African Eagle Resources Regulatory News (AFE)

28 Jul 2006 07:01

African Eagle Resources PLC28 July 2006 African Eagle Resources plc STRATEGIC DEVELOPMENT PARTNER FOR MKUSHI COPPER MINES AIM quoted African Eagle Resources plc ("African Eagle" or "the Company", tickerAIM: AFE) today announces that it has signed a Heads of Agreement ("Heads") withCentral Asia Gold Limited (CAGL) for the joint venture development of its MkushiCopper Mines project in Zambia. Under the Heads, CAGL will conduct and finance abankable feasibility study ("BFS") at Mkushi, leading to a decision on minedevelopment. The deal is a major landmark in AFE's strategy of realising thevalue in its asset holdings. Under the Heads, AFE and CAGL will set up a joint venture vehicle to explore thelicences and develop the Mkushi project, holding 49% and 51% interestsrespectively. CAGL will direct and fully fund the completion of the BFS within adefined part of the licence area. CAGL must spend at least US$1M on the BFS,which will include a scope of work set out in the Heads. If CAGL withdrawsbefore the completion of the BFS, or does not meet its obligation to complete aBFS before 30 June 2008, its 51% interest will revert to AFE. On a decision todevelop a mine, CAGL will use its best endeavours to arrange the project financefor development of a mine on behalf of the joint venture. AFE will continue toexplore the rest of the licence area outside the defined zone, funded pro rataby the two parties. Managing Director Mark Parker comments "This agreement is a milestone in ourstrategy of bringing in partners with the skills and cash to fast track our manyhighly prospective projects. It will accelerate our resource drilling,engineering studies and economic modelling, and should take us to a developmentdecision significantly faster. It will also free up some of our resources tomake progress on other key projects. "The managers at CAGL have sound track records of bringing significant minesinto production quickly and cost-effectively not only in Africa but alsoworldwide, including Golden Pride in Tanzania, Obotan in Ghana, Boroo inMongolia and Bullabulling, Chalice and Marymia in Western Australia. Members ofAFE's Board have worked successfully with the key CAGL people before, on thejoint development by SAMAX and Resolute of Tanzania's first modern gold mine atGolden Pride." The Heads are in line with the Company's objectives of bringing its nearest tomarket projects into production as quickly as possible, through developmentpartnerships where appropriate, while retaining significant future upside byleveraging its exploration skills. African Eagle has already drilled almost 10,000m of diamond and percussion drillholes and has recently engaged Snowden Mining Services to conduct a resourceestimate. The Company is currently completing its final planned holes in theresource drilling programme at H-Zone and will then switch to explorationdrilling, starting at the promising Munda target, while CAGL takes over theresource drilling programme. The Heads of Agreement are conditional on satisfactory completion of duediligence by both companies before 31 August 2006 and on approval of the jointventure by the Zambian Ministry of Mines. The Company also signed a Heads on similar terms over the Mokambo project in theZambian Copperbelt, subject to resolution of issues of title. John ParkChairmanAfrican Eagle Resources plc 28 July 2006 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 Miyabi gold project in Tanzania and theMkushi and Ndola copper projects in Zambia. It has discovered a large iron oxidecopper gold (IOCG) system at Eagle Eye in Zambia and holds a well-balancedportfolio of promising early stage projects. About Central Asia Gold The management at CAGL, which is listed on the Australian ASX and Toronto TSEexchanges, have a track record of successfully acquiring, financing,constructing and operating world class gold projects in emerging markets. CAGLis cash-rich from the sale of its interest in the 250,000 ounce per year Boroogold mine in Mongolia and other assets. At the end of March 2006, CAGL reportedcash assets of A$61M, and also has access to significant pools of capital forequity and debt financing of mining projects. The CAGL team has long-standingrelationships with a number of contractors and consultants experienced ingeology, mining and engineering, About Mkushi Copper MinesDiscovered in 1922, the Mkushi deposits were first mined by undergroundworkings, then developed as an open pit operation in the late 1960s. The mineclosed around the time of Zambia's nationalisation of the copper industry in the1970s, but archive reports indicate that there is still abundant ore left in theground. African Eagle Resources acquired the Mkushi Copper Mines in 2002 througha share-based acquisition of an Australian exploration company and is nowdrilling to confirm and expand the known copper resource. The local infrastructure around Mkushi is excellent and the brownfield siteshould make it straightforward to obtain permits for renewed operations. Thedeposits have simple chalcopyrite mineralogy which should allow a concentrate tobe produced efficiently at relatively modest capital cost. Mkushi is the onlyZambian copper mine in rocks older than the Katangan sequence which hosts thewell known Copperbelt deposits. African Eagle is also exploring a wide area surrounding the old mines.Geophysical induced polarisation surveys, which to date cover almost 30 squarekilometres, have already revealed additional mineralised zones in the area. 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