African Eagle Resources Regulatory News (AFE)

25 Sep 2006 07:02

African Eagle Resources PLC25 September 2006 African Eagle Resources plc REVIEW OF PROGRESS AND RESULTS FOR THE HALF YEAR ENDED 30 JUNE 2006 AIM quoted African Eagle Resources plc ("African Eagle" or "the Company", tickerAIM: AFE) today announces its interim results together with a project update. HIGHLIGHTS • Development Partnership on Mkushi Copper project, Zambia - Central Asia Gold Limited (CAGL) to fund and conduct a bankable feasibility study. • JORC compliant Copper resource estimate at Mkushi expected shortly. • Phelps Dodge Mining Zambia Limited (PDMZ) to invest a minimum US$2.27m in exploration at Ndola Copperbelt project, Zambia. • A 30% increase in the JORC compliant gold resource at Miyabi, Tanzania to 520,000 ounces, with 71% in the Indicated category. • Resolute Mining Limited (Resolute) completes drilling programme at Kakumbi, Tanzania and commits to the earn-in phase. • Results awaited from MDN Northern Mining drilling programme at Msasa Gold project, Tanzania. • £4.4m for exploration by placings, warrant and option exercises and cash at 30 June of £3.7m. John Park, Chairman commented: "Significant progress has been made during the first half of 2006 in line withthe Company's strategic decision, taken early in the year, to focus on thoseprojects which are closest to production and to bring in strategic developmentpartners. We have vigorously pursued our drilling programme at the Mkushi Copperproject and signed important farm-out agreements with strong partners over ourMkushi, Ndola and Msasa projects. We expect to announce a copper resource estimate for Mkushi shortly.Farm-out deals already signed, including that with CAGL on Mkushi, commit our partners to exploration expenditures of a minimum of US$5m. Considerably more than this will be spent on the exploration and development of African Eagle's projects should our partners opt into the various earn-ins contemplated and the projects progress as hoped. We expect further deals currently under negotiation to bring this commitment to at least a minimum of US$6m with a commensurate increase in the ultimate total that could be committed." PROJECT UPDATES AND FINANCIAL PERFORMANCEMkushi Mkushi is African Eagle's project nearest to production and benefits fromstraightforward metallurgy, a brownfield site and good local infrastructure. Our 53 drill holes at Mkushi (for a total of 8,359m) have confirmed copper mineralisation over a strike length of 7km to a vertical depth of at least 150m. Metallurgical test work, undertaken by our development partner CAGL, yielded excellent indicative copper recoveries of more than 95% by simple flotation. Individual drill intercepts at Mkushi include 57m at 2% copper, 84m at 1.8% and 27m at 2.1% copper. While CAGL conducts and fully funds a bankable feasibility study in the corearea, African Eagle will continue to employ its exploration skills over the restof the concession as manager of a programme jointly funded by CAGL. Our own preliminary internal economic modelling indicates that Mkushi should beprofitable at a wide range of copper prices. Under the terms of the agreementwith CAGL African Eagle retains almost half of the upside of this promisingdevelopment. Ndola Under a subscription and earn-in agreement signed in August this year, aUS$2.27m share subscription by PDMZ will fund an aggressive 15-month explorationprogramme over our large 428 sq km Ndola licence in the heart of the ZambianCopper Belt. The licence is highly prospective, surrounding the historic BwanaMkubwa Mine and lying midway between First Quantum Minerals' Frontier project(161Mt grading 1.17% copper) and Lonshi Mine (5.9Mt grading 4.6% copper), bothin the DRC. Past explorers reported a deposit in the northwest of our Ndolalicence, estimated to contain 40Mt at 0.75% copper (not JORC compliant). Ifearly exploration is successful, PDMZ will be able to earn up to 70% of theproject by completing a bankable feasibility study. Miyabi Early in the year, we achieved a 30% uplift on our independently audited goldresource at Miyabi in Tanzania to 520,000 ounces of contained gold (of which 71%lies in the Indicated category). This resource now forms a firm foundation tothe project and we plan to follow up the many other targets within and outsidethe Miyabi Gold Corridor with a view to bringing in a partner to carry theproject forward to development. Eagle Eye The geochemical data base for Eagle Eye, Zambia has recently been reviewed byThe Mineral Corporation. The review confirms the importance, as targets, of thegranite-metavolcanic contact and a number of NW trending anomalouscopper-in-soil "corridors" underlain by granite. The reinterpretation of thedata provides a new dimension to the Eagle Eye Project by identifying thestructures which may have provided fluid conduits for the development of thecopper mineralisation in the area. A hole drilled at the contact zone in 2005intersected 3m at 2% copper, demonstrating the potential of these targets. Our internal grade-shell modelling of the drill data from the Mweze prospectindicates that around 7.2Mt at an average grade of 1.2% copper may be present inthis area. The estimate is not JORC compliant but does give an indication of thepotential of the area. African Eagle is seeking a joint-venture partner toevaluate these areas through a major drilling programme. Other exploration activities Elsewhere, our exploration teams and those of our farm-in partners have alsobeen busy. The status, technical summaries and graphics relating to the work todate for all of our projects can be seen on our web site www.africaneagle.co.uk. • Zambia At the Lunga project in Zambia, MinEx Projects has identified some verypromising geochemical anomalies which it is currently following up. Lunga haspotential for copper-gold deposits similar to First Quantum's Kansanshi deposit,and other types of mineralisation. • Tanzania Resolute, our partner on the Kakumbi project in the Lake Victoria Goldfield,successfully completed its initial option expenditure and will now go ahead withan earn-in expenditure of US$1m to earn a 51% interest in the project. Duringthe option period, Resolute conducted geochemical and geophysical surveys anddrilled 36 combined air-core and RC holes totalling over 1,600 metres whichyielded intersections of gold mineralisation including 12.7 g/t over 4m and 1.78g/t over 8m. MDN Northern Mining has recently completed its phase one drilling at Msasa inwestern Tanzania, and we await their results eagerly. Our own teams in Tanzania have completed preliminary evaluation of all our earlystage projects and several of these, including Dutwa and Mabale Hills show goodpromise and will be the subject of follow-up programmes and discussions withprospective partners. • Mozambique In Mozambique, we have commenced geological mapping and stream sedimentgeochemical survey work in our Fingoe licences, a 910 square kilometre area withcopper and gold mineralisation showing similarities to that at Eagle Eye. Workat Majele and Nickel Ridge (Muazua) will be starting later in the year. Corporate and Financial On the corporate front we have raised £4.4m for exploration activities since thestart of the year through placings to institutional investors and from optionand warrant exercises. In March, we appointed Seymour Pierce as our nominatedadviser and broker. The operating loss for the period was £671,742 compared to a loss of £224,452for the 6 months to June 2005. The main reasons for the increase in theoperating loss were project write-offs (£163,296), adoption of FRS 20 for sharebased payments (£105,066) and exchange losses (£52,124). Cash in hand at the 30June 2006 was £3.7m compared to £1.1m at 31 December 2005 and shareholders fundsincreased from £8.4m to £11.7m over the same period. Comments on strategy Early in the year, we shifted our strategic emphasis from "acquire and evaluate"to "develop and realise value". We effected this shift by concentrating ourefforts on the most advanced projects, especially Mkushi. These efforts are bearing fruit with the announcement of the agreement with CAGL on 28 July and an announcement with respect to an independent resource estimate for Mkushi anticipated to be made shortly. CAGL has the skills, experience and finance to fast track the Mkushi project. I believe that the implementation of this agreement with CAGL will represent excellent value for African Eagle and its shareholders. I also believe that the agreement with PDMZ will prove to be an excellent dealfor African Eagle and its shareholders. We have put a lot of effort so far this year into finding development partnersto provide finance and to help take our projects through to production and cashgeneration as quickly as possible. We have been very successful in this, with atotal of 7 projects now signed up with 5 partners. As I noted above, we expect these deals and others under negotiation tocontribute a minimum of US$6m to the exploration and evaluation of our projects.In the event that our partners opt into the various earn-ins significantlygreater sums will be injected. The increase in our resource base, the quality and scope of our partneringagreements and the promise inherent in our exploration portfolio confirm mybelief in a great future for African Eagle. John ParkChairman 25 September 2006 Information in this announcement relating to the exploration results is based ondata reviewed by Mr Christopher Davies, Operations Director for African EagleResources, who is a Fellow of the Australasian Institute of Mining andMetallurgy and qualifies as a Competent Person in accordance with theAustralasian Code for Reporting of Exploration Results, Mineral Resources andOre Reserves (the JORC Code, 2004). Mr Davies has in excess of 25 yearsexperience in mineral exploration and consents to the inclusion of theinformation in the form and context in which it appears. AFRICAN EAGLE RESOURCES plc - CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIXMONTHS FROM 1 JANUARY 2006 TO 30 JUNE 2006 (UNAUDITED) PROFIT AND LOSS ACCOUNT Six months to 30 June Six months to 30 June Year to 31 Dec 2006 UNAUDITED 2005 UNAUDITED 2005 RESTATED £ £ £Administrativeexpenses (541,181) (312,371) (655,147)Share basedpayments (105,066) - (92,871)Exchangegains/(losses) (52,124) 32,190 473,436Operating loss (698,371) (280,181) (274,582)Interestreceivable andsimilar income 26,629 55,729 89,593Loss onordinaryactivitiesbeforetaxation (671,742) (224,452) (184,989)Tax on loss on - - -ordinaryactivitiesLoss for thefinancialperiod (671,742) (224,452) (184,989)Loss per share(pence) (0.5p) (0.2p) (0.2p) STATEMENT OF RECOGNISED GAINS AND LOSSES Six Months to 30 June Six months to 30 June Year to 31 Dec 2006 UNAUDITED 2005 UNAUDITED 2005 RESTATED £ £ £Loss for thefinancialperiod (671,742) (224,452) (184,989)Currencydifferences onforeigncurrency netinvestments (308,581) 189,199 701,379Totalrecognisedgains and(losses) (980,323) (35,253) 516,390 BALANCE SHEET At 30 June 2006 At 30 June 2005 At 31 Dec 2005 UNAUDITED UNAUDITED RESTATED £ £ £Fixed assetsIntangibleassets 7,771,664 4,557,151 7,275,475Tangibleassets 204,933 169,485 250,362Investments 18,229 18,262 18,372 7,994,826 4,744,898 7,544,209Current assetsDebtors 140,765 158,101 176,039Cash at bankand in hand 3,717,063 2,228,827 1,097,881 3,857,828 2,386,928 1,273,920Creditors - amountsfalling duewithin one year (147,424) (370,350) (418,939)Net currentassets 3,710,404 2,016,578 854,981Total assetsless currentliabilities 11,705,230 6,761,476 8,399,190Capital andreservesCalled upshare capital 1,475,358 1,039,350 1,129,550Share premiumaccount 11,789,457 7,050,968 7,953,968Other reserves 705,723 705,723 705,723Share basedpaymentsreserve 197,937 - 92,871Profit andloss account (2,463,245) (2,034,565) (1,482,922)Shareholders'funds 11,705,230 6,761,476 8,399,190 CASH FLOW STATEMENT Six months to Six months to Year to 31 30 June 2006 30 June 2005 Dec 2005 UNAUDITED UNAUDITED RESTATED £ £ £Net cash outflow fromoperating activities (316,766) (11,265) (38,855) Returns on investmentsand servicing of finance -interest received 26,629 37,367 89,593 Net cash outflow fromcapital expenditureand financialinvestment (1,262,156) (1,295,566) (3,460,081) Management ofliquid resources (2,701,575) (1,448,497) (190,315) Net cash inflow fromfinancing 4,181,297 1,198,997 2,192,197 Decrease in cash 6 (72,571) (1,518,964) (1,407,461) NOTES 1. The interim financial statements have been prepared on the basis of the accounting policies set out in the Company's statutory financial statements for 2005, which can be downloaded from www.africaneagle.co.uk/downloads.html , including the adoption of FRS 20 Share Based Payments as detailed in Note 3 below. 2. These financial statements have been approved by the Board of Directors but are un-audited. The financial information contained in these statements does not constitute statutory accounts as defined in Section 240 of the Companies Act 1985. The financial information for the year ended 31 December 2005 has been extracted from the statutory accounts for that year, as filed with the Registrar of Companies and on which the auditors issued an unqualified report. 3. In the period the Company adopted FRS 20 Share Based Payments, and an appropriate charge was recorded in the profit and loss account. The comparative figures have been restated to reflect the impact of FRS 20. 4. Legislation in the United Kingdom governing the preparation and dissemination of the financial statements may differ from legislation in other jurisdictions. 5. The loss per share was calculated from the loss for the period attributable to ordinary shareholders of £671,742 (June 2005 = £224,452; Dec 2005 = £184,989) divided by the time-weighted average number of shares in issue during the period of 123,437,168 (June 2005 = 99,628,952; Dec 2005 = 104,105,259). There is no diluted effect of share options or warrants on the basic loss per share. 6. ANALYSIS OF CHANGES IN NET FUNDS At Cash flows Exchange difference At 1 Jan 2006 £ £ 30 June 2006 £ £Liquidresources 878,242 2,701,575 - 3,579,817Depositsincluded incash 219,639 (72,571) (9,822) 137,246Net funds 1,097,881 2,629,004 (9,822) 3,717,063 About African Eagle African Eagle is a mineral resources company with a focus on eastern and centralAfrica. The Company operates in Zambia, Tanzania and Mozambique, all countrieswith highly prospective geology and low above-ground risks, which have all beenrecent destinations for major successful investments in the metals and mineralsindustries. The Company has a highly motivated team, proven management and an experiencedboard. Its principal operations are the Mkushi and Ndola copper projects inZambia and the Miyabi gold project in Tanzania. African Eagle has discovered alarge iron oxide copper gold (IOCG) system at Eagle Eye in Zambia and holds awell-balanced portfolio of promising early stage projects. 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 5640 6899 Chris DaviesOperations Director+44 20 7248 6059+44 78 6672 9959 Leesa Peters or Ed PortmanConduit PR+44 20 7429 6666 This information is provided by RNS The company news service from the London Stock Exchange