| Fri 7 Aug 2009, 8:00 | | AEA - African Eagle Resources plc - Open Offer Oversubscribed Result Of General |
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AEA
AEA
AEA - African Eagle Resources plc - Open Offer Oversubscribed Result 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
OPEN OFFER OVERSUBSCRIBED
RESULT OF GENERAL MEETING
DIRECTORS` HOLDINGS
- Open Offer oversubscribed
- Offer maximum of Euro 2.499 million (GBP2,136,700) raised and 53,417,500
Offer Shares issued
- Placing of 30,804,500 new Ordinary Shares at 4p per share completed,
raising GBP1.2 million before expenses
- 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
- Directors subscribed for 250,000 shares in the Open Offer
The Board of African Eagle Resources plc ("African Eagle" or the "Company") is
pleased to announce that its Placing and Open Offer have been successfully
completed, with all resolutions at the General Meeting of the Company held on 6
August being duly passed.
The Company is delighted to report that the Open Offer to Eligible Shareholders
("Open Offer"), which closed at 11am yesterday was oversubscribed. After
scaling back, the Offer raised Euro 2,499,939, equivalent to GBP2,136,700 at the
then ruling exchange rate of 1.17 Euro to GBP1, and accordingly, 53,417,500
Offer Shares have been issued at a price of 4p each.
Also, the placing by Seymour Pierce of 30,804,500 new Ordinary Shares with new
and existing investors at a price of 4p each, raising gross proceeds of
approximately GBP1.2 million, has now been completed (the "Placing").
Application has been made for admission to trading on AIM of the Placing Shares
and the Offer Shares and this is expected to take place this morning.
Application has also been made for admission to trading on AltX of the Placing
Shares and the Offer Shares and this is expected to take place on 11 August.
Following the issue of these new Ordinary Shares there are 296,762,128 Ordinary
Shares in issue. This figure may be used by shareholders as the denominator for
the calculations by which they will determine if they are required to notify
their interest in, or a change to their interest in, African Eagle under the
FSA`s Disclosure and Transparency Rules.
Mark Parker, Managing Director of African Eagle commented, "We are delighted
with the support shown by our shareholders and by leading institutional
investors. Their commitment is a clear endorsement of the quality of the
Company`s prospective nickel laterite project at Dutwa and our experienced
executive and operational teams. We were very keen to give as many of our
shareholders as possible the opportunity to take part in this fundraising and we
are therefore delighted with the fantastic take up of the Open Offer. In order
to be able to make the Open Offer, we had to work through a raft of complex
rules and regulations and we pay tribute to the guidance and support of our
advisers throughout this process, which ensured that we were able to include as
many shareholders as possible, whilst keeping costs to a minimum."
The net proceeds of the Placing and Open 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.
DIRECTORS` HOLDINGS
The Directors have in total subscribed for 1,222,500 shares in the Placing and
250,000 shares in the Open Offer.
Details of individual Directors` subscriptions and their consequent holdings and
percentages following the Placing and the Offer are as follows:
Subscription in Subscription in Number of Percentage of
Director Placing Offer Ordinary Enlarged
Shares held, Share Capital
after the
Placing and
Offer
John Park 250,000 - 6,926,801 2.33%
Euan Worthington 250,000 - 1,060,000 0.36%
Mark Parker 312,500 225,000* 4,033,857 1.36%
Christopher 152,500 25,000 971,730 0.33%
Davies
Bevan Metcalf 137,500 - 207,500 0.07%
Geoffrey Cooper 120,000 - 909,300 0.31%
* to be held by Mr Mark Parker`s Self-Invested Personal Pension
IMPORTANT DATES
Admission and dealings in the New Ordinary Shares to 7 August 2009
commence on AIM
CREST accounts credited with New Ordinary Shares 7 August 2009
Listing of the New Ordinary Shares on ALTx from 11 August 2009
commencement of business on
Definitive share certificates for the New Ordinary
Shares to be despatched (if appropriate) by 21 August 2009
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%).
07 August 2009
Sponsor
Nedbank Capital
Date: 07/08/2009 08:00:03 Produced by the JSE SENS Department.
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