AfriOre scores profitable first half

Junior-explorer-turned-coal-miner AfriOre (AFO-V) is reporting a small first-half profit thanks to a good operating performance at its half-owned Springlake colliery in South Africa.

For the six months ended Aug. 31, 2001, the company posted earnings of $979,612 (or 5 cents per share) compared with a loss of $567,451 (3 cents) for the same period last year.

AfriOre had difficulties at the underground mine during the second quarter, when a partial roof closure occurred in section 6.

External consultants have since investigated the colliery’s underground support system, which prior to the incident had exceeded industry design and safety standards established by the South African Chamber of Mines and accepted by the Department of Minerals and Energy. The revised procedures recommended by Dr. B. Madden of G-Ro Geotechnical Consultants have been implemented.

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 moveable assets and the mitigation of normal business risks.

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

Production has risen to pre-incident levels as a result of increasing production rates from other underground sections and from open pits.

It is now anticipated that the net loss of sales will 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 the company is compiling data from previous geological mapping and a 34-hole drilling program.

AfriOre has already commissioned an environmental impact assessment and the initial stages of a feasibility study.

If the results of this feasibility study are positive, the company believes that production could begin as early as the second quarter of 2002, subject to obtaining permits and financing.