Update on AFLUY.PK...can't let our USEG steal all the thunder!
Aflease to oust JCI
By: Julius Cobbett
Posted: '17-MAR-05 11:43' GMT © Mineweb 1997-2004
JOHANNESBURG (Mineweb.com) -- The event almost got drowned in the hype of Thursday’s record futures closeout. But JCI, one of the oldest listed companies on the JSE Securities Exchange, is to lose its prestigious position on the resources top-twenty index.
To add insult to JCI’s injury, the position will be lost to a gold-and-uranium company 15 times JCI’s junior according to revenue.
Aflease has for many years been a modest gold producer – even by junior gold-mining standards. But one should not underestimate what a name change can do for a company’s market cap.
In September 2004, CEO Neil Froneman announced that Aflease’s fortune was not going to be made out of gold. The recent doubling of the rand’s value against most major currencies meant that many South African gold producers were facing the prospect of bankruptcy.
Froneman saw that greater profit margins lay in radioactive uranium – a metal which his mines have in abundance. Eyeing opportunity, he gave shareholders bang for their buck by doubling the length of his company’s name. The Afrikander Lease was converted into Aflease Gold and Uranium Resources Limited. The company geared its focus towards uranium production, and was in the fortunate position of having gold as a “byproduct”.
It appears the decision was well timed. Just months later, the inaugural Uranium Mining Conference was held in London. Dustin J. Garrow, President of International Nuclear Inc, contended that the uranium market was going to be production driven once inventories dry up. According to Garrow, once this happened, a price of $30/pound for U308 uranium would not be unreasonable.
The rest – as they say – is history. Aflease attracted several foreign investors; its share price more than doubled in less than two months.
But while Aflease shareholders are smiling, its recent phenomenal rise in market cap will come as a bitter pill to swallow for JCI. On Thursday, one of the largest ever futures closeouts brings with it a revision of the JSE’s indices. Aflease, whose market cap is now double that of JCI, is almost certain to boot its more mature peer out of the Resi 20 index. The index constituents will be changed on Friday evening.
As if being relegated to the hoi polloi that inhabit the lower echelon of the resources index is not enough, it appears that JCI is struggling to find the cash to pay the R37-m it owes to DRDGold. To make matters worse, DRD is not taking the late payment lying down. Ilja Graulich, DRD’s spokesperson, says that the company’s lawyers are filing for an application to liquidate JCI.
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