African Eagle Resources Regulatory News (AFE)

29 Sep 2005 07:03

African Eagle Resources PLC29 September 2005 REVIEW OF PROGRESS AND RESULTS FOR THE HALF YEAR ENDED 3O JUNE 2005 CHAIRMAN'S STATEMENT The year to date has been an active and fruitful period for African Eagle. YourCompany conducted drilling campaigns on four projects and obtained promisingsurface results from increased exploration activity at a number of others. Weacquired title over new areas with great potential in all three countries inwhich we operate and we signed joint venture agreements over two of our existingproperties. As I write, we are drilling the first series of holes on the new geophysicaltargets at our Eagle Eye copper-gold project in Zambia. The first of these holesintersected a wide zone of iron oxide and sulphide mineralisation, with all thecharacteristics of IOCG deposits. Also in Zambia, we have been granted a substantial licence over a strategicallykey section of the Copperbelt. At Mkushi, we have been drilling successfully toverify the reported pre-JORC copper resource and have recently begun geophysicalsurveys there. Our JV partner at Lunga continues to generate results from anextensive geochemical programme. In Tanzania, resource drilling at Miyabi has intersected some impressive goldmineralisation while a single 3m intersection of 241g/t gold at Msasa hasintrigued and excited us. Several of our grass-roots areas in Tanzania are alsobeginning to show promise. The award of new licences in the Fingoe belt in Mozambique, close to the Sasarelicence in Zambia, positions us extremely well in an area long known for copperoccurrences but remaining relatively unexplored. On the corporate side, warrant exercises in the first quarter of the year raised£ 1.2 million for the Company's exploration work. After the end of Septemberthere will be no large warrant positions outstanding. With cash resources in excess of £ 1.4 million as I write, the Company remainswell able to continue to generate results and add value to our projects. Zambia At the large Eagle Eye iron-oxide-copper-gold (IOCG) system in southeast Zambiawe entered a new phase of exploration this year with the completion of anextensive induced polarisation (IP) survey and the commencement of diamonddrilling on targets identified from the IP and other surface surveys. One ofthe first of these new holes intersected extensive iron oxide and sulphidemineralization, confirming our contention that this is a major IOCG system. Thecore has now been submitted for assay. We look forward to completing the drillprogramme to get a clearer picture of the rocks and mineralisation causing ourIP highs and geochemical anomalies. Recently, we were granted a licence over anadditional 800km2 area to the north and east of the Sasare / Eagle Eye licenceand contiguous with it. The Mkushi prospect, near Kapiri Mposhi is a former open pit copper mine with areported but unclassified resource of 30Mt grading 1.25% copper, which theCompany has been drilling this year to verify. There have been some significantcopper intersections from the first two parts of this programme, at Coloquo andH-Zone, close to the old Munshimwemba open pit. The intersections at Coloquoincluded 33m at 1.9% copper and 16.8m at 2.4% copper, while in the H-Zone weencountered 40m at 1.2% copper and 70.5m at 0.8% copper. These early resultsjustify our optimism and broadly confirm the old reports. The geophysical teamrecently moved to Mkushi to undertake an IP survey, after completing itsprogramme at Eagle Eye, and the first results indicate that significantmineralisation exists outside the reported structures. In early August, African Eagle was granted the 480 km2 Ndola licence in theheart of the Zambian Copperbelt. This licence contains known copper occurrencesand extremely prospective geology, and represents an exploration gap in thesequences successfully investigated in neighbouring DRC by First QuantumMinerals and others. The Company has commissioned a thorough review of allexisting data over the area and will conduct drilling and surface surveys overthe coming months. We are very excited to have the chance to become a part ofthe resurgence of the Zambian Copperbelt as a major copper producing area. We are also making good progress on our other Zambian projects. At Lunga, our JVpartner completed a 500m x 1km soil geochemical grid of the whole 2000 sq kmlicence at the end of August and the samples have been submitted formulti-element analysis. We also completed an IP and other surveys at TandalweHill on the Kampumba licence. Tanzania At the Miyabi gold project In Tanzania, the Company continued resource drillingon the Faida, Shambani and Kilimani zones and exploration drilling on the Ngayaand Shule anomalies. The drilling intersected some impressive goldmineralization with mineralised intercepts including 9.4g/t over 3m and 7.3g/tover 4m, within a wider zone of 2.4g/t over 66.5m in hole MBDH-26 at Faida. Iwas also impressed with the 47m at 1.97g/t and 44m at 1.88g/t in the nearbyholes MBDH-24 and MBDH-21 respectively. Drilling continues on the Ngaya andShule area as I write and we expect to release an upgrade in resources for theMiyabi project before the year end. Drilling at the Msasa gold project in June gave a single 3m intersection of 241g/t gold, which intrigued and excited us because of the geological similaritiesto the recently commissioned Tulawaka gold mine 15km northwest. We plan tocarry out step-out drilling to investigate this discovery. We carried out geophysical and geochemical surveys at the Igurubi gold projectand combined these results with exploration data obtained from a previous holderof the area into a GIS database, which allowed us to identify more targets forour planned drilling there in October. We also concluded a joint venture agreement for Resolute Mining to explore ourKakumbi licence, which lies adjacent to its 750,000 ounce Nyakafura deposit.Resolute is operator of Tanzania's first modern gold mine, at Golden Pride nearNzega, African Eagle has established a considerable portfolio of other projects inTanzania including a number where shrewd negotiation and good judgement haveallowed us to assemble multiple licences over highly prospective areas. Surfacesurveys at several of these early stage and grass-roots projects have given verypromising results, notably at Iramba, Kiwasi Hills and Gloria. We have alsoacquired strategically located ground at Kagulamu, adjacent to Anglo-AshantiGold's Geita gold mine, and the Mabale Hills licence, which is surrounded byGallery Gold's 480,000 ounce Kitongo project on one side, the Nyanzaga prospect,to which Barrick Gold has committed $2.7M in exploration over the next 12months, on another, and the new Mwamazengo discovery on a third. We intend todevelop these projects ourselves or with appropriate joint venture partners keento participate in Tanzania's continuing gold boom. Mozambique The award of five new licences with a total of 909km2 in the Fingoe Belt inwestern Mozambique gives us a large holding in a relatively unexplored areaknown to hold copper occurrences similar to those we see at Eagle Eye and welook forward to beginning our work there. At our Namama project in eastern Mozambique, we continue to investigate thenickel anomalies at Muazua and will be conducting surface surveys over the goldand base metal targets at Majele. Information on all of our projects and the news releases which relate to themcan be found on our web site at www.africaneagle.co.uk We endeavour to keep ourweb pages as up to date as possible and are currently preparing a new section toprovide update information on our Tanzanian early-stage projects. Corporate & Financial In April, our Finance Director Bevan Metcalf took on the role of CompanySecretary and in May, we changed our brokers to Evolution Securities. Warrant exercises to end June raised £ 1.2 million for the Company's explorationwork. After 30 September, there will be no substantial warrant positionsoutstanding, with only 1.14 million warrants remaining, plus the 9.6 millionoptions issued under the Company's employee incentive scheme. In line with our policy of encouraging the Company's workforce to share in therewards and risks of our exploration, we set up an employee Share Scheme inAugust. This will grant some shares to employees and will encourage them topurchase more through tax incentives. We expect to issue about 180,000 sharesunder the scheme this year. With cash resources as I write of more than £1.4 million, the Company is wellpositioned to continue to generate results and add value to its projects. Comments The year to date has been a successful one in exploration terms despitecontinuing industry-wide shortages of drilling equipment and services, skilledexploration geologists and laboratory throughput, which have imposed somelimitations on our activities. We have drilled successfully on four projectsand plan to drill on at least one more before the year end. We have conducted agood deal of successful surface surveying, the highlights being the IP surveysat Eagle Eye and the soil geochemistry at our Tanzanian grass-roots areas. African Eagle has built up a well-balanced portfolio of advanced and early-stageexploration projects, which provides a spread of risk across commodities andjurisdictions and is the envy of many of our peers. Several of our projects havethe potential to be company-makers. We have excellent teams in the field, butclearly we cannot fully explore and develop all of these projects ourselves, sowe are actively seeking farm-in partners to provide finance and conductexploration. So far this year, we have signed up partners on two projects andwe are in advanced discussions regarding several more. Our shareholders' register is a well-balanced mix of institutions and privateinvestors, and the exercise or expiry this year of almost all the outstandingwarrants with their perceived overhang in the market, now paves the way for realgrowth in market capitalisation based on continued progress and announcements For reviews of all our projects and other information, visit our web sitewww.africaneagle.co.uk John Park Chairman 29 September 2005 The African Eagle Group consists of African Eagle Resources plc and itswholly-owned subsidiaries Twigg Resources Limited in the UK, Twigg Gold Ltd inTanzania and Katanga Resources Limited in Zambia. The Group's consolidatedbalance sheet at 30 June 2005 and profit and loss account for the six monthsended 30 June 2004 are set out below. The results for the same period of 2005and for the full year ended 31 December 2004 are provided for comparison. AFRICAN EAGLE RESOURCES plc - CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTHS FROM 1 JANUARY 2005 TO 30 JUNE 2005 (UNAUDITED) PROFIT AND LOSS ACCOUNT Six months to 30 Six months to 30 Year to June 2005 June 2004 31 Dec 2004 £ £ £Group turnover - - -Administrative expenses (280,181) (222,317) (569,175)Operating loss (280,181) (222,317) (569,175)Interest receivable and similar income 55,729 39,477 78,904Loss on ordinary activities before taxation (224,452) (182,840) (490,271)Tax on loss on ordinary activities - - -Loss for the financial period (224,452) (182,840) (490,271) Loss per share (pence) (0.2p) (0.2p) (0.6p) STATEMENT OF RECOGNISED GAINS AND LOSSES Six Months to Six months to Year to 30 June 2005 30 June 2004 31 Dec 2004 £ £ £Loss for the financial period (224,452) (182,840) (490,271)Currency differences on foreign currency net 189,199 (22,983) (103,143)investmentsTotal recognised gains and losses (35,253) (205,823) (593,414) BALANCE SHEET At 30 June 2005 At 30 June 2004 At 31 Dec 2004 £ £ £Fixed assetsIntangible assets 4,557,151 2,361,077 3,224,310 Tangible assets 169,485 87,040 85,522Investments 18,262 13,592 13,591 4,744,898 2,461,709 3,323,423Current assetsDebtors 158,101 104,944 149,293Cash at bank and in hand 2,228,827 1,864,638 2,296,217Creditors - amounts falling due within one year (370,350) (65,760) (171,201)Net current assets /(liabilities) 2,016,578 1,903,822 2,274,309Total assets less current liabilities 6,761,476 4,365,531 5,597,732 Capital and reservesCalled up share capital 1,039,350 772,403 928,747Share premium account 7,050,968 4,499,126 5,962,574Other reserves 705,723 705,723 705,723Profit and loss account (2,034,565) (1,611,721) (1,999,312)Shareholders' funds 6,761,476 4,365,531 5,597,732 CASH FLOW STATEMENT Six months to 30 Six months to 30 Year to June 2005 £ June 2004 £ 31 Dec 2004 £Net cash outflow from operating activities (11,265) (262,114) (448,159)Returns on investments and servicing of finance 37,367 39,498 78,904- interest receivedCapital expenditure and financial investment (1,295,566) (459,628) (1,498,641)Cash outflow before use of liquid resources and (1,269,464) (682,244) (1,867,896)financingManagement of liquid resourcesNet cash (outflow)/inflow from management of (1,448,497) 312,242 1,319,899liquid resources - funds withdrawn from/placedon depositFinancing 1,198,997 120,786 1,740,578(Decrease)/increase in cash 5 (1,518,964) (249,216) 1,192,581 NOTES 1. The interim financial statements have been prepared on the basis of theaccounting policies set out in the company's statutory financial statements for2004, which can be downloaded from www.africaneagle.co.uk/downloads.html 2. These financial statements have been approved by the Board of Directorsbut are un-audited . The financial information contained in these statementsdoes not constitute statutory accounts as defined in Section 240 of theCompanies Act 1985. The financial information for the year ended 31 December2004 has been extracted from the statutory accounts for that year, as filed withthe Registrar of Companies and on which the auditors issued an unqualifiedreport. 3. Legislation in the United Kingdom governing the preparation anddissemination of the financial statements may differ from legislation in otherjurisdictions. 4. The loss per share was calculated from the loss for the periodattributable to ordinary shareholders of £224,452 (June 2004 = £182,840; Dec2004 = £490,271) divided by the time-weighted average number of shares in issueduring the period of 99,628,952 (June 2004 = 76,479,741; Dec 2004 = 78,243,027). There is no diluting effect of share options or warrants on the basic loss pershare. 5. ANALYSIS OF CHANGES IN NET FUNDS PER CASH FLOW At Cash flows £ Exchange At movement £ 1 Jan 2005 £ 30 June 2005 £Net cash:Cash in hand and at bank 2,296,217 (70,467) 3,077 2,228,827Less: deposits treated as liquid resources (687,927) (1,448,497) - (2,136,424) 1,608,290 (1,518,964) 3,077 92,403Liquid resources:Deposits included in cash 687,927 1,448,497 - 2,136,424Net funds 2,296,217 (70,467) 3,077 2,228,827 For further information Tel John Park (Chairman) African Eagle 00 61 7 5528 6750Mark Parker (MD) African Eagle 015 9068 1125 or 077 7980 1159 Leesa Peters or Laurence Read Conduit PR 020 7936 9095 or 078 1215 9885 This information is provided by RNS The company news service from the London Stock Exchange