AfriOre scores profitable half

Metal-explorer-turned-coal-miner AfriOre (AFO-V) turned a small profit in the first half of its fiscal year, reflecting a strong operating performance at its 50%-owned Springlake colliery in South Africa.

For the six months ended Aug. 31, the company posted earnings of $979,612 (or 5 per share), compared with a loss of $567,451 (3 per share) for the comparable period last year. Revenue figures were not released, though these average above $2 million per quarter.

AfriOre had difficulties at the underground mine during the second quarter, when the roof in section 6 partially closed. No workers were injured or killed.

Consultants have since investigated the underground support system (which, prior to the incident, had exceeded industry design and safety standards), and AfriOre has implemented their recommendations for improvements.

As a result of the incident, Springlake has written down $1.6 million of the carrying value of the coal assets, though AfriOre notes that the colliery is insured against loss of fixed and movable assets and the mitigation of normal business risks.

Springlake has received full payment for its capital loss and received a further insurance payment of $1 million for loss of gross revenue.

Production has since risen to pre-incident levels by increasing mining rates from other underground sections and open pits.

The net loss of sales will likely be limited to less than 9% of that budgeted for the year.

AfriOre is also active at the Somkele anthracitic coal project in South Africa, where it is compiling data from previous geological work that included a 34-hole drilling program. AfriOre has commissioned an environmental impact assessment and a feasibility study. If the results of the feasibility are positive, production could begin as early as the second quarter of 2002, subject to the securing of permits and financing.

In July, AfriOre raised $2.5 million via a private placement of 5 million shares priced at 50 apiece. African Lion bought 3 million shares.

Earlier in the year, AfriOre appointed Michael Van Aswegen vice-president of exploration. He will lead the company’s gold-exploration efforts in Africa.