and estimates
have been developed for the Channel Facies over the footprint of the mineralized
BPLZ that has been delineated.
Pillars remaining in the UC prospect area have been included in the resource
estimate. The estimate is based on the declustered values obtained from Petrex
as well as outlines of the remnants from Petrex plans. The pillars are all
within the higher grade area close to the `Shoreline" feature, and are generally
surrounded by sampling data on all sides. Given the relative density of data,
Ordinary Kriging has been applied rather than the Simple Kriging used in the
other estimates.
In addition to the Black Reef, Aflease Gold has also delineated mineral
resources on the UK9A and the UK5A reefs lying within the footwall of the Black
Reef. A dataset consisting of 171,000 underground channel samples within stoping
and development on Grootvlei Mine immediately south of the Modder East project
area is available as an analogue to the payshoot that has been intersected on
Modder East.
The estimation process for the Kimberley reefs is the same as that described
above for the BPLZ, with 45 intersections (excluding deflections) being used in
the estimate.
As noted above, there has been an increase in reserve ounces at Modder East.
With respect to the BPLZ, the increase resulted from the following factors:
Borehole DD54, drilled in 2006, cut higher grade gold mineralization within an
area of previously relatively lower grade beach facies material.
Marginal, lower grade BPLZ material, which was included in the previous reserve
estimate, has been removed from the November 2006 estimate. This is reflected by
a drop in the reserve tonnage.
The BPLZ was remodeled (i.e. domained) based on new sample data. In the previous
resource estimate (February 2006) the BPLZ was sub-divided into three domains.
In the current estimate, the BPLZ has been subdivided into four distinct domains
based on metal accumulation and channel width distributions as indicated by the
drillhole data. Notably, the higher grade beach facies, which forms the basis of
the reserve at Modder East, was modeled as a separate domain.
The increase in UK9A reserve ounces at Modder East was caused by a significant
increase in indicated tonnes. This resulted from the upgrading of the main UK9A
channel in the south of the prospect area, together with the smaller Kimberley
channel in the east.
2006 Phase II drilling program
The Phase II exploration drilling program at Modder East was completed in July
2006. Five holes were drilled to test the southerly continuity of the UK9A reef
while one hole was drilled to confirm the northern margin of the BPLZ. Drillhole
DD54, sunk on the BPLZ, intersected higher grade gold mineralization (795cmg/t)
thus confirming both the northern boundary of the mineralized envelop and the
sedimentalogical model used to direct exploration on the Black Reef at Modder
East.
The five holes sunk on the UK9A (DD55, DD56, DD57, DD58 and DD59) confirmed the
southward continuation of the gold mineralization, specifically the relatively
higher grade central payshoot. Furthermore, a new potentially higher grade UK9A
payshoot was identified near the southwest margin of the UC prospect area.
Drillhole DD59, located near the southeast corner of the Modder East prospect
area, unexpectedly cut BPLZ mineralization grading at up to 267cmg/t.
Further drilling will be carried out at Modder East in 2007 (Phase III) in order
to:
- Test for higher grade extensions to the BPLZ outside the current resource
envelope.
- Test the BPLZ in the vicinity of DD59 in order to delineate the extent of
the mineralization intersected in the hole.
- Delineate more accurately the new UK9A payshoot identified near the
southwest margin of the UC prospect area.
Resource and reserve statements for Modder East
The revised mineral resource and reserve estimates for the Modder East Project
are shown in Tables 1 and 2, respectively. The BPLZ and UK9A reefs have been
modeled at a minimum mining width of 1m.
Table 1. November 2006 Modder East resource statement - cut-offs
as per February 2006
Tonnes Grade Metal % Actual
(Mt) (g/t) Content increase/ increase/
(Moz) decrease decrease in
in ounces ounces
Nov 2006 (Moz)
vs Feb
2006
Indicated
(1) BPLZ+BF 6.46 6.35 1.32 18% 0.20
(2) Channel +BF 13.15 1.41 0.60 -8% -0.05
(1) BPLZ 0.27 8.33 0.07 na 0.07
pillars
(3) UK9A 2.69 4.76 0.41 71% 0.17
(4) UK5A
SubTotal 22.57 3.31 2.40 19% 0.39
Indicated
Inferred
(1) BPLZ+BF 0.43 2.08 0.03 -40% -0.02
(2) Channel +BF 1.06 2.60 0.09 na 0.09
(3) UK9A 2.43 4.09 0.32 -20% -0.08
(4) UK5A 9.41 1.82 0.55 -4% -0.02
SubTotal 13.32 2.31 0.99 -3% -0.03
Inferred
(1) Quoted at a cut-off of 167cmg/t
(2) Quoted at a cut-off of 379 cmg/t
(3) Quoted at a cut-off of 199 cmg/t
(4) Quoted at a cut-off of 496 cmg/t
Notes:
The mineral resources have been reported in accordance with the classification
criteria of the SAMREC Code.
The revised resource estimate was prepared by Charles Muller, B.Sc. (Hons),
Pr.Sci.Nat., of Global Geo Services, an independent geoscience consultant to the
Corporation. Charles Muller is a competent person for the purposes of SAMREC.
The resource was audited by Mark Wanless of SRK Consulting.
Mineral resources are not mineral reserves and do not have demonstrated economic
viability.
The indicated resources detailed in Table 1 have been converted into probable
reserves, as shown in Table 2, through a process of mine planning, economic
modeling and the application of appropriate modifying factors, and are reported
as delivered to the plant.
Table 2. November 2006 Modder East reserve statement
Tonnes Grade Metal % increase Actual
(Mt) (g/t) Content in ounces increase
(Moz) Nov 2006 vs in ounces
feasibility (Moz)
study
Probable
BPLZ+BF 5.18 6.43 1.07 20% 0.18
UK9a 2.51 3.72 0.30 67% 0.12
Total 7.69 5.54 1.37 28% 0.30
Probable
Notes:
The revised reserve statement was prepared by Clive Brown of Turgis Consulting
and audited by Herbert (Wally) Waldeck of SRK Consulting. The probable mineral
reserves have demonstrated profitability when included in a mine plan using
industry accepted mining methods and a gold price of US$430 per ounce and an
exchange rate of US$1.00:R6.49. Using these criteria, a pay limit was used to
identify blocks of ground for mining. Within these blocks of ground, a cut-off
grade of 230cmg/t was applied to identify additional panels for mining. The gold
content figures are fully inclusive of mining dilutions and gold losses and are
reported as mill delivered tonnes and head grade. Metallurgical recovery factors
have not been applied to the reserve figures.
Mineral reserves are included in mineral resources
Aflease Gold"s Chief Executive Officer Neal Froneman commented:
"The revised reserve statement for Modder East indicates that the value of the
project has increased. We will update shareholders of any changes in the
project"s value in due course."
Quality Assurance and Quality Control
Exploration programs carried out by Aflease Gold are done so under the direction
of Warwick Bullen, M.Sc., Pr.Sci.Nat., Vice President: Geology and Exploration,
Aflease Gold, and a competent person for the purposes of SAMREC. Geological and
geostatistical modeling is undertaken by two consultants, Peter Camden-Smith,
M.Sc., G.D.Eng, MBL, Pr.Sci.Nat, and Charles Muller, B.Sc.(Hons.), Pr.Sci.Nat.,
both of whom are competent persons for the purposes of SAMREC.
Exploration data is acquired by the Corporation and its consultants under strict
quality assurance and quality control protocols. All borehole collars are
surveyed to within an accuracy of 0.1 metre and borehole density measurements
are routinely performed on all intersections. Down-hole surveys are carried out
on all surface drillholes by qualified personnel. Half-core assay samples are
collected by appropriately qualified staff, the remaining half-core being
retained for inspection by interested parties. All boreholes are routinely
logged in detail according to a standard procedure. Samples are prepared and are
assayed at the Anglo American Research Laboratory (renamed Anglo Research on 1
October 2006) located near Johannesburg, South Africa, which is accredited under
SANAS and ISO 17025 certified. Gold assays are performed using conventional lead
collector fire assay procedures, with an ICP-OES instrumental finish. Quality
control procedures follow industry standard protocols and include the use of
blind control samples.
Sub Nigel Project - Nigel Reef target
The November 2006 resource statement for the Nigel Reef target shows a resource
tonnage of 1,539Kt grading 4.14g/t for 205,000 contained ounces of gold in the
indicated category and 139Kt grading 2.99g/t for 13,000 contained ounces of gold
in the inferred category (Table 3). The resources were estimated using a cut-off
grade of 220cmg/t. This compares with a resource of 180,000 ounces in the
inferred category grading at 5.37 g/t gold, as stated in the audited mineral
resource statement for the Nigel Reef target prepared by SRK Consulting in
December 2005. In all cases, mineral resources have been reported in accordance
with the classification criteria of the South African Code for Reporting of
Mineral Resources and Mineral Reserves (SAMREC).
In light of the November 2006 resource statement, Aflease Gold has decided to
proceed with a pre-feasibility study on the Nigel Reef target. The study is
expected to be completed during the first quarter of 2007. The study will be
completed internally, with outside consultants used where needed.
Aflease Gold"s CEO Neal Froneman commented:
"Sub Nigel represents a real opportunity to expand the gold mining profile of
Aflease Gold in the short term. Given the excellent state of the existing
infrastructure, we could possibly begin production at Sub Nigel even earlier
than at Modder East, if our feasibility studies produce the expected positive
results."
The Sub Nigel Gold Project consists of three targets - the Nigel Reef, the
stratigraphically equivalent Main Reef, and the Erosion Channel. The Nigel Reef
target is located at the dormant Sub Nigel gold mine, while the Main Reef target
is located at the dormant Spaarwater gold mine situated immediately west of Sub
Nigel. The Erosion Channel target is an erosional feature incised into shales of
the Jeppestown Subgroup immediately below the Nigel and Main Reefs along the
boundary between the two properties. The October 2006 resource statement
includes mineral resources to a depth of 750m below surface.
Both the Sub Nigel and Spaarwater gold mines are owned as to 100% by Aflease
Gold Limited.
The Nigel/Main Reef is a small-pebble conglomerate ranging from 15cm to 65cm in
thickness. The reef is developed on a grey, banded shale footwall and is
overlain by quartzite. Contacts between the hanging and footwall lithologies are
sharp. The Erosion Channel varies between 200m and 500m in width, is some 150m
in thickness, and contains bands of quartzite, pyritic quartzite and
conglomerate fill. Gold mineralization occurs in the pyritic quartzites within
the palaeo-channel.
The Sub Nigel mine produced an estimated 15 million ounces of gold from the
Nigel Reef between 1909 and 1971. A total of 29.7 million tonnes of ore at an
average head grade of 15.7g/t were milled during this period. The 900m deep Sub
Nigel 1 Shaft on the property was recently re-commissioned and licensed and is
fully operational. The Spaarwater mine, located immediately to the west of Sub
Nigel, produced 850,000 ounces of gold from 2.56 million tonnes of ore at an
average head grade of 10.4g/t between 1947 and 1969. All the gold was produced
from the Main Reef.
Both the Nigel and Main Reefs are accessed from Sub Nigel 1 Shaft.
The table below summarizes the revised resources for the Sub Nigel Project by
category.
Table 3. November 2006 Sub Nigel resource statement
Tonnes Grade Metal Actual
(Kt) (g/t) Content increase/
(Koz) decrease in
ounces - Nov
2006 vs Dec
2005 (Koz)
Indicated
(1) Sub Nigel - 1,539 4.14 205 205
Nigel Reef
Spaarwater - Main
Reef
Erosion Channel
SubTotal Indicated 1,539 4.14 205 205
Inferred
(1) Sub Nigel - 139 2.99 13 -167
Nigel Reef
Spaarwater - Main 1,258 4.08 165 0
Reef
Erosion Channel 1,301 5.71 239 0
SubTotal Inferred 2,698 4.81 417 -167
(1) Quoted at a
cut-off of
220cmg/t
Notes:
The cut-off grade was determined using a gold price of US$620/oz and an exchange
rate of US$1:R6.50.
The mineral resources have been reported in accordance with the classification
criteria of the SAMREC Code.
Mineral resources are not mineral reserves and do not have demonstrated economic
viability.
The increase in resources at the Nigel Reef target reflected in the November
2006 resource estimate is the result of a re-evaluation of the resource using
geostatistical techniques, in contrast to the December 2005 estimate which was
based on classical statistical methodologies. Geostatistical techniques involve
the statistical treatment of spatially arranged data using semivariograms,
kriging and multivariate analysis. In addition, mined-out areas and associated
development ends were captured in digital format for the first time, as was the
historical assay database consisting of some 6,500 stretch values located along
on-reef development drives and in stoped-out areas. The stretch values were
checked against composited chip samples taken during 2006 from stope faces and
along on-reef development drives. The decrease in grade at the Nigel Reef target
is primarily a function of the higher stope width used in the November 2006
estimate - 90cm as opposed to 70cm used in earlier resource estimates.
The November 2006 resource estimate for the Nigel Reef target was prepared by
Peter Camden-Smith, M.Sc., G.D.Eng, MBL, Pr.Sci.Nat. of Camden Geoserve, and
Charles Muller, B.Sc. (Hons), Pr.Sci.Nat. of Global Geo Services, independent
geoscience consultants to Aflease Gold. Both Camden-Smith and Muller are
competent persons for the purposes of SAMREC. The resource estimation process
was managed by Warwick Bullen, M.Sc., Pr.Sci.Nat., Vice President, Geology and
Exploration, Aflease Gold and a competent person for the purposes of SAMREC. The
resources were audited by Mark Wanless of SRK Consulting.
About Aflease Gold
Aflease Gold is a South African gold resource company listed on the JSE Limited
(the Johannesburg stock exchange). The company owns the Modder East Gold
Project, currently under construction, as well as the Sub Nigel, New
Kleinfontein, Turnbridge and the Holfontein Gold Projects, all on the East Rand;
the Ventersburg Gold Project in the Free State gold field; and the Etendeka Gold
Project in Namibia. Aflease Gold was formed in January 2006 through the reverse
takeover of Sub Nigel Gold Mining Company by New Kleinfontein Mining Company, a
wholly-owned subsidiary of sxr Uranium One Inc. The company is currently owned
as to approximately 71.6% by sxr Uranium One and has a market capitalization in
excess of R1billion.
For further information, please contact:
Neal Froneman Robert van Niekerk
Chief Executive Chief Operating Officer
Aflease Gold Limited Aflease Gold Limited
Tel +27 11 482-3605 Tel + 27 11 814-4290
Cautionary Statement
This News Release includes certain "forward-looking statements" and "forward-
looking information". All statements other than statements of historical fact
included in this release including, without limitation, statements regarding
future plans and objectives of Aflease Gold are forward-looking statements (or
forward-looking information) that involve various risks and uncertainties. There
can be no assurance that such statements will prove to be accurate and actual
results and future events could differ materially from those anticipated in such
statements. Important factors could cause actual results to differ materially
from Aflease Gold"s expectations. Such factors include, among others, the actual
results of exploration activities, actual results of reclamation activities, the
estimation or realization of mineral reserves and resources, the timing and
amount of estimated future production, costs of production, capital
expenditures, costs and timing of the development of new deposits, availability
of capital required to place Aflease Gold"s properties into production,
conclusions of economic evaluations, changes in project parameters as plans
continue to be refined, future prices of gold and other commodities, possible
variations in ore grade or recovery rates, failure of plant, equipment or
processes to operate as anticipated, accidents, labour disputes and other risks
of the mining industry, delays in obtaining governmental approvals, permits or
financing or in the completion of development or construction activities,
Aflease Gold"s hedging practices, currency fluctuations, title disputes or
claims limitations on insurance coverage, Although Aflease Gold has attempted to
identify important factors that could cause actual results to differ materially,
there may be other factors that cause results not to be as anticipated,
estimated or intended.
There can be no assurance that such statements will prove to be accurate as
actual results and future events could differ materially from those anticipated
in such statements. Accordingly, readers should not place undue reliance on
forward-looking statements. Aflease Gold does not undertake to update any
forward-looking statements that are included herein, except in accordance with
applicable securities laws.
In addition, this news release uses the terms "indicated resources" and
"inferred resources" as defined in accordance with the SAMREC Code (South
African Code for Reporting of Mineral Resources and Mineral Reserves prepared by
the South African Mineral Resource Committee) (SAMREC) under the auspices of the
South African Institute of Mining and Metallurgy effective March 2000 or as
amended from time to time.
A mineral reserve is the economically mineable part of a measured or indicated
resource demonstrated by at least a preliminary feasibility study. This study
must include adequate information on mining, processing, metallurgical, economic
and other relevant factors that demonstrate at the time of reporting that
economic extraction can be justified. A mineral reserve includes diluting
materials and allows for losses that may occur when the material is mined. A
proven mineral reserve is the economically mineable part of a measured resource
for which quantity, grade or quality, densities, shape and physical
characteristics are so well established that they can be estimated with
confidence sufficient to allow the appropriate application of technical and
economic parameters to support production planning and evaluation of the
economic viability of the deposit. A probable mineral reserve is the
economically mineable part of an indicated mineral resource for which quantity,
grade or quality, densities, shape and physical characteristics can be estimated
with a level of confidence sufficient to allow the appropriate application of
technical and economic parameters to support mine planning and evaluation of the
economic viability of the deposit.
A mineral resource is a concentration or occurrence of natural, solid, inorganic
or fossilized organic material in or on the earth"s crust in such form and
quantity and of such a grade or quality that it has reasonable prospects for
economic extraction. The location, quantity, grade, geological characteristics
and continuity of a mineral resource are known, estimated or interpreted from
specific geological evidence and knowledge. A measured mineral resource is that
part of a mineral resource for which quantity, grade or quality, densities,
shape and physical characteristics can be estimated with a level of confidence
sufficient to allow the appropriate application of technical and economic
parameters to support mine planning and evaluation of the economic viability of
the deposit. The estimate is based on detailed and reliable exploration,
sampling and testing information gathered through appropriate techniques from
locations such as outcrops, trenches, pits, workings and drillholes that are
spaced closely enough to confirm both geological and grade continuity. An
indicated mineral resource is that part of a mineral resource for which
quantity, grade or quality, densities, shape and physical characteristics can be
estimated with a level of confidence sufficient to allow the appropriate
application of technical and economic parameters to support mine planning and
evaluation of the economic viability of the deposit. The estimate is based on
detailed and reliable exploration and testing information gathered through
appropriate techniques from locations such as outcrops, trenches, pits, workings
and drillholes that are spaced closely enough for geological and grade
continuity to be reasonably assumed. An inferred mineral resource is that part
of a mineral resource for which quantity and grade or quality can be estimated
on the basis of geological evidence and limited sampling and reasonably assumed,
but not verified, geological and grade continuity. The estimate is based on
limited exploration and sampling gathered through appropriate techniques from
locations such as outcrops, trenches, pits, workings and drillholes. Mineral
resources which are not mineral reserves do not have demonstrated economic
viability. Investors are cautioned not to assume that all or any part of the
mineral deposits in the measured and indicated resource categories will ever be
converted into reserves. In addition, "inferred resources" have a great amount
of uncertainty as to their existence and economic and legal feasibility. It
cannot be assumed that all or any part of an inferred mineral resource will be
ever be upgraded to a higher category. Under South African rules, estimates of
inferred mineral resources may not form the basis of feasibility or pre-
feasibility studies or economic studies except under conditions noted in the
SAMREC Code.
Investors are cautioned not to assume that all or any part of an inferred
resource exists or is economically or legally mineable. Exploration data is
acquired by the Corporation and its consultants under strict quality assurance
and quality control protocols.
No stock exchange, securities commission or other regulatory authority has
approved or disapproved the information contained herein.
Date: 04/12/2006 04:22:20 PM Produced by the JSE SENS Department
