The portal at
Aflease Gold’s Modder
East operation
Johannesburg, South Africa — MININGREVIEW.COM — 26 June 2008 – Aflease Gold Limited – a growth-oriented South African gold mining and exploration company – will produce substantially less gold at its Modder East project in 2009 than the 100 000 target forecast in its bankable feasibility study.

In its latest new release published here, the company explained that the production delay had resulted from large water intersections which had necessitated full face cementation cover drilling and sealing. As a result, if the average development advance rate of the past four months was maintained going forward, the first gold pour would occur towards the end of 2009, and far less gold would be produced in 2009 than originally forecast. The gold production forecasts for Modder East have been revised to 20 000 oz for 2009, 140 000 oz for 2010, and 180 000 oz pa from 2011 onwards.

The release added that the 6.5 m diameter vertical shaft was on schedule for completion in Q4 of 2008. The pre-sinking had been completed, the sinking headgear had been erected and both the kibble and stage winder had been commissioned and licensed. The shaft had reached a depth of 61m from surface and would be 345m deep when completed.

Construction of the 100 000 tpm processing plant is expected to be completed at the end of Q1 of 2009. Ground stabilisation work has been completed and the mill and tank foundations cast. The CIL tanks are currently being erected. The major long lead items for the plant have been ordered and no major delays are anticipated, according to the release.

“Management remains vigilant in its endeavours to constantly find the best cost/benefit options, but the continuous escalations in commodity prices cannot be escaped entirely,” the news release added. “To this end, a capital cost escalation of 20% can be expected, management has accordingly revised its forecasts, and construction capital expenditure is expected to be approximately R814 million, while cash costs of production are expected to increase to about R57 000 per kg.”

“Despite the cost escalation and slower production build up, the Modder East project remains a robust, high margin project,” the release continued. The BFS, which was reviewed by SRK

Consulting in November 2007, calculated the NPV of the project at R925 million. Current economic parameters – including the increased costs – indicate an NPV of just under R1.4 billion

With a current market capitalisation of ZAR1.15 billion the company continues to have an attractive valuation, it concludes.