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Strategic update

Strategic update. January 2005. A new lease of life for Aflease. Presentation overview. Corporate issues The uranium market The Aflease uranium project The Aflease gold projects. A new lease of life for Aflease. The executive team. Neal Froneman (44) CEO Pr Eng

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Strategic update

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  1. Strategic update January 2005 A new lease of life for Aflease

  2. Presentation overview • Corporate issues • The uranium market • The Aflease uranium project • The Aflease gold projects A new lease of life for Aflease

  3. The executive team Neal Froneman (44) CEO Pr Eng • 23 Years Mining Experience • Executive positions with Goldfields, Harmony, JCI Jean Nortier (36) CFO CA (SA) • Substantial board and international corporate finance experience Bruce Jones (47) Technical Director Pr Eng • 29 Years Mining Experience • Executive positions with Gold Fields & Merelani Mining Norman Schwab (44) GM Operations BSc Mining Eng • 21 Years Mining Experience • Executive manager Anglovaal • Target Mine project leader Clear production and project focus

  4. JOHANNESBURG East Rand Central Rand West Rand CARLETONVILLE Evander HEIDELBERG West Wits VEREENIGING POTCHEFSTROOM KLERKSDORP VREDEFORT Klerksdorp BOTHAVILLE N KROONSTAD Free State WELKOM 0 50 100km The Aflease asset base Modder East Gold Operations The Aflease Uranium Operations Aflease is positioned as a shallow, low risk mining operator

  5. Aflease resource & reserve statement Audited Reserves and Resources Declared at R85 000/kgUranium Resource Cut Off 0.25 kg/t Aflease owns high quality gold and uranium reserves

  6. The Aflease uranium resource • Previous mining history at Dominion and Rietkuil • Orebody data (+250 boreholes, 46 000 data points from previous mining, 3D seismic survey) • AngloGold information is not SAMREC compliant • Information as presented was summarized by Dr Kingsley in February 2004 • Further exploration will be required to up-grade and extend portions of the resource This is not a greenfields project

  7. The Aflease uranium resource in context Source: OEDC Nuclear Energy Agency & IAEA 1999 & 2001 Aflease accounts for more than 50% of South Africa’s uranium resource

  8. Australian resource comparison Source: UIC Australia’s Uranium A world class uranium resource!

  9. Canadian resource comparison Source: UEX Corporation 2003 A world class uranium resource!

  10. The Aflease uranium strategy • To assess the project in a professional and structured manner • To incorporate Aflease’s ability to open cast and heap leach multiple, narrow reef ore bodies • To maximise the use of existing plant and infrastructure • To formalise relationships with partners to ensure access to the appropriate skills base and finance • To create a focused uranium company The first step is to complete a feasibility study

  11. Creating focus Step 1 On the 17th of January 2005 the name change was unanimously approved by shareholders  Step 2 Create a uranium brand and divisionalise the business along commodity lines Step 3 Create critical mass and maximise value for the pure gold business. The logical end point is separate listed entities No more bull!

  12. Aflease “pure gold” assets (Modder East) • Sell the pure gold assets for cash (this is not a fire sale) or • Merge the pure gold assets into another listed gold vehicle or • Build a gold business with critical mass Aflease will always have an association with gold through its by products.

  13. Relative gold price trends Temporary Closure of Operations Temporary Closure of Operations Temporary Closure of Operations Positioning for a Strong Rand Strategy Positioning for a Strong Rand Strategy Positioning for a Strong Rand Strategy 6% SA Inflation factor applied to the ZAR gold price

  14. The Aflease action plan – positioned for a strong Rand! • Restructure the existing operations • Expedite the development of our high margin assets • Bonanza • Modder East • Dominium Uranium • Continue with focused exploration • Acquire new high margin assets Every Rand spent is adding value! Aflease is incurring zero, nothing , naught, nil operating losses

  15. Shareholder profile Offshore shareholders now exceed 65%

  16. Relative Share Price Performance Temporary Closure of Operations Strategically well positioned? Capital Raising Uncertainty Temporary Closure of Operations Capital Raising Uncertainty Relative share prices from the top of the gold market (28/5/2002)

  17. Funding requirements • Aflease is fully funded to complete; • The Bonanza South project • The extended uranium feasibility study • The Modder East feasibility study (including the resource drilling) • An estimated $75m - $100m is required for phase 1 of the Dominion uranium project • 20% is required in Q3 2005 • 20% is required in Q2 2006 • 60% is required in Q3 2006 New shareholders have indicated their desire to be part of any capital raising

  18. Randgold investment • Aflease still holds about 6m Randgold shares (10%) • Randgold holds more than 30% of Randgold Resources • Other Randgold listed investments are Harmony, DRD, Angloplats and Aflease • Randgold’s NAV is R27 per share • Randgold is trading at a significant discount Source: Randgold Interim Report 16 Sept 2004 Aflease will only liquidate its investment at appropriate value

  19. The International Uranium Market A new lease of life for Aflease

  20. Western World uranium supply and demand Price Demand Primary Production Source: Nufcor International Limited • A new lease of life for Aflease

  21. World nuclear energy forecast Source: WNA 2003 • A new lease of life for Aflease

  22. World uranium requirements Source: International Nuclear Inc 2005 • A new lease of life for Aflease

  23. Historical uranium production and consumption Source: WNA 2003 • A new lease of life for Aflease

  24. World secondary uranium supply Source: International Nuclear Inc 2005 • A new lease of life for Aflease

  25. Scheduled world uranium production Source: International Nuclear Inc 2005 • A new lease of life for Aflease

  26. World uranium supply and demand Source: International Nuclear Inc 2005 • A new lease of life for Aflease

  27. The uranium supply gap! Source: International Nuclear Inc 2005 • A new lease of life for Aflease

  28. Recent uranium price trends Source: International Nuclear Inc 2005 • A new lease of life for Aflease

  29. Uranium resource sensitivity Source: Fresh Fuel Volume 21 No 769 A 100% increase in the price results in a 35% increase in international uranium resources

  30. The uranium market in relation to Aflease • The market could easily absorb an additional 11 million lbs of U3O8 per annum from South Africa* • Utilities will pay a premium to diversify supply • Structural changes in the supply cycle opens unique opportunities for obtaining funding from end users * Nufcor International Limited Very positive supply and demand fundamentals

  31. The Dominion uranium project update A new lease of life for Aflease

  32. Seismic survey model Rietkuil Mine Dominion Mine This ore body structure is well understood

  33. Initial SAMREC conversion focus area - Rietkuil • A number of new entrants to the uranium market have made it their business to own lbs in the ground and have no intention of ever producing uranium • Aflease’s focus is to increase the confidence in the areas where mining will take place in the shorter term (blue area) • The initial SAMREC conversion process has delineated 34 years of equivalent production Red = Measured Yellow = Indicated Blue = Inferred White = OOR Our key objective is to delineate ore reserves for mining

  34. Initial SAMREC compliant uranium resource *OOR information is based on the AngloGold inferred resourceUranium Resource Cut Off 0.35 kg/t Gold and uranium grades have increased by 13% and 12% respectively

  35. Resource up-grade • In-fill drilling to enable detailed open-pit & underground mine design • Drill to delineate identified payshoots • Other geological & geostatistical investigations to: • Determine geological domains • Establish grade distributions • Increase confidence in grade estimates & mine planning • Drill extension blocks to add to resource statement Our key objective is to delineate ore reserves for mining

  36. 5 year target for the Rietkuil resource upgrade 20% Measured 30% Indicated 50% Inferred Red = Measured Yellow = Indicated Blue = Inferred Our key objective is to delineate ore reserves for mining

  37. The feasibility study • Preliminary evaluation was based on: • A “soft start” at 100 000 TPM throughput with a life of 6 years • A “mega mine” of 200 000 TPM throughput with a life of a further 14 years • The feasibility indicates sufficient near surface resources for a production rate of 200 000 TPM with a life of 10 years (Phase 1) • To ensure sustainable production Vertical shafts (Phase 2) will be required by year 9 • The feasibility study is now focused on Phase 1 The first step is to complete a feasibility study

  38. Rietkuil Mining Area Decline 2 Area Decline 1 Area Rietkuil Mine The first step is to complete a feasibility study

  39. Rietkuil Mine Incline Shaft & Decline Proposed Decline Mining Levels Existing Incline Shaft Raise Lines The first step is to complete a feasibility study

  40. Dominion Mining Area Decline 3 Area Decline 4 Area The first step is to complete a feasibility study

  41. Decline 4 Proposed Decline Mining Levels Raise Lines The first step is to complete a feasibility study

  42. ROM Production Profile The first step is to complete a feasibility study

  43. Production profiles The first step is to complete a feasibility study

  44. Top 10 uranium companies Source – World Nuclear Association, 2003 A world class uranium project

  45. Break even operating costs Gold as a by-product enhances the project parameters

  46. Uranium project value Exchange Rate - R6.5/$Discount Factor – 10% The rare earth elements have not been included in the valuations

  47. Value analysis – code compliant lbs Source – Haywood Securities October 2004 This would value Aflease at $244 million or R4.25/share

  48. Value analysis – non compliant lbs * Excluded from the analysis due to operating income from other sources Source – Haywood Securities October 2004 This would value Aflease at $299 million or R5.21/share

  49. The Aflease uranium strategy • To assess the project in a professional and structured manner • To incorporate Aflease’s ability to open cast and heap leach multiple, narrow reef ore bodies • To maximise the use of existing plant and infrastructure • To formalise relationships with partners to ensure access to the appropriate skills base and finance • To create a focused uranium company The first step is to complete a feasibility study

  50. Mine design, process engineering, marketing and distribution Nufcor International Limited Discussions with Eastern and Western distributors and end users is progressing well

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