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Gold/Mining/Energy : Mining News of Note

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To: LoneClone who wrote (18085)	4/21/2008 9:27:20 AM
From: LoneClone	Read Replies (1) of 193124

African Eagle changes strategy Brendan Ryan Posted: Mon, 21 Apr 2008 miningmx.com [miningmx.com] -- Tough times for junior exploration companies have forced African Eagle Resources to change its business strategy and focus on getting a mine into production as fast as possible. African Eagle has been listed on London’s AIM bourse since 2003. The company came to the JSE last August via a dual listing on AltX but the share has headed rapidly south since then. African Eagle listed at 245c but dropped to 110c before recovering to current levels around 136c. The reason, according to MD Mark Parker, is the “flight from risk” that investors have undertaken in the wake of the sub-prime crisis and widespread credit crunch. “Investors have made it clear they do not want to put up any more cash to be used for drilling more holes in Africa. Any funds we ask for will be put into developing producing assets and will not be used to go exploring,” Parker said. The company has sufficient funds to keep exploring for another 18 months after raising £7,4m through a placing ahead of the Alt-X listing. Some 90% of that money came from SA investors and Parker said last August African Eagle had come to the JSE because it could not find that kind of money in London as an exploration player. He said at the time; “we had a choice, which was either to concentrate on bringing one project into production rapidly or to look outside AIM for money to continue exploring.” But it seems the SA backers also now want African Eagle to get into production rapidly and Parker told Miningmx the company is focussing on the development of its Mkushi Copper project in Zambia. A prefeasibility study on Mkushi was produced in January and Parker hopes to have the full bankable feasibility study (BFS) completed by October/November leading to a “go” decision by the end of the year. “We are confident enough that Mkushi will get the go-ahead to order long-lead items such as the mill ahead of the completion of the BFS,” Parker said. He added the project was robust enough to cope with the recent changes announced to the Zambian taxation and mining regime about which Parker and African Eagle operations director Chris Davies sounded irritated but philosophical. They pointed out the UK government had previously done something similar to the oil companies operating in the North Sea. Click Here to subscribe to our daily newsletter Parker commented; “It is not unrealistic that a country should expect to get a reasonable return on its natural resources but there’s a balance to be struck between getting such a return and scaring off investors. “Governments must remember that, at the end of the day, mining is a business driven by a profit motive. “It’s going to take a year or two to shake the new system down. My initial reaction is that I think the Zambian government may have gone too far but our assessment is that the Mkushi project still stacks up under the new regime.” The estimated capital cost of Mkushi is US$70m over the life of the mine. Mkushi will be a joint venture between African Eagle and Australian company CGA Mining which will hold 51% and will operate the mine. It will be a small operation with an economic life of just six years but the pre-feasibility study indicates a 47% IRR and a capital payback period of two and a half years. Parker said the decision to list on AltX had been a good one for African Eagle. “It has given us a higher profile here and in the rest of Africa which is leading to new contacts which will prove valuable in future.” One of those new contacts is with TWP Holdings, the JSE-listed engineering company. Subsidiary TWF Finance has taken a 5% stake in African Eagle which it is looking to increase. “That could develop into a productive relationship going forward as they have the technical skills required to build mines that we lack, “ Parker said.

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