Neal Froneman, CEO Aflease Gold
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» Aflease plots 500,000 oz gold strategy
» Uranium One to swell Aflease Gold asset base
» Uranium One may quit Aflease Gold

» JSE:AFLEASE GOLD LIMITED:
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Mvelaphanda buys into Aflease Gold
Brendan Ryan
Posted: Fri, 04 Apr 2008

[miningmx.com] -- Mvelaphanda Holdings (Mvela) is part of the consortium buying control of Aflease Gold (Afgold) from Uranium One for US$89m.

That was confirmed to Miningmx by Mvela CEO Mark Willcox who described Afgold’s developing Modder East mine as “ a very attractive asset.”

Mvela is part of a consortium led by a fund called African Global Capital which is expected to make an announcement on the deal later today.

Market sources claim Afgold CEO Neal Froneman is also part of the consortium taking up the controlling stake in Afgold.

Froneman resigned abruptly from Uranium One in late February saying he would concentrate on running Afgold. As of end-December he held just a 0,03% stake in Afgold.

Market sources say Froneman approached Gold Fields – which holds a 4% stake in Afgold – looking for an option to buy that stake. A Gold Fields spokesman denied this and said the group still owned its Afgold shares.

Froneman did not return calls made by Miningmx attempting to confirm his involvement in the consortium.

There was previously a commitment by Mvela to offer any mining opportunities it found to resources arm Mvelaphanda Resources. According to Pine Pienaar, CEO of Mvelaphanda Resources, that’s no longer the case.

“That agreement lapsed in October last year. We are not involved in any way with Afgold, “ Pienaar commented.

Uranium One announced the sale of its Afgold stake this week in two tranches with an initial 152,2m shares – equivalent to 29% of the company – being sold for $40m.

That avoids an offer to Afgold minorities until the buyer exercises an option over the second tranche of 186,8m shares (35,6%) at a cost of about $49m.

According to Uranium One, “once the option is exercised, the purchase and sale of the shares in Aflease Gold will be required to comply with the provisions of the Securities Regulation Code of the Securities Regulation Panel of South Africa relating to a compulsory offer to the other shareholders of Aflease Gold.”

Uranium One vice president for investor relations – Chris Sattler – refused to identify the purchaser of the Afgold shares saying there was a confidentiality agreement in place and that there was no requirement for Uranium One to do so anyway.

Afgold chairman Sandile Zungu commented; “I do not know who Uranium One has sold its Afgold stake to.”

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Other substantial shareholders in Afgold include Investec with 6%, Gold Fields with 4,2% and Cape Town-based financial institution Trinity Holdings with around 5%. Gold Fields got its stake when Afgold took over the former Sub Nigel in which Gold Fields was a substantial minority shareholder.

Trinity has long been a supporter of Froneman. Trinity MD Quinton George said he did not know who was buying control of Afgold and added Trinity was not involved in the deal.

But he welcomed the sale by Uranium One and he fully backed Froneman to be CEO of Afgold as well as the appointment of former Sallies CEO Izak Marais as COO.

George is still fully supportive of Froneman despite the meltdown in the share price at Uranium One over the past year during which Trinity sold down its stake in the troubled company by about 75%.

“We are bullish on Afgold. We think Neal will be far better at running Afgold than he was at Uranium One and we think it will be refreshing for Afgold to belong to an owner that believes in the company’s prospects.

“You have to a bit forgiving here. Neal bit off a lot more than he could chew at Uranium One. He had a lot of balls in the air at the same time and he dropped a couple of them trying to run a business spread around the world.

“At Afgold he will be totally focussed on running an operation close to home and I think he’s perfect for the job because he’s obviously going to put his guts into it.”