Neal Froneman, CEO Aflease Gold
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» Aflease not waiting for R&E
» Uranium One may quit Aflease Gold
» Aflease Gold weighs a second gold mine
» A new Johannesburg gold mine
» Aflease Gold clears feasibility hurdle
» Afgold Nasdaq exposure for new mine

» JSE:AFLEASE GOLD LIMITED:
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Uranium One to swell Aflease Gold asset base
Allan Seccombe
Posted: Wed, 27 Jun 2007

[miningmx.com] -- Aflease Gold will acquire a host of gold assets from its largest shareholder Uranium One as it moves towards becoming a standalone company with a North American listing, said Neal Froneman, who will step down as Afgold CEO before the end of the year.

JSE-listed Aflease Gold is likely to be a gold producer from mid-2008 from its Sub-Nigel mine, which it took acquired after taking over a company with the same name in early 2006.

Froneman is also the chief executive of TSX and JSE-listed Uranium One, the world’s second-largest public uranium company. There are a number of gold assets in the uranium group, particularly after its spate of acquisitions, which are non core and will be disposed of.
more critical mass using Uranium One assets
“We will provide Aflease Gold with more critical mass using the assets in Uranium One,” Froneman told Miningmx in an interview.

“As Uranium One, we have acquired the assets we want and I don’t think you should look forward to more acquisitions in Uranium One until we’ve delivered three mines into production in the next nine months. You will see us disposing of some of our assets,” he said.

The latest Uranium One purchase of Energy Metals Corp. has brought in gold assets in Nevada and Wyoming to add to the Weltevreden gold property and a number of others in South Africa.

Golden Predator Mines is a wholly owned subsidiary of Energy Metals and it owns exploration plays at Agate near Orovada, Humboldt County, Nevada and Lewiston in Fremont County, Wyoming.

Uranium One will know in the next three months how it will deal with the Energy Metal gold assets. This could entail an IPO, putting them into Aflease Gold or reversing Aflease Gold into a North American listed company and then putting the Energy Metal gold assets into that vehicle.

Froneman and chief financial officer Jean Nortier will both leave Aflease Gold to focus on Uranium One, which has a R50bn market capitalisation. Froneman explained that despite holding 68% of Aflease Gold, the company made up just one percent of Uranium One’s market capitalisation.

“We have identified a possible new CEO and we are in discussions,” Froneman said. “We won’t just abandon Aflease Gold, but want it to be more of a hand over. We have been preparing Aflease Gold to be a stand alone company.”

Uranium One has a strategy of slowly exiting Aflease Gold by not following its rights in share issues and will further diminish its stake in the future as the gold company makes acquisitions or raises growth capital.

‘We want to raise its capital markets profile,” Froneman said. He declined to say where the company might be listed, but it would be fair to speculate Toronto, a now all too familiar stomping ground for Froneman, would be the bourse of choice.

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Aflease Gold will need to raise about R200m in the next two years to develop its South African assets. This could be through debt or an equity placement.

In South Africa, Aflease Gold will become a gold producer in the middle of 2008 from its Sub-Nigel mine on the East Rand. There is sound infrastructure at the mine and capital investment will be a relatively low R75m. The mine will have steady state output of 30,000 oz/year.

Aflease Gold will build a R70m, 30,000 tonnes/month gold processing plant on site, quashing any speculation of a tie up between itself and Pamodzi Gold, an empowerment group, which recently acquired Bema’s Petrex operations.

Plenty of suitors have come knocking at Aflease Gold’s door, said Froneman, but he declined to say whether the company would be sold any time soon. He did, however, unequivocally rule out a tie up with Pamodzi Gold.

The other company which has a similar model to that of Aflease Gold of building shallow, low technical risk mines is TSX and JSE-listed Great Basin Gold. Froneman would not be drawn on who Aflease Gold was talking to.

Aflease Gold’s flagship Modder East mine is on track to come into production in the third quarter of 2009. It will have steady state output of 110,000 oz/year.

The third major South African asset within Aflease Gold is an exploration property near Ventersburg in the Free State province near Harmony Gold’s operations in Virginia.

An advanced exploration programme is underway at the site to bring resources into code compliance. A pre-feasibility study could start there in a year.

“There is definitely a mine there. It could become our flagship project,” Froneman said. There are an estimated six million ounces of gold starting from 700 metres below surface. The project was drilled by Gold Fields and modelling of the resource has started using the data.