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AFRICAN EAGLE RESOURCES PLC - Update on financial position and revised operational plan

Release Date: 15/05/2013 16:30
Code(s): AEA     PDF:  
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Update on financial position and revised operational plan

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)
(“African Eagle” or the “Company”)


Update on financial position and revised operational plan


African Eagle Resources plc announces the following update to the market.

Update on financial position

Further to the corporate and Dutwa project update, announced on 2 April 2013, the Company has
been in discussions with its major shareholders and other institutional investors to assess the
potential to raise additional equity financing to further progress the Dutwa lateritic nickel project and to
explore the potential of the Dutwa and Zanzui licences to hold nickel sulphide mineralisation.

In addition to these discussions, the Company, with its adviser, Cutfield Freeman & Co, is continuing
its strategic partner search with regard to the development of the Dutwa nickel laterite project.

However, it has become apparent to the directors of the company (the "Directors") that at the current
time the investment appetite for the development of nickel laterite projects is limited and the Directors
have been unable to identify any source of funding for the Company and its subsidiary undertakings
(the “Group”) pursuant to these discussions.

Therefore, the Directors have determined that the Company needs to take immediate steps to
minimise costs, in order to preserve the Company’s cash position, and undertake a restructuring,
such that it will take the steps necessary to retain the main licences related to the Company’s nickel
assets, but that it will no longer provide funding to its Tanzanian subsidiary, Red Hill Nickel Limited
(“RHN”), the potential impact of which is set out below.

The Directors intend to continue discussions with major shareholders in relation to the provision of
funding for the restructured Company and other potential transactions.

Red Hill Nickel Limited

As set out above, the Directors have determined that the Company can no longer continue to provide
funding to RHN and as a consequence, it is anticipated that a process will commence for the orderly
winding up of RHN in due course, although the directors of RHN continue to work with the Directors
and their local Tanzanian advisors to evaluate the options available. The Directors believe that
directors of RHN are taking all necessary and prudent actions consistent with the financial position of
RHN and a further announcement will be made should, as expected, a formal winding up process
commence.

RHN is the project company established for the development of Dutwa, but does not hold licences
over the Dutwa project resource, these are instead held by other Company subsidiaries. RHN’s
assets are limited mostly to intellectual property resulting from the development activities undertaken.

The Company’s operations and financial position

In order to further reduce costs within the Group, the Directors have also resolved to closely control
the funding made available to the Company’s remaining subsidiaries, and all further funding requests
will be considered by the Directors on a case by case basis. Furthermore, the Company is seeking
and exploring opportunities to dispose of assets, including the Tanzanian gold licences, as a means
to provide funding for the restructured Group.

In order to reduce the operating costs of the Company, further employment reductions will result with
additional senior management leaving the Company in due course.

The Group will shortly seek the renewal, from the Tanzanian authorities, of the Group’s licence in
relation to the Wamangola hill deposit (the “Wamangola Licence”) and will evaluate the potential
renewal of other licences when application for the renewal of each licence falls due. The Wamangola
hill deposit constitutes a significant proportion of the Dutwa resource. At this time, the Group does not
intend to expend significant additional funds in connection with the Wamangola Licence over and
above the expenses in relation to its renewal and maintenance.

Following completion of the steps set out above the Company expects to have significantly reduced
its cost base and intends to use its remaining funds to provide working capital for the day-to-day
operation of the Company.

The Directors will continue to engage with the Company’s major shareholders, to consider the
strategic options for the Company, which may include new investment opportunities in the natural
resources and related sectors, subject to the availability of financing.

As at 14 May 2013, the Company had cash of £1.15 million, which the Directors believe will provide
the Company with sufficient working capital for at least the next 6 months.

The Company expects to release final results for the year ended 31 December 2012 in June 2013.
Further announcements will be made as and when required.

Enquiries:

African Eagle Resources plc
Trevor Moss, CEO
Alex Buck
+44 20 7248 6059

Strand Hanson Limited (NOMAD)
Stuart Faulkner
Angela Hallett
James Dance
+ 44 20 7409 3494

Ocean Equities Limited (Broker)
Guy Wilkes
+44 20 7786 4370

Russell & Associates, Johannesburg
Charmane Russell
Marion Brower
+27 11 880 3924

Sponsor
Merchantec Capital

15 May 2013

A copy of this announcement will be available on the Company's website at www.africaneagle.co.uk
as soon as possible. The content of the website referred to in this announcement is not incorporated
into and does not form part of this announcement.

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