Curtain to rise on Aflease

[] — AFLEASE Gold and Uranium Resources (Aflease), the new name for Afrikander Leases, has yet to capture the interest of the general investors notwithstanding the company’s interesting uranium potential. But it’s well placed to reverse its near devastating share price losses of 2003/2004. “A few months ago, we were not even a going concern in the eyes of the market,’ CEO Neal Froneman reflects.

Aflease had an awful year in 2004 registering a 48% decline. However, it has shored up its shareholder register with some heavyweight names, like Canada’s Sprott Asset Management and East Coast-based Eastbourne

Sprott’s John Embry is a touchstone for gold bulls the world over, while
more cynical investors will view the interest shown by Eastbourne’s Borden
Putnam – a wily customer known to spot a trend long before the rest of the
market has wiped the sleep
from its eyes – as a sign that Aflease may merit a
closer look. Putnam is considered to be the brains behind Eastbourne’s bonanza returns from Canada’s Cameco, which has gained 55% last year. Eastbourne, Cameco’s fifth-largest shareholder at about 2.4%, was still adding to its holdings as of September.

Their support will not only lend some gravitas to a company that has
suffered near-terminal loss of confidence from minority shareholders over the
past two years, but will also serve to dilute the influence of Johannesburg’s
Kebble family held through Randgold & Exploration.

Froneman says Randgold & Exploration is no longer the majority shareholder in Aflease for the first time in more than a year. The Kebble company stood to own 45% in Aflease just under a year ago but its implied position is now 22% with offshore funds, which also include Firebird, Topgold, and RAB, owning a combined 24% of the company. “Surely the Kebble discount is now gone,’ says
Froneman, unabashed.

If Froneman can turn the huge uranium deposit at Klerksdorp to account while the uranium market remains near its current levels – the highest in more than 10 years – the stock’s fortunes could change this year. Australia’s Paladin Resources, which is studying the viability of new uranium mines in Malawi and Namibia, has seen its stock gain more than eight-fold last year, though it has not the shareholding breadth of Aflease.

First things first, though. Froneman will need to raise the funding for the
new mine, which he hopes will be producing at a rate of 4 million pounds a year, for 30 years, by the end of 2006. Early estimates suggest a mine of half that size would cost around R300 million. Although he may be emboldened to go it alone, given the buoyancy of the market, perhaps he should give AngloGold, the mine’s former owners, a call. Anglo has uranium operating and marketing expertise aplenty and a hefty balance sheet. Its involvement
could catapult the project into a higher league.

Kelvin Williams, AngloGold’s marketing director, is clearly a uranium bull,
though he told Bloomberg last month the company would not expand output from its current operations. “We will keep an open mind as to what opportunities there might be,” he told the news service. The world’s number two gold producer is currently South Africa’s largest uranium producer and owns half of Nufcor, the world’s largest uranium trading shop. Williams is also on the board. Chances are Anglo might just be eager to put its foot on another source of supply in its own back yard.

Froneman is unconvinced. “We’re extremely sensitive to issuing shares at this price,’ he says. In any event, Froneman doesn’t believe funding is the primary concern for Aflease. “It’s probably not the most difficult thing for us. But the first milestone will be to prove our uranium feasible,’ he says. Feasibility study results will become known from the middle
of this year.

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