| Tue 21 Jun 2011, 9:08 | | AEA - African Eagle Resources plc - Mid-Year Progress Report |
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AEA
AEA
AEA - African Eagle Resources plc - Mid-Year Progress Report
African Eagle Resources plc
Incorporated in England and Wales
(Registration number 3912362)
(AIM share code: AFE AIM ISIN: GB0003394813)
(JSE share code: AEA JSE ISIN: GB0003394813)
MID-YEAR PROGRESS REPORT
African Eagle Resources plc ("African Eagle" or "the Company"; AIM: AFE; AltX:
AEA) is pleased to report excellent progress on its Dutwa nickel project in
Tanzania and on its other operations and corporate reorganisations.
Dutwa
* Second bulk ore sample drilling nears completion
* Geotechnical testwork completed on first bulk ore sample
* Mineralogical study conducted by London Natural History Museum
* Metallurgical testwork progressing well at labs in Australia and
South Africa
* Environmental baseline and social impact assessment started
* Significant progress on logistics and reagents studies
Other Projects
* JV partner BrightStar commences 10,000m drilling programme at Miyabi gold
project, Tanzania
* Zambian copper spin-out company Cobra Copper incorporated
* Board reorganisation well advanced
Dutwa is a unique nickel project with a JORC resource of 99 million tonnes at
0.93% Ni, easily mined from two hilltop deposits and amenable to simple, low
acid consumption atmospheric leaching, leading to world class economics. The
updated independent financial modelling prepared for the feasibility study by
Simulus in March 2011 indicated a net present value for a 3Mtpa project of
$870M at today`s nickel price of $10/lb, with cash operating costs of
approximately $3.40/lb and a projected capital payback of between three and
five years.
The African Eagle board`s intention is to deliver a definitive feasibility
study ("DFS") on Dutwa by the end of Q4 2012 - the pre-feasibility stage of
this is on track for late 2011. Mineral processing and metallurgical testwork,
key components of the DFS, are currently underway on carefully chosen bulk
samples of each of the ore types. The new testwork will build on the results
of past tests which demonstrated that the Dutwa ore can be treated by simple
atmospheric leaching at low acid consumption, with no requirement to employ
costly and challenging HPAL (high pressure acid leaching) technology. The new
tests will help to optimise the process flow-sheet and investigate various
ways to cut operating costs to improve the favourable economics already
demonstrated by our scoping studies.
Several elements of the DFS are already underway in parallel with the pre-
feasibility work, including drilling a second bulk ore sample for pilot-plant
testwork and the environmental and social impact assessment.
African Eagle`s Managing Director Mark Parker comments: "We are pleased to
report good progress on our Dutwa DFS. Geotechnical tests have been completed
on Bulk Ore Sample 1; metallurgical test programmes are well underway; and
diamond drilling to obtain Bulk Ore Sample 2 is almost complete. We expect to
recommence drilling for the resource upgrade at the Ngasamo part of Dutwa in
early July. We have made a start on the baseline work for our environmental
and social impact assessment and advanced our logistics and reagents studies.
We are on schedule with the DFS and expect to establish the preferred
treatment process for Dutwa ore and complete the pre-feasibility stage of the
study in late 2011.
"Our management reorganisation, which is intended to put in place the skills
and expertise we will need for the finance and construction of the Dutwa
project, is making good progress. The spin out of our Zambian copper projects
into a new company, Cobra Copper, is advancing well. In Tanzania, our partner
BrightStar Resources has begun a major drill programme at the Miyabi gold
project."
Dutwa progress
Tests are well underway on Bulk Ore Sample 1 ("BOS1"), which was shipped to
the ALS AMMTEC lab in Perth WA in Q1 2011. BOS1 consists of about 10 tonnes of
large diameter mineralised drill core, from holes carefully selected to be
representative of the averages and variations of the principal ore types from
both Wamangola and Ngasamo. Testwork so far has focused on investigating the
properties of the ore in crushing and grinding prior to leaching, and on
geotechnical tests to determine the rock parameters for mining engineering and
pit design. The test data have been incorporated into a request to quote for
accurate mining cost estimates for input to the feasibility study, sent to
international mining contractors. Beneficiation tests now underway on BOS1
employ commonly used laterite ore processing steps such as crushing, drum
scrubbing, attritioning and screening to determine the upgrade potential of
the various types of ore, ahead of integrated feed slurry preparation and
leaching tests.
This testwork has been complimented by a mineralogical study by the London
Natural History Museum ("NHM"), which is giving valuable insights into the
style and nature of the nickel and cobalt mineralisation. Understanding the
mineralogy of nickel laterites is vital in developing the optimum ore
treatment method. The information from the NHM study will help us to design a
process flow-sheet which minimises the amount of acid required to leach the
nickel and reduce the process energy requirements, reducing the operating cost
per pound of nickel.
Atmospheric agitated tank leaching tests by Mintek, Johannesburg, on composite
samples from Ngasamo covering a wide range of lithologies returned encouraging
results, confirming that the leach performance of Dutwa ores is superior to
many nickel laterites elsewhere in the world. The ferruginous siliceous ore
from Ngasamo, which accounts for about 20% of the total Dutwa resource, does
not leach quite as well as its equivalent at Wamangola, but nickel can still
be recovered easily from this ore with extractions approaching 80% at a low
acid consumption of 375 kg/t after 8 hours at 90-95 Celsius. Ngasamo
transition ore averaged 75% extraction with 425 to 440 kg/t acid, while even
the saprolitic ore required only 550-660kg/t acid to extract 75 to 80% of the
nickel. Such ores from other laterite deposits are characteristically high
acid consumers, needing up to 900-1000 kg/t. As the Dutwa ores are generally
low in iron, aluminium and manganese, we expect that extraction of nickel and
cobalt from the liquors produced by atmospheric leaching will be relatively
straight forward.
The financial models for the DFS are now fully built and checked. Inputs will
be modified and improved as better data become available, such as the mining
and processing costs noted above. The models will also be used to test the
economic impact of potential cost-saving measures such as using rail instead
of road transport or using magnesium-bearing saprolite ore in place of some of
the limestone needed to neutralise residual acid after leaching.
Well ahead of schedule, diamond drilling, for bulk ore sample 2 ("BOS2") is
nearing completion. BOS2 consists of a further 15 tonnes of material from the
two Dutwa deposits and will be shipped to Perth for use as feedstock for our
first pilot-scale metallurgical tests later this year or early 2012. Results
from this will inform the detailed plant design engineering and costing for
the DFS, and will provide product samples for potential off-take buyers.
The mineral resources at Dutwa have been almost completely defined to JORC
standards, but some drilling is still needed, mostly at Ngasamo, to extend the
resource and upgrade it from inferred to indicated category. This will
commence in early July, using a new track-mounted drill rig which has been
designed to operate safely on the relatively steep slopes of Ngasamo hill.
Flooding of the drill rig factory in Brisbane early in the year delayed this
start of this drilling programme somewhat and due to the specialised nature of
the rig, it was not practical to source an alternative, but we expect to
complete the programme in time to finish the pre-feasibility phase of the DFS
in late 2011.
We are making good progress with other elements of the feasibility study: our
studies of logistics, infrastructure and reagents are well advanced and our
contractor has started the baseline surveys for the environmental and social
impact assessment, which will be conducted to full Equator Principles
standards.
Miyabi Gold project
BrightStar Resources Limited ("Brightstar"), who signed a joint venture over
the Miyabi gold project in April, has already begun operations on the ground,
commencing a 10,000 metre drilling programme which will cover a three
kilometer strike length of a highly prospective zone along the granite
contact, as well as other promising targets. BrightStar`s announcement can be
found on its web site, www.brightstar.com.au
Corporate reorganisation
The Company is advancing its plan to reorganise its board of directors, in
order to put in place the skills it will need to take Dutwa through
construction and into production, and to spin out its non-core legacy
projects. The search for a new CEO is making good progress and the Company is
on track for Mark Parker to shift to a new opportunities role at the year end.
Our part time Finance Director, Bevan Metcalf, will step aside once a full
time replacement has been appointed, with input from the new CEO. Chris Davies
has been mandated to steer AFE`s copper division to full independence, and
Julian McIntyre joined the Board as a non-executive director in May.
African Eagle`s plan to divest its legacy assets in order to focus on the
Dutwa project is advancing well. Under the guiding hand of Chris Davies, AFE`s
copper division is well on the way to being spun out into a new company, Cobra
Copper. Cobra represents a fully integrated copper exploration and development
company in one of the great copper producing regions of the world, and we
expect it to realise the value of AFE`s copper assets.
Qualified Person
Information in this report relating to metallurgical test results is based on
data reviewed by Chad Czerny PhD, Project Manager, Metallurgy for African
Eagle Resources, who is a Member of the Australasian Institute of Mining and
Metallurgy, has more than 20 years` relevant experience in the mining and
metallurgical industry, and is a Qualified Person under AIM guidelines. Dr
Czerny 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
Sponsor
Merchantec Capital
21 June 2011
For further information:
Please see the Company`s web site at www.africaneagle.co.uk or contact one of
the following:
African Eagle Resources plc
Mark Parker (Managing Director)
Euan Worthington (Chairman)
Sandra Spencer (PR Consultant)
+44 20 7248 6059
+44 77 5640 6899
+44 75 1535 7790
Canaccord Genuity Limited
Andrew Chubb
Bhavesh Patel
+44 20 7050 6500
Ocean Equities Limited
Guy Wilkes
+44 20 7786 4370
Russell & Associates, Johannesburg
Charmane Russell
Marion Brower
+27 11 8803924
+27 82 8928052
Date: 21/06/2011 09:08:00 Produced by the JSE SENS Department.
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