| Fri 6 Nov 2009, 9:00 | | AEA - African Eagle Resources plc - Latest Drilling Results From African |
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AEA
AEA
AEA - African Eagle Resources plc - Latest Drilling Results From African
Eagle`s Dutwa Nickel Project In Tanzania
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
LATEST DRILLING RESULTS FROM AFRICAN EAGLE`S DUTWA NICKEL PROJECT IN TANZANIA
First assay results from 2009 drilling programme
- Results received from first 17 of approximately 120 planned holes.
- Key mineralised intersections include
- 18m at 1.2% nickel including 9m @ 1.7%
- 15m at 1.1% nickel
- 27m at 0.9% nickel
- Option exercised on the Ngasamo deposit
- Deposit modelling contract awarded to Snowden Mining Services
- Logistics study awarded to Drum Resources Limited
African Eagle`s Managing Director Mark Parker comments, "We are pleased to
report that we have successfully completed our drilling programme to define
the margins of the Wamangola Hill Deposit at the Dutwa Nickel Project in
Tanzania. We recently received preliminary assay results from the first few
drill holes, which are in line with our expectations. The rig will now move
to Ngasamo Hill, where our recently completed surface surveys have confirmed
that the laterite is nickel bearing. As a result, we have exercised our
option to earn an interest in Ngasamo.
"The appointment of Snowden Mining Industry Consultants to conduct the
deposit modelling and Drum Resources Limited to carry out the logistics study
gets our feasibility study well under way."
Drilling
The programme of step-out and infill Reverse Circulation (RC) drilling at the
main Wamangola deposit was completed last week, with 62 RC holes drilled for
a total of 3299m, to an average depth of 53m.
The programme was designed to improve the definition of the deposit,
especially around the edges, which were not fully investigated by previous
drilling campaigns. The results should allow an upgrade of the resource
estimate to JORC indicated category and may also add to the 31 million
tonnes, 1.1% nickel resource announced last November.
Preliminary assay results for nickel have now been received from the first 17
drill holes and the results are in line with our expectations for the deposit
margins, where the laterite is somewhat thinner and lower grade than in the
centre. The samples are now being prepared for assay for a wider suite of
chemical elements.
Mineralised intersections with grade more than 0.5% nickel are listed below.
Hole No Depth Intersection Grade
metres metres Ni %
DTRC_140 24 15 1.08
DTRC_142 6 27 0.89
DTRC_143 9 18 1.21
incl 18 9 1.65
DTRC_144 0 12 0.72
DTRC_147 3 3 0.53
DTRC_149 3 3 0.80
and 45 9 0.68
DTRC_150 9 3 0.59
DTRC_152 0 6 0.82
DTRC_155 0 9 0.59
DTRC_156 0 12 0.55
DTRC_157 0 6 0.52
and 21 3 0.62
Ngasamo Option Exercised
Having completed the Wamangola step-out and infill programme, drilling will
move 7km west to Ngasamo Hill. African Eagle recently completed surface
surveys over this area, which supported the Company`s view that the laterite
at Ngasamo Hill is geologically very similar to that at Wamangola and holds a
potentially significant nickel endowment. African Eagle has therefore
exercised its option with Ngasamo`s owners, (Safina a.s. of the Czech
Republic and its Tanzanian subsidiary Precious Metals Refinery Company Ltd),
to earn an interest in the prospect.
Under the earn-in Agreement, announced 7 April 2009, the Company will now
earn an initial 35% interest by conducting and co-funding the current RC
drilling programme to delineate a JORC inferred resource at Ngasamo. It can
then increase this to 50% by sole-funding the promotion of the resource to
indicated category and to 75% by including the Ngasamo deposit in the global
feasibility study. On completion of the feasibility study, Safina will
convert its interest in Ngasamo into an interest in the whole project,
according to the ratio of the two companies` attributable interests in the
global resources.
Deposit modelling and logistics contracts
African Eagle has awarded two significant contracts which will form key parts
of the Dutwa feasibility study.
The Company has appointed Snowden Mining Industry Consultants to carry out
deposit modelling and mine planning on the drill results. Snowden has one the
best records of any consulting group in nickel laterite advanced deposit
modelling, resource estimation and/or mine engineering studies including
Koniambo in New Caledonia (Xstrata Nickel, formerly Falconbridge); Caldag in
Turkey and Acoje in the Philippines (European Nickel); Ravensthorpe (BHP
Billiton) and Murrin Murrin (Anaconda Nickel) both in Australia. Other recent
Snowden clients include Heron Resources, Intex Resources, Toledo Mining
(Berong and Ipilan).
African Eagle has also awarded the contract for a logistics and transport
study to Drum Resources Limited, a UK based group specialising in logistics
in Africa. Drum has extensive experience of providing logistics services to
the mineral industry, including copper supply chain management from the
Democratic Republic of Congo and for chrome and manganese mines in South
Africa, as well as expertise in broader commodity import and export
logistics.
Qualified Person (AFE)
Information in this report relating to exploration results is based on data
reviewed by Mr Christopher Davies BSc, MSc, DIC, FSEG, FAusIMM, Operations
Director for African Eagle, who is a Fellow of the Australasian Institute of
Mining and Metallurgy, has more than 27 years` relevant experience in mineral
exploration, and is a Qualified Person under AIM rules. Mr Davies consents to
the inclusion of the information in the form and context in which it appears.
Technical terms
A glossary of technical terms used by African Eagle in this announcement and
other published material may be found at
www.africaneagle.co.uk/p/glossary.asp
For further information:
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.
The Company holds a 90% interest, with option to acquire 100%, over the Dutwa
laterite deposit and in 2009, signed a Letter of Intent for an option and
joint venture over another nickel laterite at Ngasamo, 5km west. In all,
African Eagle has explored a total area of more than 750kmSquared in the
project area.
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.
The Study indicates that Dutwa, if it were in production today, would be
profitable. Earnings, on an EBIT basis, would be of the order of $110 million
per annum on average over the life of mine, giving an internal rate of return
around 20%.
As a potentially low-cost producer, the upside for the Dutwa project is
considerable if nickel prices are above the $7/lb used in the base case. The
following table shows the key metrics for several upside cases.
Ni price US$/lb 9.00 8.50 8.00 7.50 7.00 6.50
Life of mine $M 2,600 2,300 2,000 1,800 1,500 1,200
EBIT
Pre-tax IRR % 31 27 24 21 17 13
Post-tax IRR % 27 24 21 18 15 11
Pre-tax NPV $M 640 530 420 310 200 90
Post-tax NPV $M 430 350 270 190 110 30
Base case: Abbreviations:
Nickel price = US$ 7/lb EBIT = Earnings before interest and
($15,430/tonne) tax
Cobalt price = US$ 10/lb IRR = Internal Rate of Return
Discount rate = 10% NPV = Net Present Value
Transport cost = US$100/tonne (8Cents DCF = Discounted cash flow analysis
(USD)/tonne/km)
Tax rate = 30%, fiscal incentives not All numbers stated to 2 significant
accounted digits
Royalty = 3%
The financial modelling was conducted
in US dollars with an estimated
accuracy of +/-30%
The Study adopted a fairly broad brush approach to many of the costs, to
demonstrate "proof of concept" and provide indicative economics. GRD Minproc
estimated individual capital and operating costs to +/- 30%, based on their
considerable experience with nickel laterites. These variables will be
determined with more accuracy and confidence during the forthcoming
feasibility work.
The Study identified several key areas where further testwork and detailed
study are especially likely to result in improvements to the "bottom line" or
to important gains in confidence. These areas include:
- Improved global deposit model and the potential for early "high-
grading". The Ngasamo resource will be drilled and incorporated into a
more sophisticated global resource model and mining plan. From this, it
will be possible to establish whether richer ore can be mined first,
giving increased early cash-flow and an improved NPV.
- Ore beneficiation and project scale. The capital and operating costs of
the plant would be reduced if mechanical beneficiation of the ore prior
to leaching yields a smaller tonnage of richer material for processing
through the plant.
- Advanced leaching testwork. Column and vat leach tests at bench and
pilot scale will determine the best operating conditions to optimise
nickel extraction, including acid concentration, residence time and
temperature.
- Reagent cost reductions. The cost of reagents, notably sulphur and
lime, will be a significant component of operating costs and
profitability will increase considerably if these costs are minimised.
Transport is a substantial part of the reagent costs and ways to
minimise this will be investigated, as will the availability of more
local sources, particularly of lime.
- More sophisticated fiscal and economic modelling. Tanzania offers a
number of tax incentives for exploration and mine development, which
were not fully accounted in the Study economic model.
In August, the Company raised GBP3.3M additional capital through a Placing
and Offer, to address these issues and progress the project towards
feasibility. Further metallurgical testing has commenced on drill core
samples at Mintek laboratories in South Africa and the Company has started
infill drilling at Dutwa and resource drilling at Ngasamo.
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.
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%).
06 November 2009
Sponsor
Nedbank Capital
Date: 06/11/2009 09:00:01 Produced by the JSE SENS Department.
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