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22 January 2013: African Eagle Resources plc ("African Eagle" or the "Company") (AIM: AFE; AltX: AEA) is pleased to provide a development update regarding its flagship Dutwa project in Tanzania. Over the past year the Company has achieved substantial advances in the project in accordance with its plan for the development of a Bankable Feasibility Study (the "BFS"). During 2012 the Company undertook a significant amount of work directed toward de-risking the project and takes this opportunity to update shareholders of developments and outline the near term plans for further activities.
Principal Advances Achieved in 2012:
The resource estimate for Dutwa has been upgraded and extended with greater than 100Mt occurring in the Indicated category grading at 0.92% nickel;
Extensive metallurgical test work has been performed on both ore types in the two hills comprising Dutwa (Wamangola and Ngasamo). This has led to much improved understanding and prediction of process behaviour in terms of beneficiation and leach performance in support of straightforward and low risk atmospheric tank leaching;
The Company has significantly advanced its efforts regarding the environmental and social impact assessment (the "ESIA"), which is being performed in accordance with Tanzanian government regulations and the Equator Principles;
Logistics review studies have developed significantly. The Company now believes that rail transport to and from the project is a viable and secure transport option. Efforts have been extended to secure agreement with the governments of Tanzania and surrounding countries on the method and structure of rail operations in support of Dutwa;
Robust sources of key process reagents (limestone and sulphur) have been identified and their future supply, demand and pricing has been independently forecast and efforts have been undertaken to define these opportunities such that supply agreements can be established in support of the completion of the BFS; and
Cutfield Freeman and Company ("CF&Co") has been engaged to provide the Company with advisory services related to the overall project financing and securing the support of a strategic partner in the development of Dutwa. The Company has held early stage discussions with certain potential strategic partners and will shortly expand its efforts in this regard.
Principal Conclusions and Near Term Plans:
Beneficiation and sequential leaching process data have enabled the consumption of acid and limestone to be optimised with a good degree of confidence. The estimate of nominal acid demand per unit of nickel produced is in line with estimates recently announced, though substantially higher than reported in 2011;
Operating and capital costs will be subject to re-estimation during completion of the BFS and the Company anticipates that the potential Dutwa operating and capital costs should remain competitive when benchmarked against similar projects in the global nickel industry and that overall project returns are likely to have significant leverage to the nickel price;
In view of the refinement of the flow sheet, better definition of consumables volumes, changes to forecast consumables costs, logistics developments and potential resultant changes in capital costs, the operating and capital cost assumptions included in the Dutwa economic model update of March 2011 are no longer considered valid and a material increase in operating cost is to be anticipated;
To assist with its strategic partner search, the Company is planning to undertake a mini-pilot plant test programme, which will model the full process flow sheet at a small scale, as a means to de-risk the more costly main pilot plant and to provide early confirmation of the process performance predicted by the discrete beneficiation and leach test programmes. The integrated test will enable the production of limited quantities of nickel product, which the Company will use in its development activities and in support of the search for a strategic partner; and
The Company has determined it prudent to defer any other significant new BFS project work activities, including the planned main pilot plant tests, until the results of the integrated test have been received.
Commenting on the development progress, African Eagle's CEO, Trevor Moss said "I am pleased with the solid progress we have made to date on the development of the Dutwa BFS and the definition of the project that we have been able to achieve. We now have good confidence in the process method, with beneficiation and sequential leaching offering tangible benefits, and we have significantly improved the understanding of reagent supply and transportation. We seek to extend that knowledge further via economical means such as the integrated test, which will provide meaningful additional data without incurring the significant cost of the main pilot plant.
It is important that the Company seeks maximum benefit for its shareholders and the early engagement of a strategic partner to assist in the development of Dutwa is a key objective in this regard. With the assistance of CF&Co we plan to expand our activities toward this objective."
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, please visit www.africaneagle.co.uk or contact:
African Eagle Resources plc
Trevor Moss, CEO
+44 20 7248 6059
Canaccord Genuity Limited (NOMAD and Joint Broker)
Rob Collins or Andrew Chubb
+ 44 20 7523 8000
Ocean Equities Limited (Joint Broker)
+44 20 7786 4370
Russell & Associates, Johannesburg
Charmane Russell or Marion Brower
+27 11 880 3924
About African Eagle
African Eagle Resources plc is a nickel development and exploration company listed on the London AIM (AFE) and Johannesburg AltX (AEA) stock exchanges. The Company's flagship project is the Dutwa Nickel project in Tanzania located about 25km south of Lake Victoria and 110km east of Mwanza within greenstone gold belts which host many of Tanzania's operating and developing gold mines. The Company is currently conducting a Bankable Feasibility Study.
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