Afrikander Lease

Neal Froneman: CEO, Afrikander Lease
By: Alec Hogg
Posted: '06-SEP-04 06:57' GMT © Mineweb 1997-2004

MINEWEB: Neal Froneman joins us now. You’ve come out with quarterly results today. They are also your half-year results. It looks a bit better Neal, but there’s still a long way to go. You listed on Nasdaq on the American stock market. Have you had any reaction back from the American shareholders at this point?

NEAL FRONEMAN: Alec, no, we haven’t had any specific feedback or reaction from the American shareholders. But, yes, I think there’s a long way to go as you said. I think what’s important, though, in our results, is the trend, not the absolute numbers. In fact, I would go as far as to say the second quarter of operating profits is somewhat meaningless because we’ve really been cleaning up gold. So we are the first to acknowledge that the absolute numbers are nowhere near what we want them to be. I think the net loss improvements are substantial. There’s a 70% improvement on the net loss year-on-year. Comparing the same period, it is very significant. And that was our strategy, to stop the bleeding. We were bleeding to death.

MINEWEB: You’ve got a couple of gold prospects that you’re looking at, that you're developing, that will take time to come on board. But I guess the most important thing for Afrikander Lease is, are you going to survive? And you are busy doing a deal with Randgold JCI. Is that now on track, is that going to be sufficient funding for you?

NEAL FRONEMAN: Yes, Alec, contrary to the last discussion we had …

MINEWEB: You’ve had some tough discussions in this studio. I think tonight's a little easier, isn’t it?

NEAL FRONEMAN: Well, I thought it’s better that I come and sit in front of you – you don’t seem to attack me then. But jokes aside, Alec, the transaction is well on track. We released an announcement in the middle of the week saying that all the conditions precedent have been met. As I said last time, not everything was within our control. I also said with this transaction it was within our control. And I think we’ve proved that. The only outstanding issue is the general meeting which takes place on the 23rd, and the shareholders circulars have been posted.

MINEWEB: How much money are you going to be putting in the bank as a result of that?

NEAL FRONEMAN: Again, Alec, our last discussion, there was a bit of confusion. There is about R175m in total that will be raised at these sort of prices, of which R50m is a loan that gets converted, and there’s two ways of converting it.

MINEWEB: The big issue, though, as far as Aflease is concerned going into the future, for most international investors, is the uranium story. Let’s dwell a little on that, because if you take a guy sitting in the United States, he’s got many different gold shares around the world that he can invest in. But he’s getting excited about Afrikander Lease because of uranium. How significant are the deposits in your business?

NEAL FRONEMAN: They are very, very significant, and I think the way you’ve just put the question to me is the way that we’ve looked at it from a board perspective. There’s hundreds of junior gold miners. I think we’ve got decent assets. But I don’t think we had the sort of assets from a gold mining perspective that would make us significantly different to anyone of those hundred-odd junior gold miners. But where we can be very significantly different is on the uranium side. We’ve said – and the more we read and the more we understand, the more work we do – we definitely have about half of South Africa’s near-available uranium. And South Africa accounts for 10% of the near-available uranium.

MINEWEB: What’s that?

NEAL FRONEMAN: It’s a definition that the uranium producers use, and it’s not a Samrac-compliant definition. It’s uranium that could be mined fairly easily. It’s not ultra-deep, it’s not pie-in-the-sky type uranium. It’s economically viable. And South Africa accounts for 10% of what they call the world’s near-available uranium. And therefore, as a company, we sit on about 5% of the world’s near-available uranium.

MINEWEB: How long will it take, though, to bring that to account?

NEAL FRONEMAN: Again, as we work on it, we develop new ideas. Some of the better concepts that we’ve founded at Aflease, like the ability to open pit narrow reefs ..

MINEWEB: Open pit narrow reefs? In layman’s terms, what’s that?

NEAL FRONEMAN: That simply means that you can open-cast mine, from surface, narrow reefs. Most open-cast mines mine very large, wide and thick ore bodies. When it comes to narrow reefs, it’s a lot more difficult. And in the inner basin, we were mining 12 reefs. The uranium have three different reefs, an upper, middle and lower. And that expertise that’s been developed over a number of years will be the new thinking that’s applied to that deposit.

MINEWEB: It’s cheaper to mine that way than going underground?

NEAL FRONEMAN: It is cheaper. We do have to go underground. We’ve developed a concept which is called a “soft start”. So we can, with a minimum amount of capital, get our uranium project off the ground. I think the last time we spoke we were saying we needed initial capital of about R300m to get the big project off the ground. The total capital requirement for that is R1bn. For a company of our size, and the perceived risk, that would be extremely difficult to raise that sort of money. The soft-start approach – we use existing infrastructure. And remember, this is not a greenfields project, this is a brownfields project. It was mined in the past by companies like AngloGold and so on. And for the soft-start approach we require an initial capital of about R75m.

MINEWEB: It’s a long way from the R300m we were talking about before. What would drop it so?

NEAL FRONEMAN: As I’ve said, what we have come to realise is that there is a lot of existing infrastructure that can be used to start that operation.

MINEWEB: Didn’t you know about that before?

NEAL FRONEMAN: We did, but we took a mega-mine approach, in terms of a broad perspective. What has also happened, we’ve taken the open-cast concept across to the uranium. It’s in the same area. And together that has led to what we call the soft start.

MINEWEB: Neal, how long, with all of this, how long will it take before you earn you first cash out of real uranium?

NEAL FRONEMAN: It’s at least two years, Alec.

MINEWEB: And the uranium market? Is it likely to remain in an upward trend for at least two years?

NEAL FRONEMAN: It certainly is. And I think that’s one of the key fundamentals of what excites us about this. You know, uranium and its consumption in terms of nuclear power end-users is a 50-year type market. People have a 50-year view on a nuclear power station. We are in the very early phases of a bull run. There is no other known sustainable clean environmentally friendly source of energy right now. The biggest acknowledged threat to the world at the moment is the greenhouse effect, and nuclear energy doesn’t have that sort of problem associated with it.

MINEWEB: Does the Chinese government have a problem with nuclear energy, because I guess that would be key to unlocking it.

NEAL FRONEMAN: Certainly they are seen as one of the more aggressive areas of growth of nuclear energy. But I have to say, right now, as we sit here, there’s 30 new nuclear power plants under construction worldwide, and it’s not just in the Eastern bloc countries or any specific area of the world.

MINEWEB: And they all use uranium as their primary feedstock?

NEAL FRONEMAN: Yes, they do, and the only real difference is the amount of enrichment that they require, of the uranium, to make it work.

MINEWEB: And the uranium sources of supply at the moment? Is there still an oversupply?

NEAL FRONEMAN: No. And again, that underpins the fundamental changes that have occurred in the market. Only 46% of total consumption comes from new supply at the moment. In other words, right now as we sit here, 54% is coming from other sources that are not new supply.

MINEWEB: Meaning what? Recycled?

NEAL FRONEMAN: Some of it is recycled. But that’s a very small component. The majority comes from the stockpiles that were built up in the sort of Cold War era, and the other major source of uranium at the moment that makes up the shortfall is the conversion of weapons-grade uranium to commercial-grade uranium. And that’s an agreement that the United States has with the old Soviet Union.

MINEWEB: So Neal, once a power plant starts, and there are 30 of them that are in the stage of construction at the moment, and they use the uranium, then the uranium is used – then you need new uranium to replenish it?

NEAL FRONEMAN: In most cases that holds true. What the end users have done, they’ve also become more efficient. And they use more of the uranium that they’ve got. So some of the shortfall is also being met from recycling some of that uranium. But essentially, once you’ve consumed the atomically active U235, it’s consumed.

MINEWEB: And what is the likely cost to you to bring the uranium to account, from your side, in two years’ time, and what is the market price at the moment?

NEAL FRONEMAN: Our break-even cost on the soft-start approach is $14 a pound. That takes into account the additional revenue we get from gold, because we are very fortunate. In our case, gold will be a by-product. The current spot price of uranium is just over $19 a pound, $19.25 a pound. But you can enter into long-term contracts right now at $23 a pound. So it looks very good and it’s a rising market.

MINEWEB: When might you pull the trigger on your investment there?

NEAL FRONEMAN: Well, certainly the board has approved R15m, and part of the money that we raise now is earmarked for that. And that is to complete a pre-feasibility. I have to say that the numbers that we talk about here are preliminary numbers. We need to do the appropriate technical studies. So it has a health warning. But right now, we are very comfortable with what we are saying.

MINEWEB: And you are likely to be a uranium company in future, rather than a gold company?

NEAL FRONEMAN: Alec, you know, if I say that then everyone thinks we are going to discard our gold assets. And that’s not true. We’ve got good gold assets. They can make us good money once we bring them into production. But, as I said right in the beginning, it would be illogical for us to remain a junior gold miner when we have a resource like this.

MINEWEB: That was Neal Froneman, chief executive officer of Afrikander Lease

http://www.world-nuclear.org/nb/nb04/pdf/nb0422.pdf

Alte Nachricht, jedoch ist die Homepage interessant fuer weitere Infos.

Reserves and Resources
Aflease has adopted the SAMREC code of internationally recognised procedures and standards for reporting mineral resources and reserves in South Africa.

The Mineral Resource and Mineral Reserve statements tabulated below were prepared by Aflease and audited by Steffen, Robertson and Kirsten (South Africa) (Pty) Ltd (SRK). The Competent Person responsible for the review of the Mineral Reserves is Mr H G Waldeck, Pr Eng (ECSA) whi is an employee of SRK. The Competent Person responsible for the review of the Mineral Resources is Dr M Harley PrSciNat (SACNASP) who is an employee of SRK.

The Resource figures shown are inclusive of the Reserves. The open pit Inner Basin resource was totally discounted from this report on the back of poor gold yield and the temporary suspension of open pit activity. Exclusions from the Mineral Resources is due to uncertainties in the available information and the geological model but are considered as exploration targets. The Big Pebble reef is not included in the Mineral Resources due to the paucity of information available and economic factors.

At present, the Dominion Reef (Uranium) packages are not included in the Mineral Resources due to insufficient information and uncertainty in economic factors, but remain an exploration target.

Before the Outer Basin reefs are assessed for conversion to Reserves further modelling will be carried out to verify the Resource base.

Resources are quoted in-situ at a cut-off grade over a realistic mining width.
Mineral reserves are quoted inclusive of diluting material, as delivered to the mill.

Bonanza Project - Audited Mineral Resource and Reserve Statement
Mineral Reserves Tonnage (kt) Grade (g/t) Gold (koz) Mineral Resources Tonnage (kt) Grade (g/t) Gold (koz)
Probable Indicated
Bonanza Upper Reef 0 Bonanza Upper Reef 0
Bonanza Intermediate Reef 300 1.6 15 Bonanza Intermediate Reef 792 2.4 60
Bonanza Lower Reef 747 4.3 104 Bonanza Lower Reef 795 5.6 143
Bonanza West (Upper & Lower) 67 3.9 8 Bonanza West (Upper & Lower) 72 4.6 11
Total Reserves 1,114 3.6 128 Sub Total 1,659 4.0 213
Inferred in LoM Inferred
Bonanza Upper Reef 406 2.6 34 Bonanza Upper Reef 795 1.9 48
Bonanza Intermediate Reef 0 Bonanza Intermediate Reef 0
Bonanza Lower Reef 0 Bonanza Lower Reef 0
Bonanza West (Upper & Lower) 0 Bonanza West (Upper & Lower) 0
Sub Total 406 2.6 34 Sub Total 795 1.9 48
Total in LoM Plan 1,520 3.3 162 Total Resources 2,454 3.3 261
Modder East Project - Audited Mineral Resource and Reserve Statement
Mineral Reserves Tonnage
(kt) Grade
(g/t) Gold
(koz) Mineral Resources Tonnage
(kt) Grade
(g/t) Gold
(koz)
Probable Indicated
Black Reef 4,615 5.2 772 Black Reef 4,611 6.5 964
Total Reserves 4,615 5.2 772 Sub Total 4,611 6.5 964
Inferred in LoM Inferred
Black Reef 0 Black Reef 0
Sub Total 0 0.0 0 Sub Total 0 0.0 0
Total in LoM Plan 4,615 5.2 772 Total Resources 4,611 6.5 964
Kleinfontein & Turnbridge - Audited Mineral Resource Statement
Mineral Resources Tonnage (kt) Grade (g/t) Gold (koz)
Indicated
Kleinfontein - Main Reef 0
Turnbridge - Main Reef 1,143 4.8 176
Sub Total 1,143 4.8 176
Inferred
Kleinfontein - Main Reef 2,466 6.9 549
Turnbridge - Main Reef 657 4.9 104
Sub Total 3,123 6.5 653
Total Resources 4,266 6.0 829
Outer Basin - Audited Mineral Resource Statement
Mineral Resources Tonnage (kt) Grade (g/t) Gold (koz)
Indicated
Lower / Magazine Reef 712 2.6 59
Middle Reef 109 3.6 13
Upper Reef 2,661 2.7 233
5 Reef 0.0
Sub Total 3,482 2.7 305
Inferred
Lower / Magazine Reef 0.0
Middle Reef 654 2.8 59
Upper Reef 4,463 2.7 382
5 Reef 20 3.5 2
Sub Total 5,137 2.7 444
Total Resources 8,619 2.7 748
Total Aflease - Audited Mineral Resource and Reserve Statement
Mineral Reserves Tonnage (kt) Grade (g/t) Gold (koz) Mineral Resources Tonnage (kt) Grade (g/t) Gold (koz)
Probable Indicated
Bonanza Reefs 1,114 3.6 128 Bonanza Reefs 1,659 4.0 213
Modder East Black Reef 4,615 5.2 772 Modder East Black Reef 4,611 6.5 964
Turnbridge and Kleinfontein 0 Turnbridge and Kleinfontein 1,143 4.8 176
Inner Basin 0 Inner Basin 0 0.0 0
Outer Basin 0 Outer Basin 3,482 2.7 305
Total Reserves 5,729 4.9 900 Sub Total 10,895 4.7 1,658
Inferred in LoM Inferred
Bonanza Reefs 406 2.6 34 Bonanza Reefs 795 1.9 48
Modder East Black Reef 0 Modder East Black Reef 0
Turnbridge and Kleinfontein 0 Turnbridge and Kleinfontein 3,123 6.5 653
Inner Basin 0 Inner Basin 0 0.0 0
Outer Basin 0 Outer Basin 5,137 2.7 444
Sub Total 406 2.6 34 Sub Total 9,055 3.9 1,144
Total in LoM Plan 6,135 4.7 934 Total Resources 19,949 4.4 2,802

Fuer die, die es alles wissen wollen:

http://www.aflease.com/announcements/04-09-01_Circular.pdf

Kann die Praesentation auf der Homepage empfehlen.

http://www.aflease.com/

Bei Presentations muesst Ihr die Zip Datei

Interims update 2004 09

runterladen. Sehr informativ.

bin zwar nicht gogh, aber gebe auch mal meine Meinung zum Besten:

Interessant ist Aflease aufgrund der riesigen Uranvorkommen. Glaube sind etwa 5 % der weltweiten Vorkommen. Vorteil bei Aflease: Die Foerderanlagen stehen zum Teil schon und das U ran kann relativ leicht gefoerdert werden. Im vergleich zu den anderen Uranaktien ist da noch nichts passiert. Jedoch sollte man ein wenig Geduld mitbringen (2 Jahre).

Gruesse, Newtechxl

@ gogh

Kannst Du mir ein wenig mehr ueber die Goldaktivitaeten sagen ?
Hatte das Teil hauptsaechlich wegen des Urans gekauft. Wird im Moment gefoerdert ? Wieviele Minen und Reserven haben sie ?

1. AFLEASE - Gold and Uranium Producer of Promise
The first is a simple gold/uranium play, but with the emphasis on uranium. As a South African, the writer spent part of his career in finance as a stockbroker in Johannesburg, the other as a bond trader in Cape Town. But his most exciting four year stint took place in between the two moves, from 1983 to 1987, whilst Executive Chairman of junior gold miner Wit Nigel.

Half way through the writer's stormy tenure as Chairman, the company made a public offer for a minimum 25% stake in a gold-uranium producer called AFLEASE, then controlled 65% by Anglo's Vaal Reefs gold mine. Today that company, with a much-expanded capital base, sits on a uranium resource estimated by Anglo to amount to 330m lbs. That would make it approximately 60% the size of Canadian heavyweight CAMECO. AFLEASE also has two small, but proven shallow gold reserves - and a potentially much larger gold resource which has yet to be properly drilled but could ultimately contain in excess of 10m ounces of gold. A 'reserve' is a deposit which has been properly established. A resource is far less certain.

In total Aflease controls approximately 60% of South Africa's easily- available uranium. Grades should initially average close to 1kg a ton (2,2 lbs). A third of projected uranium revenue will come from gold which co-exists in the same deposit, at an average recovered grade of 1gm/ton. Much of the resource lies at or close to surface. The other three gold deposits are quite separate and have nothing to do with the above gold as a by-product of uranium.

The company recently raised R200m ($33m) via a share swap with Randgold & Exploration. A portion of the funds will be used to complete a 'pre-feasibility study' of the uranium deposit. It should take 6-9 months from start to finish. In the late 70's and early 80's the giant Anglo American Corporation sank 240 boreholes on the uranium prospect. These ranged from surface down to 2000 meters. To put it bluntly, the deposit has been drilled as thoroughly as a Swiss 'Emmentaler' cheese.

Seventy of the cores are still available for re-assaying to enable the information to become SAMREC compliant. In the old days of South African mining, exploration of the 'Main Gold Reef' - or even the 'Merensky' Platinum reef - was relatively predictable. Less than a dozen good borehole results were all one needed to prove up a viable mine because it was simply an 'extension' of an existing reef. Imagine having 240 drill holes in a single large deposit! All thanks to Anglo thoroughness.

Subject to the pre-feasibility study producing no unpleasant surprises, the company will approach one of a handful of potential customers with a view to establishing an initial mega mine capable of producing up to 6m lbs a year. 2m would come from a 'soft start' short-term opencast proposition, taking a year or so at most to bring on stream. The mega mine would take four years to establish and would have a minimum 25-year life.

Most of the initial finance for the above mine would come from the customer. Mining and treatment costs are expected to average less than $15/lb. If the uranium price is trading over $30/lb by August next year - currently $20/lb - we have a very sound proposition on our hands. If the spot price hits our more realistic target of $45/lb, we have ourselves a veritable humdinger of a project - despite our long-term bullish projections for the Rand, currently trading above R6/$.

We enclose a far more detailed analysis in the main body of this report, but it is only available to SUBSCRIBERS. The Company's CEO is currently on an overseas 'roadshow,' visiting potential investors in the UK, Switzerland, Canada, the US, and Japan. Japanese gold group Jipangu already holds 20m shares and has recently appointed a second director to the Board.

In the long term, should the pre-feasibility pan out as hoped, and should the market warrant, AFLEASE could one day open THREE mega mines producing a total of 12m lbs a year. This would place them in the same league as CAMECO with their current production of 20m. Although AFLEASE has nowhere near the high grades of CAMECO, it will operate in a far kinder environment. When account is taken of its by-product revenue from gold, the company will enjoy surprisingly low costs in relation to it's the price of uranium.

The company has a present issued capital of less than 325million shares. The ruling price at time of writing was R2,10/share equivalent to US 35cents. We believe that at around R2,50 ( US 40cents) - it would be possible to pick up between 20m and 30m shares in sizeable blocks. The total investment would amount to less than $15m. Should any of our readers be interested, they may contact us via our web site, http://www.investmentindicators.com.

On July 27 of this year, we recommended the stock at R1, (US 16 cents) in a special report entitled: ENERGY UNLIMITED - AFLEASE and URANIUM. It has since doubled off a low base. We believe that by July of next year, with the 'pre-feasibility' complete and uranium at $30, the shares could be trading at R7 ($1,16). By the end of next year, 14 months down the line, with spot uranium probably up at $45/lb and gold at $600 an ounce, these shares could well be trading between five and six times current levels. That would put them between R10 and R12/share, equivalent to US $1,80 each.

Aflease places 14.745m in shares for cash

--------------------------------------------------------------------------------

Mining holding company Afrikander Lease (Aflease, AFL) on Monday announced that it had placed a further 14.745 million shares for cash transactions.

A total of 27.720 million new Aflease ordinary shares of 2 cents per share have been issued at an average price of 1.74 rand per share, which equates to a 0.56% discount to the weighted average traded price of Aflease shares on the JSE Securities Exchange South Africa (JSE) for the 30 business days prior to the date on which the agreements were reached, Aflease said in a statement.

The cash issue constitutes 12.91% of the issued share capital of Aflease prior to such issue, as calculated from 28 June, 2004, the date the general authority was passed.

The new Aflease shares will rank pari passu with the existing issued shares of Aflease.

Application has been made to the JSE for the listing of the new Aflease shares with effect from 10 December, 2004.

As a result of the Aflease board approving a change in scope of the uranium feasibility study, the costs thereof increased from 15 million rand to 21 million rand.

The change in scope is necessary to ensure that production can commence from the end of 2006, Aflease said in a statement.

The final green light for the project will still be subject to a successful outcome of the phase 1 feasibility study.

The board further approved the recommencing of exploration at Modder East, the Bonanza Basin and at the Afrikander gold deposits at which operations were
suspended in December 2003.

To fund the increased cash flows the company has entered into a number of private share placements. Aflease is pleased to announce that it has placed shares with Sprott Asset Management of Canada.

Sprott Asset Management has acquired 3.8% of Aflease through an investment of 21.9 million rand (US$3.7 million).

Earlier private share placements have also taken place in Europe and the US.

Aflease is pleased to welcome Sprott Asset Management (Canada), RAB Capital (United Kingdom), Midas Natural Resources (United Kingdom) and Firebird Global Fund (US) to the group's growing international shareholder base, the group said.
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