African Eagle Resources Regulatory News (AFE)

1 Jun 2006 07:00

African Eagle Resources PLC01 June 2006 AFRICAN EAGLE RESOURCES plc PROGRESS REPORT AND ACCOUNTS OF AFRICAN EAGLE RESOURCES plc TO 31st DECEMBER 2005 NOTICE OF ANNUAL GENERAL MEETING Chairman's statement For African Eagle, 2005 saw considerable advances at our key projects,especially Mkushi in Zambia and Miyabi in Tanzania. It was also a year ofconsolidation which culminated in a comprehensive review of our projects and theevolution of our strategy for the future. Since our AIM listing, the Group's focus has been firmly on these two advancedprojects and a small number of other headline projects, notably Eagle Eye andNdola. At the same time we have continued to build a broad asset base ofprojects considered highly prospective. In this way we have leveraged our skillsand local networks to build up a significant portfolio which represents the bestof the many projects we've evaluated over the period and offers considerableupside potential. By the end of 2005, the results of this strategy of "acquire and evaluate"allowed the Board to conduct a full and well-informed review of all our assets,with the aim of identifying those which are nearest to commercial production andcould be taken forward fastest to generate cash flow. This review identifiedMkushi as the project nearest to market and we will now advance it to aproduction decision as rapidly as possible. The Mkushi Copper Mines, near Kapiri Mposhi in central Zambia, are former openpit and underground mines with remaining resources reported to be 30Mt at agrade of 1.23% copper, or some 370,000 tonnes of contained metal. To date wehave conducted surface geological and geophysical surveys and a programme ofdiamond and percussion drilling for a total of almost 8000 metres. The drillprogramme yielded some excellent intersections, including 84m at 1.8% copper and57m at 2.0% copper. We are now rapidly approaching a first JORC-compliant resource at Mkushi. Thedeposit compares favourably with others in the region which have been or arebeing brought into production, and together with the excellent infrastructureand other advantages of Mkushi, these results convinced us of the need toproceed rapidly to a feasibility study. In second place in our list of priority projects is the Miyabi Gold project inTanzania. Here, we recently announced a 30% increase in the indicated andinferred gold resource, to 520,000 ounces of gold, of which 71% is in theIndicated category. Our Miyabi team has conducted extensive geophysical surveyswhich flagged up many exploration targets to be tested, offering the potentialfor a deposit of 1 million ounces or more. We have also begun pre-feasibilitystudies at Miyabi and metallurgical testing has confirmed that the gold isreadily extractable by conventional leaching. The numerous other projects we have acquired and evaluated provide a solidfoundation to the portfolio, with the Eagle Eye, Ndola and Mokambo projectsespecially offering considerable future upside. Whilst our emphasis goingforward will be strongly on securing a return from Mkushi, we recognise that wecannot on our own do full justice to all of the numerous other projects of meritin the Group's portfolio. We have therefore been actively seeking farm-inpartners to participate in their exploration and development. The excellentresults reported from our Lunga licence by our farm-in partner MinEx Projects(formerly MSA) shows how well this strategy can perform and on 3 May 2006 theGroup signed an option agreement with MDN Northern Mining over the Msasa goldproject in Tanzania. MDN holds a 30% interest in the Tulawaka Gold Mine which islocated just 15km northwest of Msasa. Our large Eagle Eye iron-oxide-copper-gold (IOCG) system in southeast Zambiaentered a new phase of exploration in 2005, with the completion of an extensiveinduced polarisation (IP) survey followed by diamond drilling. The sheer size ofthis mineralised system means that although potentially huge, the project ismuch further from production than is Mkushi. We will continue to use our skills and contacts to acquire promising newventures, with an eye to developing them in partnership with other operators.For example, in August 2005, we were granted the 480 km2 Ndola licence and inFebruary of this year the 30 km2 Mokambo licence. These two areas lie in theheart of the Zambian Copperbelt and hold two copper deposits which have beenestimated to contain 1 million tonnes of copper metal on a combined pre-JORCbasis. We are very excited to have the chance to become part of the resurgenceof the Zambian Copperbelt as a major copper producing area. Other promising acquisitions during the year include two large diamondreconnaissance licences in central Tanzania and the Fingoe licences inMozambique, which have similar geology and IOCG mineralisation to Eagle Eye inneighbouring Zambia. On the corporate front, 2005 saw the exercise of almost all of the Company'soutstanding warrants, raising £2.2 million. Only 1.1 million warrants and 9.6million employee options remained outstanding at the year end. Other than thewarrant exercises, the Company issued no new shares during 2005, although wehave since raised £4.3 million by way of placings. The Company's shares continued to trade with relatively high liquidity, withaverage daily volume over the year of more than 650,000. Gold Fields sold outits position in the autumn, trading 12 million shares through the market and toinstitutions with relatively little impact on the price. Operationally, we continued to be highly cost-effective, putting 88 pence ofevery pound spent into exploration, an improvement of almost 8 pence in thepound from 2004, and I congratulate all staff on keeping overhead costs to aminimum. Following the change in our strategic emphasis, Board responsibilities wererealigned with Managing Director Mark Parker concentrating on strategy andbusiness development and Operations Director Chris Davies responsible for allaspects of exploration and evaluation. Also during the course of the year wewelcomed John Arthurs to the African Eagle team. John is a structural geologistwith extensive worldwide experience in both the public and private sectors. Asgeological adviser to the Group, John will help evaluate the explorationpotential of our projects. The period from the beginning of 2005 to date has seen our key projects maturesufficiently for us to begin the process of turning them to account through thecommencement of feasibility studies. It saw increases in the potential of anumber of other projects through the application of our exploration skills, arestructuring of the way in which we will operate in the future, the appointmentof Seymour Pierce as our Broker and Nomad and the formation of a clearlyfocussed strategy which will take us forward. African Eagle is now in an excellent position to take advantage of the Mkushicopper project in Zambia and the Miyabi gold project in Tanzania particularlyand with the continuing strength of metal markets I believe the outlook for thebusiness is excellent. John Park ChairmanAfrican Eagle Resources plc1 June 2006 AFRICAN EAGLE RESOURCES plc - AUDITED CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR FROM 1 JANUARY 2005 TO 31 DECEMBER 2005 PROFIT AND LOSS ACCOUNT Year to Year to 31 Dec 2005 31 Dec 2004 £ £ Administrative expenses (655,147) (524,814)Exchange gains/(losses) 473,436 (44,361) ________ _______Operating loss (181,711) (569,175)Interest receivable and similar income 89,593 78,904 ________ _______Loss on ordinary activities before taxation (92,118) (490,271)Tax on loss on ordinary activities - - ________ _______Loss for the financial year (92,118) (490,271) ======== =======Loss per share (pence) (0.1p) (0.6p) STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES Year to Year to 31 Dec 2005 31 Dec 2004 £ £ Loss for the financial year (92,118) (490,271)Currency differences on foreign currency net 701,379 (103,143)investments ________ _______Total recognised gains and (losses) 609,261 (593,414) ________ _______ BALANCE SHEET At 31 Dec 2005 At 31 Dec 2004 £ £Fixed assetsIntangible assets Note 1 7,275,475 3,224,310Tangible assets 250,362 85,522Investments 18,372 13,591 _________ _________ 7,544,209 3,323,423 _________ _________Current assetsDebtors 176,039 149,293Cash at bank and in hand 1,097,881 2,296,217 _________ _________ 1,273,920 2,445,510 _________ _________ Creditors - amounts falling due within one year (418,939) (171,201) _________ _________Net current assets 854,981 2,274,309 _________ _________Total assets less current liabilities 8,399,190 5,597,732 _________ _________ Capital and reservesCalled up share capital 1,129,550 928,747Share premium account 7,953,968 5,962,574Other reserves 705,723 705,723Profit and loss account (1,390,051) (1,999,312) _________ _________Shareholders' funds 8,399,190 5,597,732 _________ _________ CASH FLOW STATEMENT At 31 Dec 2005 At 31 Dec 2004 £ £ Net cash outflow from operating activities (38,855) (448,159)Returns on investments and servicing of finance - 89,593 78,904interest receivedNet cash outflow from capital expenditure and (3,460,081) (1,498,641)financial investmentManagement of liquid resources (190,315) 1,319,899Net cash inflow from financing 2,192,197 1,740,578 _________ __________(Decrease)/Increase in cash Note 5 (1,407,461) 1,192,581 _________ __________ NotesThe increase in intangible assets represents exploration expenditure in theyear. 1.The Company's Annual Report and Accounts for the year ended31 December 2005 can be downloaded at www.africaneagle.co.uk/downloads.html. 2. The financial information set out above does not constitutestatutory accounts as defined in section 240 of the Companies Act 1985. Theconsolidated profit and loss account and balance sheet have been extracted fromthe Group's 2005 statutory financial statements upon which the auditors' opinionis unqualified. 3.The loss per share was calculated from the loss for theperiod attributable to ordinary shareholders of £92,118 (2004: £490,271) dividedby the time-weighted average number of shares in issue during the year104,105,259 (2004: 78,243,027). There is no dilutive effect of share options orwarrants on the basic loss per share. 4.Analysis of changes in net funds At 1 Cash flow Exchange At 31 January Difference December 2005 2005 £ £ £ £ Liquid resources 687,927 190,315 - 878,242Cash 1,608,290 (1,407,461) 18,810 219,639 _________ _________ ______ _________ 2,296,217 (1,217,146) 18,810 1,097,881 ========= ========= ====== ========= African Eagle Resources plc NOTICE OF ANNUAL GENERAL MEETING Notice is hereby given that the Annual General Meeting of the Company will beheld at the Company's registered office at 2nd Floor, 6-7 Queen Street, LondonEC4N 1SP on 29 June 2006 at 2:00pm for the following purposes: Ordinary business 1.To receive the annual report and financial statements forthe year ended 31 December 2005. 2.To re-elect Mr J Park who is retiring by rotation inaccordance with the Articles of Association as a director of the Company. 3.To re-elect Mr C Davies who is retiring by rotation inaccordance with the Articles of Association as a director of the Company. 4.To reappoint Grant Thornton UK LLP as Auditors and toauthorise the directors to fix their remuneration. 5.To adopt for a further 5 years the Company's UnapprovedShare Option Scheme ("the Scheme"). Special business To consider and if thought fit to pass the following resolutions: Ordinary Resolutions 6.THAT the Company increase its Authorised Share Capital by£2,000,000 beyond its existing Authorised Share Capital of £2,000,000 by thecreation of 200,000,000 Ordinary Shares of £0.01p each, such shares ranking paripassu with the existing Ordinary Shares of £0.01p each in the capital of theCompany. 7.THAT the directors be and they are hereby generally andunconditionally authorised and empowered for the purposes of Section 80 of theCompanies Act 1985 ("the Act") to exercise all powers of the Company to allotrelevant securities (within the meaning of Section 80(2) of the Act), to suchpersons at such times and upon such terms and conditions as they may determine(subject always to the Articles of Association of the Company) up to anaggregate nominal amount of the authorised but unissued share capital of theCompany. The authority will (unless revoked, varied or renewed) expire on thedate of the Company's next Annual General meeting (or if sooner the expiry of 15months after the passing of this Resolution) except as regards an allotment madepursuant to an offer or agreement made by the Company before such date whichwould or might require equity securities to be allotted after such expiry, suchauthority to be in substitution for all existing authorities granted to thedirectors in respect of the allotment of relevant securities. Special Resolutions 8.THAT subject to the passing of Resolution 6, Clause 6 ofthe Memorandum of Association of the Company be amended to read as follows: "TheCompany's share capital is £4,000,000 divided into 400,000,000 Ordinary Sharesof one penny each." 9.THAT subject to the passing of Resolution 6, Clause 3 ofthe Articles of Association of the Company be altered so that it shall now readas follows:" The share capital of the Company is £4,000,000 divided into400,000,000 Ordinary Shares of one penny each." 10.THAT subject to the passing of Resolution 7 the directors beand they are hereby empowered pursuant to Section 95 of the Act to allot and tomake offers or agreements to allot equity securities (as defined by Section 94(2) of the Act) for cash, pursuant to the authority conferred by Resolution 7above , as if section 89(1) of the Act did not apply to any such allotment,provided that such power shall be limited to: (i) the allotment of equity securities in connection with any offer by wayof rights in favour of the holders of ordinary shares in the Company where theequity securities respectively be attributed to the interests of the ordinaryshareholders proportionate to the respective numbers of ordinary shares held bythem subject to only such exclusions or other arrangements as the directors deemnecessary or expedient to deal with fractional entitlement, legal or practicalproblems arising in any overseas territory or the requirements of any regulatorybody or Stock Exchange or otherwise; and (ii) the allotment (otherwise pursuant to sub-paragraph (i) above) of equitysecurities up to the nominal amount of the authorised but unissued share capitalof the Company from time to time; Such power (unless previously revoked, varied or renewed) shall expire at theconclusion of the Annual General Meeting to be held in 2007, (or if sooner theexpiry of 15 months after the passing of the Resolution) save that the Companymay before such expiry make an offer or agreement which would or might requireequity securities to be allotted after such expiry and the directors may allotequity securities pursuant to any such offer or agreement as if the powerconferred thereby had not expired. The following special business will be conducted at the meeting: 1. Increase in the Authorised Share Capital An Ordinary Resolution (No 6 in the Notice) and Special Resolutions (No 8 and No9 in the Notice) will beproposed to increase the Authorised Share Capital of the Company. 2. Authority to allot shares An Ordinary Resolution (No 7 in the Notice) and a Special Resolution (No 10 inthe Notice) will be proposed to empower the directors to allot and issue shares up to the nominal but unissued share capitalof the Company without first having to offer such shares on a pre-emptive basis to existing shareholdersin proportion to their existing shareholdings . The proposed power will expire on the date of the next AGM or 15 months from thedate of approval of the Resolutions, whichever is sooner. By order of the Board1 June 2006 Bevan MetcalfCompany Secretary Registered Office:2nd Floor, 6-7 Queen Street, London EC4N 1SP, UK Note to editors About African Eagle African Eagle is a mineral resources company operating in eastern and centralAfrica. It holds projects in Zambia, Tanzania and Mozambique, countries withhighly prospective geology and low above-ground risks, which have all beendestinations for successful recent major investments in the metals and mineralsindustries. The Group has a highly motivated team, proven management and an experiencedboard. Its principal operation is the Mkushi Copper Mines projects in Zambia. Italso holds the Miyabi gold project in Tanzania, the Ndola copper project in theZambian Copperbelt and has discovered a large iron oxide copper gold (IOCG)system at Eagle Eye in Zambia. There is also a well-balanced portfolio ofpromising early stage exploration projects. For further information, see the Groups web site www.africaneagle.co.uk orcontact one of the following: Mark ParkerManaging Director+44 20 7248 6059+44 77 5640 6899 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