Placing, Open Offer, Notice of GM & Directors' Hldngs

21 juli 2009 AFRICAN EAGLE RESOURCES PLC PLACING TO RAISE £1.2 MILLION AND OPEN OFFER TO RAISE UP TO £2.16 MILLION NOTICE OF GENERAL MEETING DIRECTORS' HOLDINGS * Commitments received to subscribe for 30,804,500 new Ordinary Shares at 4p per share to raise £1.2 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 £2.16 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 £1.2 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 £2.16 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 £1.5M. The estimated cost of the next stages of the feasibility study will be approximately £1.5M to £2M, 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 Number of Percentage of Percentage of Director in Placing Ordinary Enlarged Share Enlarged Share Shares Capital (assuming Capital held, full subscription (assuming no after the under the Offer) subscription Placing under the and Offer 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 Metcalf 137,500 207,500 0.07 0.09 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 open 20 July 2009 Record Date for Eligible Shareholders for the Offer 29 July 2009 Latest time and date for receipt of Form of Proxy 4:00 p.m. on 4 from all shareholders August 2009 Latest time and date for receipt of Application Forms 11.00 a.m. on 6 from Eligible Shareholders August 2009 General Meeting 4.00 p.m. on 6 August 2009 Announcement of results of the Offer through a 6 August 2009 Regulatory Information Service and the Securities Exchange News Service of the JSE Limited 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 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%). ---END OF MESSAGE--- This announcement was originally distributed by Hugin. The issuer is solely responsible for the content of this announcement.