Gold Starts Flowing to Pay for Uranium Project

JOHANNESBURG (Business Day) -- Gold and uranium mining junior Aflease has announced the pouring its first gold at its developed Bonanza South mine near Klerksdorp.

Aflease said the pour signalled a "new era" for the company, which ceased gold production at Bonanza at the end of 2003 due to the strengthening rand.

"We have undergone 18 months of transformation and reconstruction, a necessary but tough process," said Aflease Chief Executive Neal Froneman in a statement.

"From today, we can say goodbye to our status as a development company, and can move forward once again as a mining company," he added.

"We seem to have called the rand very well, as the timing of our 2003 closure was in the early phases of rand strength and our commencement of production comes in what appears to be the early phase of rand weakness," he stated.

"Going forward, we will have a strategy of acquiring quality, shallow-level deposits to add to our portfolio. We will be acquisitive, but we will not overpay to acquire new resources," Froneman said.

Aflease also has its Dominion uranium project adjacent to Bonanza, which would benefit from the experience of successfully bringing the gold mine back into production.

The first uranium is due to be mined early in 2007.

Aflease recently announced an updated audited reserves and resources exercise, which resulted in the reserves and resources of Bonanza being substantially increased to 413 000 troy ounces of reserves at Bonanza South, a 155 percent increase over 2003, at an average grade of 5.5 gram per ton.

As well as gold, Bonanza has uranium resources. As a result of the updated data, a new mine plan is being compiled, and this will be announced once it has been completed.

"In the past month or so, we have seen an encouraging boost in the rand gold price, and while one can never be 100 percent certain of future trends, we are confident that this is now a much more optimal environment for Bonanza to be brought back on line," said Froneman.

"This is the first of three high margin assets to be brought into production - with the Dominion mine and our Modder East property being the others in our current project pipeline," he added.

"While Bonanza is important, its success will not make or break Aflease. We have a strategy of developing a focused uranium vehicle and a portfolio of gold assets, which can be spun into a separate vehicle once it can stand on its own," Froneman said.