Placing, Open Offer, Notice of GM & Directors' Hldngs>
Placing, Open Offer, Notice of GM & Directors' Hldngs
(Thomson Reuters ONE) - 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 PlacingThe Board of African Eagle Resources plc ("African Eagle" or the"Company") is pleased to announce that Seymour Pierce has arranged aPlacing to raise gross proceeds of approximately £1.2 million by wayof a placing of 30,804,500 new Ordinary Shares at a price of 4p eachwith new and existing investors (the "Placing"). The Placing willrepresent approximately 14.5% of the existing issued share capital.The Board also announces its intention to give as many eligibleAfrican Eagle shareholders as possible an opportunity to participatein the fundraising on the same terms, by way of an open offer of upto 53,875,000 new Ordinary Shares at the same price of 4p each toraise up to an additional £2.16 million, equivalent to Euro 2.5million (the "Offer").Relative to the closing market price of 5p per Ordinary Share on theLondon Stock Exchange on 17 July 2009 (the last practicable businessdate prior to this announcement), the issue price under the Placingand the Offer represents a discount of 20%.John Park, Chairman of African Eagle commented, "We are delightedwith the support that leading institutional investors in the UnitedKingdom have given the Company. Their commitment endorses the qualityof the Company's prospective nickel laterite project at Dutwa and ourexperienced executive and operational teams."The proceeds of the Placing will allow us to make a start on thefeasibility study at Dutwa so as to accomplish the recommendationsthat GRD Minproc suggested to further delineate and understand theresource potential at Dutwa which will create substantial value forour shareholders. We feel it is important give as many shareholdersas possible the opportunity to participate in the fundraising on thesame terms and look forward to the required resolutions being passedat our General Meeting organised on 6 August 2009."The net proceeds of the Placing and Offer, after expenses, areintended to be used, in conjunction with the Company's existing cashresources, to make a start on work leading to a feasibility study onAfrican Eagle's Dutwa Nickel Project in Tanzania and for generalworking capital.Since its discovery of the Dutwa nickel deposit in June 2008, AfricanEagle has completed resource drilling; received an independentresource estimate; completed laboratory metallurgical andmineralogical tests (which revealed that the deposit could beprocessed efficiently by sulphuric acid leaching), and commissioned ascoping study which has indicated that the project is likely to beeconomically feasible.In December 2008, African Eagle decided that the Dutwa project shouldbecome its top priority, because the Directors believed that, of allthe Group's projects, Dutwa offered the greatest potential to addvalue. With the delivery of the positive scoping study in June 2009,the Company resolved to start work immediately on a feasibilitystudy.At the end of June 2009, African Eagle held net cash of approximately£1.5M. The estimated cost of the next stages of the feasibilitystudy will be approximately £1.5M to £2M, including the workingcapital the Company will need to cover its general operational andadministrative expenditures. The Board therefore resolved to raisefunds through a placing of Ordinary Shares with institutionalinvestors.In order to give as many of its shareholders as possible theopportunity to participate in the financing and to limit the dilutiveeffect of the Placing, the Board also resolved to make an open offerto as many shareholders as possible. For legal reasons, the Offer isonly available to Eligible Shareholders, being those shareholders ofthe Company whose service addresses in the Shareholders' Register on29 July 2009 are in the United Kingdom (excluding, for the avoidanceof 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 openoffer to shareholders to the equivalent sterling amount of Euro 2.5M,without requiring an approved prospectus to be produced. The issueof a prospectus would considerably increase the costs of thefundraising and it would take much longer to complete, as any suchprospectus would require the prior approval of the UKLA.The Placing has been arranged by the Company's Broker, SeymourPierce. The Placing is conditional, inter alia, on (i) shareholderapproval at the General Meeting; (ii) the Placing Agreement becomingunconditional in all respects as regards the Placing; and (iii)admission of the Placing Shares to AIM and listing on ALTx. ThePlacing is not conditional upon the Offer.In connection with the Placing and Offer, the Company has published aCircular containing full details, including the terms and conditions,of the Placing and the Offer. The Circular itself does not includean application form to enable Eligible Shareholders to participate inthe Offer. Application Forms are personalised for each EligibleShareholder and have been sent, together with the Circular and Formof Proxy, by mail to each shareholder's address of record in theshareholders register on 20 July. For Eligible Shareholders who holdshares in African Eagle Resources plc through a nominee, theApplication Form, Circular and Form of Proxy will be sent to thenominee. Any person becoming an Eligible Shareholder between 21 and29 July and needing an Application Form should contact CapitaRegistrars or visit the Company's website (www.africaneagle.co.uk/im/Offer_Circular.asp). NOTICE OF GENERAL MEETINGA General Meeting (GM) of African Eagle Resources plc will be held at2nd Floor, 6-7 Queen Street, London EC4N 1SP, UK (the "GM") on 6August 2009 at 4.00 p.m. The purpose of the GM is to consider and, ifthought fit, to pass the resolutions necessary to authorise andimplement the Placing and the Offer.The Circular, containing a Notice of the GM, together with a separateForm of Proxy, has been sent to all shareholders. The Circular andNotice of the GM and Form of Proxy may also be obtained via theCompany's website (www.africaneagle.co.uk/im/Offer_Circular.asp).Shareholders should read the full text of the resolutions containedin the Notice of General Meeting in the Circular. Shareholders whoare not Eligible Shareholders may attend the General Meeting inperson or by proxy but should take no action in relation to the Offerwhich is not capable of acceptance by them. DIRECTORS' HOLDINGSThe Directors have jointly subscribed for 1,222,500 shares in thePlacing and senior managers have subscribed for a further 269,500shares.Details of individual directors' subscriptions and their consequentholdings and percentages following the Placing and the Offer are asfollows: Subscription Number of Percentage of Percentage ofDirector 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 2.85Euan 250,000 1,060,000 0.36 0.44WorthingtonMark Parker 312,500 3,808,857 1.28 1.57Christopher 152,500 946,730 0.32 0.39DaviesBevan Metcalf 137,500 207,500 0.07 0.09Geoffrey 120,000 909,300 0.31 0.37CooperAs all of the Directors are participating in the Placing and thusthere are no independent Directors, Seymour Pierce, the Company'snominated adviser, has reviewed the terms on which the aboveDirectors are participating in the Placing and on the grounds thatthey are participating on the same terms as all of the other placees,consider such terms to be fair and reasonable insofar as shareholdersare concerned. IMPORTANT DATESDate of posting of the Circular and Offer open 20 July 2009Record Date for Eligible Shareholders for the Offer 29 July 2009Latest time and date for receipt of Form of Proxy 4:00 p.m. on 4from all shareholders August 2009Latest time and date for receipt of Application Forms 11.00 a.m. on 6from Eligible Shareholders August 2009General Meeting 4.00 p.m. on 6 August 2009Announcement of results of the Offer through a 6 August 2009Regulatory Information Service and the SecuritiesExchange News Service of the JSE LimitedAdmission and dealings in the New Ordinary Shares to 7 August 2009commence on AIMCREST accounts credited with New Ordinary Shares 7 August 2009Listing of the New Ordinary Shares on ALTx from 11 August 2009commencement of business onDefinitive share certificates for the New OrdinaryShares to be despatched (if appropriate) by 21 August 2009DEFINITIONS: All capitalised terms used in this announcement aredefined on pages 6 to 8 of the Circular.For further information contact:Mark ParkerManaging DirectorAfrican Eagle+44 20 7248 6059+44 77 5640 6899Nicola MarrinSeymour Pierce Limited, LondonNominated Adviser+ 44 20 7107 8000Charmane RussellRussell & Associates, Johannesburg+27 11 8803924+27 82 8928052Ed Portman / Leesa PetersConduit PR, London+44 20 7429 6607+44 77 3336 3501About African EagleAfrican Eagle is a diversified mineral exploration and developmentcompany operating in eastern and central Africa. The Company'sprincipal advanced assets are the Dutwa nickel laterite discovery inTanzania, where the Company completed a scoping study in June 2009,and its 49% interest in the Mkushi Copper Mines joint venture projectin Zambia, for which a draft feasibility study was completed in Q42008.African Eagle is evaluating a second promising nickel lateritedeposit at Zanzui in Tanzania and has defined a JORC gold resourceestimated at half a million ounces at its Miyabi gold project inTanzania. The Company holds a well-balanced portfolio of promisingearlier stage gold, copper, platinum and uranium projects, includingthe Ndola and Mokambo projects in the Zambian Copperbelt and theIgurubi gold project in Tanzania.Zambia, Tanzania and Mozambique, the sites of African Eagle'sprojects, are all countries which have highly prospective geology,relatively low above-ground risks and track records of successfulmajor investments in the metals and minerals industries.In December 2008, African Eagle resolved to prioritise the Dutwaproject, because the Board believes that, of all the Company'sprojects, it offered the greatest potential to add value. To take itsother discoveries into production, African Eagle is seeking industrypartners with records of successful mine development, by means ofjoint ventures, farm-ins, spin-outs or other mechanisms.About the Dutwa ProjectAfrican Eagle has discovered a significant nickel laterite deposit inthe Dutwa project area in the Lake Victoria Goldfield. WithinTanzania, the project is favourably situated 100km east of therailhead at Mwanza and close to the main Mwanza-Nairobi trunk road, amajor power line and the shore of Lake Victoria.Since the discovery of the Dutwa nickel deposit in June 2008, AfricanEagle has explored the project very quickly and cost-effectively,including resource drilling and an independent resource estimate;laboratory metallurgical and mineralogical tests which revealed thatthe deposit could be processed efficiently by sulphuric acidleaching. 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 economicallyviable, and African Eagle has now begun work towards a definitivefeasibility study.For the study, GRD Minproc reviewed information provided by AfricanEagle relating to the geology, resources, setting, mineralogy andmetallurgy of the deposit, and the infrastructure in Tanzania andneighbouring countries, combining this information with its owninternal data and experience, to develop and calculate the economicsof ten alternative mining and process plant options. Costs wereestimated in US dollars, to an accuracy of ±30%. The economicmodelling was an iterative process, feeding back into the miningplans and the process designs.GRD Minproc used Whittle mine modelling to optimise the mining planand cut-off grade for each process option, based on the deposit modeland JORC compliant resource of 31 million tonnes at 1.1% nickel and0.034% cobalt produced by SRK in November 2008. GRD Minproc added a50% upside, to take into account the nearby Ngasamo laterite, whichadds a potential 15-20 million additional tonnes.The study showed that the optimum process option is likely to beatmospheric tank leach, but the project may also be viable using heapleaching. High-pressure acid leach with direct solvent extraction ofthe nickel is also potentially economically feasible.The financial modelling showed that at today's nickel prices, theproject can be expected to generate a net cash-flow (EBIT) of US$ 53million to 130 million per year over a mine life of 15 to 20 years,depending on the processing method. The detailed results are set outin the table below.The study also shows a good investment case for the project, with apost-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 of10%, 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 majorcomponent of operating costs and sensitivity analysis shows thatreturns can be considerably increased if these costs can beminimised. Also, as anticipated, transport costs will form asignificant contribution to operating costs and the Company willinvestigate ways to minimise them. The base case used transport costsof 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 thetransport costs can be reduced by 25% and an 8% discount rate isused.The study demonstrated that further feasibility studies are nowjustified and the Company has commenced work on these. The initialwork will be directed towards investigating ways to reduce costs andincrease revenues, together with drilling the adjacent Ngasamodeposit, improving the resource model and refining the metallurgicalinformation. A start has already been made on the additionalmetallurgical test work at Mintek Laboratories in South Africa,including column and tank leach tests, sizing analysis and physicaltest work to establish more definitively the optimum processingroutes.African Eagle acquired the Dutwa project for its gold potential, butthe Company's exploration team quickly recognised that there wassignificant nickel laterite potential. There is very little outcrop,so the Company conducted extensive ground magnetic surveys to revealthe underlying structure and geology. The Company also compiledhistorical data, including detailed geological maps and trenchresults dating from 1956, when rock chip samples from the trenchesover the ultramafic rocks were reported as yielding up to 1.9% nickeland 10% chromium.In all, African Eagle has explored a total area of more than 750km²in the Dutwa project area. The Company holds a 90% interest, withoption to acquire 100%, over the Dutwa laterite deposit itself. InApril 2009, African Eagle signed a Letter of Intent for an option andjoint venture over another nickel laterite at Ngasamo, 5km west ofthe Dutwa deposit.Greenstones and granites underlie the project area. The greenstones,of Archaean Nyanzian age, are mostly metamorphosed volcanic andsedimentary rocks, with some banded iron formation in the east.Several large ultramafic bodies occur within the greenstones and thenickel laterites form a blanket up to 60m thick on top of these.To investigate the nickel discovery, the Company undertook trialdrilling in June 2008. The results were very encouraging and a139-hole reverse circulation (RC) drilling programme was completed todelineate the resource. African Eagle also undertook a 10-holediamond drill programme to obtain core samples for metallurgicaltesting and density measurements.In November 2008, African Eagle announced an initial Inferred MineralResource 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, thisgives Dutwa a contained metal endowment of some 340,000 tonnes ofnickel and 11,000 tonnes of cobalt. The estimate was prepared byindependent consultants SRK Consulting (UK) Ltd in line with theAustralasian Code for Reporting of Mineral Resources and Ore Reserves(the JORC Code). A little additional drilling and more advancedgeostatistics and deposit modelling will be needed to upgrade theresource to Indicated category.Ngasamo Hill, 5km west of the Dutwa deposit, is geologically verysimilar and holds a laterite deposit of the order of 15 to 20 milliontonnes, which would increase the global resource at Dutwa from thecurrently defined 31 million tonnes at 1.1% nickel, to some 45 - 50million tonnes. Drilling and metallurgical tests will be needed toconfirm the size, grade and compatibility of Ngasamo. Under itsagreement with Ngasamo's owners, (Safina a.s. of the Czech Republicand its Tanzanian subsidiary Precious Metals Refinery Company Ltd),African Eagle can earn an interest of at least 50% and up to 75% inNgasamo by carrying out exploration and evaluation work, up to afeasibility study.Mintek Laboratories in Johannesburg investigated the mineralogy andmetallurgy of mineralised drill samples from the deposit, includingextended 'bottle roll' sulphuric acid leach tests to investigatemetal recoveries and acid consumption. Mintek also carried outmineralogical characterisation by X-ray diffraction (XRD), scanningelectron microscopy (SEM) and polished section work.The bottle roll test results showed nickel extractions of 70-90% withan average of 83%. Cobalt extractions were mostly in the range 70 to85%. The acid consumptions, averaging 209kg/t, are very low comparedto other Ni laterite ores worldwide.The mineralogical investigations show that the laterite is extremelysilica-rich, with low iron and magnesium content, indicating thatDutwa is not a typical laterite nickel deposit. Mintek believes thatmuch of the nickel and cobalt occurs in "wad" with manganese contentof 20-60%, nickel content of up to 20% and cobalt content of up to10%.The unusual mineralogy of the deposit is highly beneficial, as itresults in lower acid consumption and is expected to give good heapleach permeability or favourable liquid-solid separation in tankleaching. The concentration of nickel and cobalt in the manganese wadoffers the possibility that mechanical selection of high-gradematerial may allow reduced throughput and hence a lower costprocessing plant.The Company is also investigating other potential nickel lateritedeposits in Tanzania, and has completed a trial programme of RCdrilling to test a laterite at its Zanzui project, 60km to the southof Dutwa. Results included 42m at 1.05% nickel (including 6m at2.80%) 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.
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Datum: 21.07.2009 - 08:01 Uhr
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