| Tue 21 Jul 2009, 8:00 | | AEA - African Eagle Resources Plc Placing to Raise GBP1.2 Million and Open Offer |
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AEA
AEA
AEA - African Eagle Resources Plc Placing to Raise GBP1.2 Million and Open Offer
to Raise Up to GBP2.16 Million Notice of General Meeting Directors` Holdings
African Eagle Resources plc
(Incorporated in England and Wales, registered number 3912362)
AIM share code: AFE & AIM ISIN: GB0003394813
JSE share code: AEA & JSE ISIN: GB0003394813
AFRICAN EAGLE RESOURCES PLC PLACING TO RAISE GBP1.2 MILLION AND OPEN OFFER TO
RAISE UP TO GBP2.16 MILLION NOTICE OF GENERAL MEETING DIRECTORS` HOLDINGS
- Commitments received to subscribe for 30,804,500 new Ordinary Shares at 4p
per share to raise GBP1.2 million before expenses
- Announcement of a non-underwritten open offer to eligible shareholders of
up to 53,875,000 Ordinary Shares at 4p per share to raise up to
GBP2.16 million (equivalent to Euro 2.5 million), before expenses
- The proceeds of the Placing and Offer to fund work on African Eagle`s
feasibility study of the Dutwa Nickel Project and for general working
capital
- Notice is given of a General Meeting of shareholders to consider and
approve these share subscriptions
- Directors and Managers to subscribe for 1,492,000 shares in the Placing
The Board of African Eagle Resources plc ("African Eagle" or the "Company") is
pleased to announce that Seymour Pierce has arranged a Placing to raise gross
proceeds of approximately GBP1.2 million by way of a placing of 30,804,500 new
Ordinary Shares at a price of 4p each with new and existing investors (the
"Placing"). The Placing will represent approximately 14.5% of the existing
issued share capital.
The Board also announces its intention to give as many eligible African Eagle
shareholders as possible an opportunity to participate in the fundraising on the
same terms, by way of an open offer of up to 53,875,000 new Ordinary Shares at
the same price of 4p each to raise up to an additional GBP2.16 million,
equivalent to Euro 2.5 million (the "Offer").
Relative to the closing market price of 5p per Ordinary Share on the London
Stock Exchange on 17 July 2009 (the last practicable business date prior to this
announcement), the issue price under the Placing and the Offer represents a
discount of 20%.
John Park, Chairman of African Eagle commented, "We are delighted with the
support that leading institutional investors in the United Kingdom have given
the Company. Their commitment endorses the quality of the Company`s prospective
nickel laterite project at Dutwa and our experienced executive and operational
teams.
"The proceeds of the Placing will allow us to make a start on the feasibility
study at Dutwa so as to accomplish the recommendations that GRD Minproc
suggested to further delineate and understand the resource potential at Dutwa
which will create substantial value for our shareholders. We feel it is
important give as many shareholders as possible the opportunity to participate
in the fundraising on the same terms and look forward to the required
resolutions being passed at our General Meeting organised on 6 August 2009."
The net proceeds of the Placing and Offer, after expenses, are intended to be
used, in conjunction with the Company`s existing cash resources, to make a start
on work leading to a feasibility study on African Eagle`s Dutwa Nickel Project
in Tanzania and for general working capital.
Since its discovery of the Dutwa nickel deposit in June 2008, African Eagle has
completed resource drilling; received an independent resource estimate;
completed laboratory metallurgical and mineralogical tests (which revealed that
the deposit could be processed efficiently by sulphuric acid leaching), and
commissioned a scoping study which has indicated that the project is likely to
be economically feasible.
In December 2008, African Eagle decided that the Dutwa project should become its
top priority, because the Directors believed that, of all the Group`s projects,
Dutwa offered the greatest potential to add value. With the delivery of the
positive scoping study in June 2009, the Company resolved to start work
immediately on a feasibility study.
At the end of June 2009, African Eagle held net cash of approximately GBP1.5M.
The estimated cost of the next stages of the feasibility study will be
approximately GBP1.5M to GBP2M, including the working capital the Company will
need to cover its general operational and administrative expenditures. The Board
therefore resolved to raise funds through a placing of Ordinary Shares with
institutional investors.
In order to give as many of its shareholders as possible the opportunity to
participate in the financing and to limit the dilutive effect of the Placing,
the Board also resolved to make an open offer to as many shareholders as
possible. For legal reasons, the Offer is only available to Eligible
Shareholders, being those shareholders of the Company whose service addresses in
the Shareholders` Register on 29 July 2009 are in the United Kingdom (excluding,
for the avoidance of doubt, the Channel Islands), the Republic of Ireland and
Germany. The Offer closes at 11:00 on Thursday 6 August 2009.
The FSMA limits the amount which can be raised by way of an open offer to
shareholders to the equivalent sterling amount of Euro 2.5M, without requiring
an approved prospectus to be produced. The issue of a prospectus would
considerably increase the costs of the fundraising and it would take much longer
to complete, as any such prospectus would require the prior approval of the
UKLA.
The Placing has been arranged by the Company`s Broker, Seymour Pierce. The
Placing is conditional, inter alia, on (i) shareholder approval at the General
Meeting; (ii) the Placing Agreement becoming unconditional in all respects as
regards the Placing; and (iii) admission of the Placing Shares to AIM and
listing on ALTx. The Placing is not conditional upon the Offer.
In connection with the Placing and Offer, the Company has published a Circular
containing full details, including the terms and conditions, of the Placing and
the Offer. The Circular itself does not include an application form to enable
Eligible Shareholders to participate in the Offer. Application Forms are
personalised for each Eligible Shareholder and have been sent, together with the
Circular and Form of Proxy, by mail to each shareholder`s address of record in
the shareholders register on 20 July. For Eligible Shareholders who hold shares
in African Eagle Resources plc through a nominee, the Application Form, Circular
and Form of Proxy will be sent to the nominee. Any person becoming an Eligible
Shareholder between 21 and 29 July and needing an Application Form should
contact Capita Registrars or visit the Company`s website
(www.africaneagle.co.uk/im/Offer_Circular.asp).
NOTICE OF GENERAL MEETING
A General Meeting (GM) of African Eagle Resources plc will be held at 2nd Floor,
6-7 Queen Street, London EC4N 1SP, UK (the "GM") on 6 August 2009 at 4.00 p.m.
The purpose of the GM is to consider and, if thought fit, to pass the
resolutions necessary to authorise and implement the Placing and the Offer.
The Circular, containing a Notice of the GM, together with a separate Form of
Proxy, has been sent to all shareholders. The Circular and Notice of the GM and
Form of Proxy may also be obtained via the Company`s website
(www.africaneagle.co.uk/im/Offer_Circular.asp). Shareholders should read the
full text of the resolutions contained in the Notice of General Meeting in the
Circular. Shareholders who are not Eligible Shareholders may attend the General
Meeting in person or by proxy but should take no action in relation to the Offer
which is not capable of acceptance by them.
DIRECTORS` HOLDINGS
The Directors have jointly subscribed for 1,222,500 shares in the Placing and
senior managers have subscribed for a further 269,500 shares.
Details of individual directors` subscriptions and their consequent holdings and
percentages following the Placing and the Offer are as follows:
Subscription in Number of Percentage Percentage of Enlarged
Director Placing Ordinary of Share Capital (assuming
Shares held, Enlarged no subscription under
after the Share the Offer)
Placing and Capital
Offer (assuming
full
subscripti
on under
the Offer)
John Park 250,000 6,926,801 2.33 2.85
Euan 250,000 1,060,000 0.36 0.44
Worthington
Mark Parker 312,500 3,808,857 1.28 1.57
Christopher 152,500 946,730 0.32 0.39
Davies
Bevan 137,500 207,500 0.07 0.09
Metcalf
Geoffrey 120,000 909,300 0.31 0.37
Cooper
As all of the Directors are participating in the Placing and thus there are no
independent Directors, Seymour Pierce, the Company`s nominated adviser, has
reviewed the terms on which the above Directors are participating in the Placing
and on the grounds that they are participating on the same terms as all of the
other placees, consider such terms to be fair and reasonable insofar as
shareholders are concerned.
IMPORTANT DATES
Date of posting of the Circular and Offer 20 July 2009
open
Record Date for Eligible Shareholders for the 29 July 2009
Offer
Latest time and date for receipt of Form of 4:00 p.m. on 4 August 2009
Proxy from all shareholders
Latest time and date for receipt of 11.00 a.m. on 6 August 2009
Application Forms from Eligible Shareholders
General Meeting 4.00 p.m. on 6 August 2009
Announcement of results of the Offer through 6 August 2009
a Regulatory Information Service and the
Securities Exchange News Service of the JSE
Limited
Admission and dealings in the New Ordinary 7 August 2009
Shares to commence on AIM
CREST accounts credited with New Ordinary 7 August 2009
Shares
Listing of the New Ordinary Shares on ALTx 11 August 2009
from commencement of business on
Definitive share certificates for the New
Ordinary Shares to be despatched (if 21 August 2009
appropriate) by
DEFINITIONS: All capitalised terms used in this announcement are defined on
pages 6 to 8 of the Circular.
For further information contact:
Mark Parker
Managing Director
African Eagle
+44 20 7248 6059
+44 77 5640 6899
Nicola Marrin
Seymour Pierce Limited, London
Nominated Adviser
+ 44 20 7107 8000
Charmane Russell
Russell & Associates, Johannesburg
+27 11 8803924
+27 82 8928052
Ed Portman / Leesa Peters
Conduit PR, London
+44 20 7429 6607
+44 77 3336 3501
About African Eagle
African Eagle is a diversified mineral exploration and development company
operating in eastern and central Africa. The Company`s principal advanced assets
are the Dutwa nickel laterite discovery in Tanzania, where the Company completed
a scoping study in June 2009, and its 49% interest in the Mkushi Copper Mines
joint venture project in Zambia, for which a draft feasibility study was
completed in Q4 2008.
African Eagle is evaluating a second promising nickel laterite deposit at Zanzui
in Tanzania and has defined a JORC gold resource estimated at half a million
ounces at its Miyabi gold project in Tanzania. The Company holds a well-balanced
portfolio of promising earlier stage gold, copper, platinum and uranium
projects, including the Ndola and Mokambo projects in the Zambian Copperbelt and
the Igurubi gold project in Tanzania.
Zambia, Tanzania and Mozambique, the sites of African Eagle`s projects, are all
countries which have highly prospective geology, relatively low above-ground
risks and track records of successful major investments in the metals and
minerals industries.
In December 2008, African Eagle resolved to prioritise the Dutwa project,
because the Board believes that, of all the Company`s projects, it offered the
greatest potential to add value. To take its other discoveries into production,
African Eagle is seeking industry partners with records of successful mine
development, by means of joint ventures, farm-ins, spin-outs or other
mechanisms.
About the Dutwa Project
African Eagle has discovered a significant nickel laterite deposit in the Dutwa
project area in the Lake Victoria Goldfield. Within Tanzania, the project is
favourably situated 100km east of the railhead at Mwanza and close to the main
Mwanza-Nairobi trunk road, a major power line and the shore of Lake Victoria.
Since the discovery of the Dutwa nickel deposit in June 2008, African Eagle has
explored the project very quickly and cost-effectively, including resource
drilling and an independent resource estimate; laboratory metallurgical and
mineralogical tests which revealed that the deposit could be processed
efficiently by sulphuric acid leaching. On 24 June 2009, the Company announced
the results of its "proof of concept" scoping study. The study, by GRD Minproc
of Perth, Western Australia, indicated that the project can be economically
viable, and African Eagle has now begun work towards a definitive feasibility
study.
For the study, GRD Minproc reviewed information provided by African Eagle
relating to the geology, resources, setting, mineralogy and metallurgy of the
deposit, and the infrastructure in Tanzania and neighbouring countries,
combining this information with its own internal data and experience, to develop
and calculate the economics of ten alternative mining and process plant options.
Costs were estimated in US dollars, to an accuracy of +/-30%. The economic
modelling was an iterative process, feeding back into the mining plans and the
process designs.
GRD Minproc used Whittle mine modelling to optimise the mining plan and cut-off
grade for each process option, based on the deposit model and JORC compliant
resource of 31 million tonnes at 1.1% nickel and 0.034% cobalt produced by SRK
in November 2008. GRD Minproc added a 50% upside, to take into account the
nearby Ngasamo laterite, which adds a potential 15-20 million additional tonnes.
The study showed that the optimum process option is likely to be atmospheric
tank leach, but the project may also be viable using heap leaching. High-
pressure acid leach with direct solvent extraction of the nickel is also
potentially economically feasible.
The financial modelling showed that at today`s nickel prices, the project can be
expected to generate a net cash-flow (EBIT) of US$ 53 million to 130 million per
year over a mine life of 15 to 20 years, depending on the processing method.
The detailed results are set out in the table below.
The study also shows a good investment case for the project, with a post-tax
internal rate of return (IRR) of 15% and a net present value (NPV) of US$110
million, using a base case of a 10% discount rate of 10%, a US$7/lb nickel
price, with the best processing option (AL/MSP). The pre-tax NPV is US$200
million.
The cost of reagents, especially sulphur and lime, will be a major component of
operating costs and sensitivity analysis shows that returns can be considerably
increased if these costs can be minimised. Also, as anticipated, transport costs
will form a significant contribution to operating costs and the Company will
investigate ways to minimise them. The base case used transport costs of US$0.08
per tonne per km; the NPV rises to $210 million (post-tax) or US$350 million
(pre-tax) and the IRR increases to 15.5% if the transport costs can be reduced
by 25% and an 8% discount rate is used.
The study demonstrated that further feasibility studies are now justified and
the Company has commenced work on these. The initial work will be directed
towards investigating ways to reduce costs and increase revenues, together with
drilling the adjacent Ngasamo deposit, improving the resource model and refining
the metallurgical information. A start has already been made on the additional
metallurgical test work at Mintek Laboratories in South Africa, including column
and tank leach tests, sizing analysis and physical test work to establish more
definitively the optimum processing routes.
African Eagle acquired the Dutwa project for its gold potential, but the
Company`s exploration team quickly recognised that there was significant nickel
laterite potential. There is very little outcrop, so the Company conducted
extensive ground magnetic surveys to reveal the underlying structure and
geology. The Company also compiled historical data, including detailed
geological maps and trench results dating from 1956, when rock chip samples from
the trenches over the ultramafic rocks were reported as yielding up to 1.9%
nickel and 10% chromium.
In all, African Eagle has explored a total area of more than 750km2 in the Dutwa
project area. The Company holds a 90% interest, with option to acquire 100%,
over the Dutwa laterite deposit itself. In April 2009, African Eagle signed a
Letter of Intent for an option and joint venture over another nickel laterite at
Ngasamo, 5km west of the Dutwa deposit.
Greenstones and granites underlie the project area. The greenstones, of Archaean
Nyanzian age, are mostly metamorphosed volcanic and sedimentary rocks, with some
banded iron formation in the east. Several large ultramafic bodies occur within
the greenstones and the nickel laterites form a blanket up to 60m thick on top
of these.
To investigate the nickel discovery, the Company undertook trial drilling in
June 2008. The results were very encouraging and a 139-hole reverse circulation
(RC) drilling programme was completed to delineate the resource. African Eagle
also undertook a 10-hole diamond drill programme to obtain core samples for
metallurgical testing and density measurements.
In November 2008, African Eagle announced an initial Inferred Mineral Resource
estimate of 31 million tonnes at an average grade of 1.1% nickel and 0.034%
cobalt. At a cut-off grade of 0.5% nickel, this gives Dutwa a contained metal
endowment of some 340,000 tonnes of nickel and 11,000 tonnes of cobalt. The
estimate was prepared by independent consultants SRK Consulting (UK) Ltd in line
with the Australasian Code for Reporting of Mineral Resources and Ore Reserves
(the JORC Code). A little additional drilling and more advanced geostatistics
and deposit modelling will be needed to upgrade the resource to Indicated
category.
Ngasamo Hill, 5km west of the Dutwa deposit, is geologically very similar and
holds a laterite deposit of the order of 15 to 20 million tonnes, which would
increase the global resource at Dutwa from the currently defined 31 million
tonnes at 1.1% nickel, to some 45 - 50 million tonnes. Drilling and
metallurgical tests will be needed to confirm the size, grade and compatibility
of Ngasamo. Under its agreement with Ngasamo`s owners, (Safina a.s. of the
Czech Republic and its Tanzanian subsidiary Precious Metals Refinery Company
Ltd), African Eagle can earn an interest of at least 50% and up to 75% in
Ngasamo by carrying out exploration and evaluation work, up to a feasibility
study.
Mintek Laboratories in Johannesburg investigated the mineralogy and metallurgy
of mineralised drill samples from the deposit, including extended `bottle roll`
sulphuric acid leach tests to investigate metal recoveries and acid consumption.
Mintek also carried out mineralogical characterisation by X-ray diffraction
(XRD), scanning electron microscopy (SEM) and polished section work.
The bottle roll test results showed nickel extractions of 70-90% with an average
of 83%. Cobalt extractions were mostly in the range 70 to 85%. The acid
consumptions, averaging 209kg/t, are very low compared to other Ni laterite ores
worldwide.
The mineralogical investigations show that the laterite is extremely silica-
rich, with low iron and magnesium content, indicating that Dutwa is not a
typical laterite nickel deposit. Mintek believes that much of the nickel and
cobalt occurs in "wad" with manganese content of 20-60%, nickel content of up to
20% and cobalt content of up to 10%.
The unusual mineralogy of the deposit is highly beneficial, as it results in
lower acid consumption and is expected to give good heap leach permeability or
favourable liquid-solid separation in tank leaching. The concentration of nickel
and cobalt in the manganese wad offers the possibility that mechanical selection
of high-grade material may allow reduced throughput and hence a lower cost
processing plant.
The Company is also investigating other potential nickel laterite deposits in
Tanzania, and has completed a trial programme of RC drilling to test a laterite
at its Zanzui project, 60km to the south of Dutwa. Results included 42m at 1.05%
nickel (including 6m at 2.80%) and 33m at 0.91% nickel (including 9m at 1.41%).
21 July 2009
Sponsor
Nedbank Capital
Date: 21/07/2009 08:00:01 Produced by the JSE SENS Department.
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