African Eagle Resources Regulatory News (AFE)

27 Mar 2006 07:38

African Eagle Resources PLC27 March 2006 African Eagle Resources plc CHANGE OF BROKER AND NOMINATED ADVISER STRATEGIC REVIEW SHIFTS EMPHASIS TOWARDS PRODUCTION African Eagle (ticker AFE, "the Company"), is pleased to announce that it hasappointed Seymour Pierce as Broker and Nominated Adviser. Since listing on the London AIM market in June 2003, the Company has built upand evaluated a strong portfolio of advanced and early stage explorationprojects. After a full review of all its projects, the Company has determinedthat the Mkushi copper project in Zambia is the nearest to making a commercialproduction decision and thus pre-feasibility studies have begun. Work will continue on the Company's other priority projects (Miyabi, Ndola,Mokambo and Eagle Eye), which together provide major future upside potential,but emphasis will be strongly on securing a return from Mkushi and on advancingother projects with suitable partners. By the end of 2005, African Eagle had completed two full African field seasonsof work since its AIM listing in June 2003 and had been able to evaluate all itsexploration properties thoroughly. The Company's emphasis during this 30 monthperiod was firmly on a small number of headline projects, but it also continuedto build a broad asset base by adding projects considered highly prospective,effectively leveraging its skills and local networks to build up a verysignificant upside potential. The highly promising Ndola and Mokambo copperlicences on the Zambian Copperbelt are two such new projects. African Eagle'scurrent portfolio represents the best of the many projects which the company hasevaluated over the period. By the end of this period of asset building and evaluation, with all theexploration results to hand, African Eagle's Board was in a position to reviewall these projects and decide on a strategy for realising the value of theCompany's portfolio. The buoyant metals market, the best for decades, offers anunrivalled opportunity for achieving value from these assets. African Eagle's "nearest-to- market" asset is the Mkushi copper project inZambia. Containing a reported resource of more than 300,000 tonnes of coppermetal, Mkushi has excellent infrastructure and the history of previous miningwill assist in the permitting process for renewed operations. The mineralisationappears to have simple metallurgy which should allow efficient production of acopper sulphide concentrate. African Eagle now aims to generate income from Mkushi as soon as possible. TheCompany will shortly commission an independent scoping study which will includemilling test work and preliminary economic modelling based on a modular approachto project development. It is expected that this study will support theCompany's own preliminary calculations which show that Mkushi could be highlyprofitable A resource drilling programme is underway and it is anticipated thata full feasibility study can be completed by end 2007. The Company's second near-market asset is its Miyabi gold project in Tanzania.The recently updated 520,000 ounce independent Mineral Resource Estimate broughtthe Company much closer to establishing Miyabi as a mineable asset. TheCompany's emphasis on this project will also now shift to generating an economicpre-feasibility study, including additional drilling to enlarge the resource,with a view to getting the project into production. The metallurgical testresults announced on 20 January have already demonstrated that the gold can beextracted by conventional leaching. Beyond these two near-market projects, the Ndola, Mokambo and Eagle Eye projectsoffer considerable upside and the exploration potential of the Company'searly-stage projects provide a solid foundation to the portfolio. African Eagle recognises that it cannot on its own do full justice to all theseprojects and has been actively seeking farm-in partners to participate in theirexploration and development. The Company will continue to use its skills andcontacts to acquire promising new ventures, with an eye to developing them inpartnership with other operators. The recent signature of an agreement withMinEx Projects to explore one of the Company's Tanzanian diamond projects is anexample of the Company's ability to assemble attractive projects and findsuitable farm-in or joint-venture partners and several other farm-in deals areunder negotiation. To effect this changed strategy better, the Company's Board responsibilitieshave been adjusted. Managing Director Mark Parker will concentrate on strategyand business development, while Operations Director Chris Davies will beresponsible for all aspects of exploration and evaluation. Today's change of Broker and Nomad is also an element in the Company's change ofemphasis. Seymour Pierce is one of the City's longest established brokers andis a leading provider of corporate broking and finance services to smallerquoted companies, with over 150 retained corporate clients and especially strongresearch and corporate finance expertise in the Mining sector. Seymour Piercehas led over two hundred primary and secondary issues since 1st January 2004,raising in excess of £625 million for corporate clients. I am convinced that focussing our efforts on taking one or two near-marketprojects through towards production, coupled with the addition of resources onour most advanced exploration projects is the correct strategy and will enableus to achieve the value which I believe is inherent in African Eagle'soutstanding portfolio of exploration assets. I have included summaries of ourprojects below and full descriptions can be found on our websitewww.africaneagle.co.uk John ParkChairmanAfrican Eagle Resources plc 24 March 2006 About African Eagle's projects Mkushi A report commissioned by the Zambian nationalised copper company in 1990estimated that more than 300,000 tonnes of copper metal remained in the groundat Mkushi, in a resource of 30Mt at a grade of 1.24% copper. African Eagle'sdrilling over the past months has indicated that this estimate, although itpre-dates modern resource reporting standards, appears well founded. The local infrastructure around Mkushi is excellent and the past history ofmining should make permitting for renewed operations straightforward. Themineralisation appears to have simple chalcopyrite mineralogy which should allowa copper sulphide concentrate to be produced efficiently at relatively modestcapital cost. Moreover, the Company's geophysical surveys have indicated that othermineralised zones exist which were not recognised by previous explorers.African Eagle believes that these could bring the total resource to 50Mt atgreater than 1% copper, with 500,000 tonnes of contained metal. The Company nowplans to conduct a full resource drilling programme and economic evaluation atMkushi, leading to a full feasibility study during 2007 with a view to takingthe project to commercial production. Miyabi The Company's Miyabi gold project holds an independently audited JORC-compliantMineral Resource estimate of 12.4Mt at a grade of 1.3g/t, containing 520,000ounces of gold of which 71% is in the Indicated category. (Company news releaseof 21 March 2006). Grade sensitivity analysis also revealed that at 1g/t cut-offthe resource is 6.3Mt at 1.82 g/t, for 370,000 ounces of gold. Recentmetallurgical tests indicated that the gold can be extracted successfully byconventional leaching. The Company believes that this brings Miyabi much closer to being a mineableasset, with a good level of confidence in the resource. The Miyabi team's nexttask is to commence an economic pre-feasibility study, with additional drillingto add significantly to the total, especially at the Ngaya and Shambani Southzones and new targets identified from recent IP and magnetic surveys. Ndola The Ndola licence is located in Zambia's Copperbelt and surrounds the historicBwana Mkubwa copper mine, mid-way between First Quantum's Frontier and Lonshiassets. The licence contains two highly significant targets: • Lower Roan style mineralisation. Most of the known deposits of theCopperbelt, including Bwana Mkubwa, Frontier and the older mines at Luanshya,Nkana and Mufulira, lie within rocks of the Lower Roan unit. Within this geologyin African Eagle's licence, an unclassified deposit estimated to contain 40Mt ata grade of 0.8% copper, known as Ndola East, was reported from drilling carriedout in the 1950's and 1970's. There are strong hints that the mineralisationextends both north and south of the Ndola East deposit. • Lonshi-type mineralisation. Copper occurrences have been reported inthe licence area near the DRC frontier but there is no evidence that they haveever been investigated. The occurrences lie about 5km north of Lonshi, withinrocks of the same Kundelungu geological unit. Lonshi is a high grade depositwith little surface expression, discovered by soil geochemistry. The Company believes that modern exploration techniques based on currentgeological thinking on Copperbelt mineralisation could add significantly to thisasset. Makombo The Mokambo licence lies in the Zambian Copper Belt about 30km north of theCompany's Ndola licence. Composed largely of Lower Roan geology, the licenceholds an unclassified deposit investigated in the mid-1970s and then estimatedto contain 41 million tonnes grading 1.7% copper. African Eagle has started athorough review of all existing data and will implement a field explorationprogramme in 2006, including geophysical surveys and drilling, to evaluate thisextremely promising licence. Eagle Eye Another of African Eagle's exploration projects with considerable upsidepotential is the Company's iron oxide copper gold (IOCG) discovery at Eagle Eye.IOCG deposits can be substantial and often occur within even larger mineralisingsystems. From its exploration to date, African Eagle has identified an IOCGmineralising system extending over a strike length of more than 25km. Withinthis, the Company's test drill holes yielded potentially economic intersections,including 67m at 0.7% copper, 21m at 1.1%, 12m at 3% and 6m at 5%. Significant work will be needed to explore the system fully and we believe theCompany needs to bring in a farm-in partner with experience of this type ofdeposit, to share the risks and rewards. Other advanced projects The Msasa gold project in Tanzania contains a shear-hosted gold system whichyielded a drill intersection of 930g/t over 1m, perhaps indicating a high gradedeposit similar to that at Tulawaka, 15km to the north. The Igurubi gold projecthas also yielded high-grade intersections, including 4m at 14.2g/t and 6m at7.3g/t. Surface surveys have indicated at least one additional gold-bearingzone. The Zanzui project is a 15km diameter layered mafic complex with potentialfor nickel and platinum mineralisation. The Company plans to follow up platinumand palladium anomalies identified from soil geochemical surveys. In Zambia, MinEx Projects (formerly MSA) is exploring the 2000 square kilometreLunga licence for Kansanshi-type copper mineralisation and other deposits, undera farm-in agreement. A soil geochemical survey over the whole licence hasrevealed some extremely promising copper-gold anomalies. Early-stage projects African Eagle has 10 early-stage gold projects in Tanzania, many of which haveyielded very encouraging early results and several of which could develop intosignificant discoveries. Especially notable are the Kagulamu, Gloria, KiwasiHills, Dutwa and Mabale Hills areas. The Company also holds two diamond projectareas in Tanzania, and has signed an agreement with MinEx Projects (formerlyMSA) to explore one of them under joint venture. Zambian early stage projects include the Kampumba copper project and the Nyimbapolymetallic sulphide project. The Fingoe project in Mozambique containsgeology and reported mineralisation similar to that at Eagle Eye, and hence hasIOCG potential. In eastern Mozambique, the Nickel Ridge (Muazua) and Majelegold projects are subject to a farm-in agreement with African Advanced Metals. The Company will continue to use its skills and contacts to acquire promisingnew ventures, with an eye to developing them in partnership with otheroperators. Farm-outs and Joint Ventures African Eagle recognises that it cannot on its own do full justice to all itsprojects and is actively seeking farm-in partners to participate in theirexploration and development. The recent signature of an agreement with MinExProjects to explore one of the Company's Tanzanian diamond projects is anexample of the Company's ability to assemble attractive projects and findsuitable farm-in or joint-venture partners. Several other farm-out deals areunder negotiation. Competent Person Where not previously reported by the Company, information in this reviewrelating to exploration results is based on information compiled by the Company.The compilation and review was supervised by Mr Mark Parker, African Eagle'sManaging Director, who is a Member of the Institution of Materials, Minerals andMining and bound by its code of ethics. Mr Parker has in excess of thirty yearsexperience relevant to the styles of mineralisation and types of deposit underconsideration. Mr Parker consents to the inclusion of the information in theform and context in which it appears. For further information, see the Company's web site www.africaneagle.co.uk orcontact one of the following: Mark ParkerManaging Director+44 20 7248 6059+44 77 7980 1159 Chris DaviesOperations Director+44 20 7248 6059+44 78 6672 9959 Leesa PetersConduit PR+44 20 7429 6600+44 78 1215 9885 This information is provided by RNS The company news service from the London Stock Exchange