Earn In Agreement at Ndola

8 Aug 2006 07:01

African Eagle Resources PLC08 August 2006 African Eagle Resources plc PHELPS DODGE MINING (ZAMBIA) LIMITED TO PARTNER AFRICAN EAGLE AND FUND THE NDOLA COPPERBELT PROJECT AIM quoted African Eagle Resources plc ("African Eagle" or "the Company", tickerAIM: AFE) today announces that it has signed an Earn-in Agreement with PhelpsDodge Mining (Zambia) Limited (PDMZ), a wholly owned subsidiary of the PhelpsDodge Exploration Corporation, for the exploration and joint venture developmentof its Ndola Copperbelt project in Zambia. Under the Agreement, PDMZ will subscribe for AFE shares to the value of US$2.73million in two tranches, at a 10% premium to the market price of AFE's shares.AFE will use 75% of the funds on an agreed exploration programme at Ndola andthe balance on other AFE projects and general working capital. PDMZ will gain anexclusive right to earn an ownership interest of up to 70% in the Ndola projectby making agreed expenditures on further exploration up to and includingcompletion of a bankable feasibility study. This Agreement is in line with AFE's strategy of working with other companiesinthe joint development of its projects and complements the recent announcementthat the Company's Mkushi Copper Mines project, also in Zambia, will bedeveloped in partnership with Central Asia Gold Limited. The principal terms of the Agreement are: • PDMZ will subscribe for an initial tranche of AFE shares to a value of US$1,273,333 (approximately £680,000) and within 12 months will subscribe to a second tranche of AFE shares to a value of US$1 million (approximately £530,000), both at a 10% premium to the average closing mid-market price of AFE's shares for the 10 consecutive dealing days immediately preceding the relevant subscription date. At AFE's current share price of 11.75p, PDMZ would hold approximately 3.4% of the Company's share capital after the first subscription and almost 6% after the second tranche. • AFE will undertake an agreed 15-month exploration programme on the Ndola licence, spending at least 75% of the amount subscribed on that programme. • AFE will grant PDMZ the exclusive right to enter into a joint venture with AFE on the Ndola project at the end of the 15 month period. Under the joint venture, PD can earn a 51% interest in the Ndola project by spending a further US$3m on exploration and then an additional 19% by completing a bankable feasibility study on the property. The share subscription will be subject to approval of the contemplated jointventure by the Zambian Ministry of Mines and to satisfactory completion of duediligence by PDMZ. The Ndola licence area is considered highly prospective, being underlain by theMine Series and Lower Kundelungu geological sequences which host most of theworld-class copper deposits of Zambia and the DRC. The licence occupies alittle-explored gap between First Quantum Minerals' Frontier and Lonshi mines inthe DRC. Drilling of the Mine Series northeast of Ndola town during the 1950sand 60s revealed extensive copper mineralisation, with a historical estimate(not JORC-compliant) of 40 million tonnes at 0.75% copper. African Eagle's toppriority will be to re-evaluate the resource and test for extensions to. At the same time, the Company will conduct surface surveys over the wholelicence, including soil geochemistry, geological mapping, gravity and airbornegeophysics, which are likely to reveal new drilling targets. African Eagle's Managing Director Mark Parker comments "I am delighted thatPhelps Dodge, the world's third largest copper miner, will be exploring thishighly prospective area with us." John ParkChairmanAfrican Eagle Resources plc 08 August 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 Phelps Dodge Corporation Phelps Dodge Mining (Zambia) Limited is a wholly owned subsidiary of PhelpsDodge Exploration Corporation. The parent, Phelps Dodge Corporation (TickerNYSE: PD) is one of the world's leading producers of copper and molybdenum andis the largest producer of molybdenum-based chemicals and continuous-cast copperrod. The company employs 14,500 people worldwide. About Ndola African Eagle's Ndola licence lies in the southern part of the hugely prolificCentral African Copperbelt, one of the great mining districts of the world. TheCopperbelt hosts two of the world's ten biggest copper deposits and contains aglobal resource of almost 200 million tonnes of copper metal, mostly in veryhigh grade ores. The Ndola licence surrounds the historic Bwana Mkubwa copper mine and occupies alittle-explored gap between the Frontier and Lonshi Mines operated by FirstQuantum Minerals. The Group believes that modern exploration techniques coupledwith current geological thinking on Copperbelt mineralisation could yieldsignificant discoveries at Ndola. In late 2005, the Company conducted a thorough review of archive information onthe mineral resources and potential of the Ndola area. The review concluded thatthe area is highly prospective for copper deposits, of the Frontier and Lonshitype as well as the classic Zambian Copperbelt Mine Series hosted type.Widely spaced drilling in the Mine Series during the 1950s and 60s revealed aresource of some 40 million tonnes of 0.75% copper northeast of Ndola town, anda deposit containing 3 million tonnes of 3.5% combined lead and zinc near thecentre of the licence. These deposits were only sketchily explored and havepotential for further development. 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