The company has some 5,000 km2 of licenses in Zambia, some 2,500 km2 of licenses in Tanzania and 1,000 km2 of licenses in Mozambique, the three countries in which it operates.

Unlike many junior mining groups these days, African Eagle is a traditional exploration company.

“We have no intention of being producers, and we will not start up mines. We have different skill sets, and unlike some juniors we are able to focus on what we are good at. That is exploration and deal making,” says African Eagle managing director, Mark Parker.

Parker believes that there remains a strong role in the industry for companies such as African Eagle which discover and delineate deposits to a certain level.

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View of African Eagle’s Miyabi
project located in the Lake Victoria
goldfields of Tanzania.

“We can take projects to feasibility stage, but we would prefer to use someone else for scoping studies rather than do them ourselves.” “Obviously there would be the advantage of cash flow associated with one’s own producing assets, but if we did want to take one of our projects into production it would be spun off into a new entity or form part of a joint venture. We would then be shareholders in the production venture,” Parker says.

The company’s current portfolio, built up during the trough years of the commodities cycle, places it in a strong position, with exploration focused on a variety of commodities – gold, copper, and nickel. It also has increased its geographic spread with its involvement now spread across three low risk countries.

However, like all exploration companies with no steady cash flow income, African Eagle has to marshal its resources efficiently. One measure that gauges how well it achieves this is that it is able to put 80 pence of every British pound it raises into the ground.

The most advanced of African Eagle’s projects is Miyabi, where its discovery cost per ounce so far has been US$6.50. Miyabi, located in the Lake Victoria goldfields of Tanzania, has a SRK audited resource of 400,000 ounces of gold. Of this 75% is indicated and 25% inferred. Miyabi hosts a shear zone hosted gold system extending over 7 km and recent results from African Eagle’s ongoing drilling programme, using between two to four rigs there, are expected to increase this resource.

The second project on Parker’s list of priorities is Eagle Eye. It is an iron oxide copper gold (IOCG) project within African Eagle’s Sasare licence in south-eastern Zambia.

“This is a longer shot, a more grass roots speculative project,” he says. “But it is a priority because iron oxide copper gold deposits are extremely attractive exploration targets, with potential for high grades and large tonnages.”

World class IOCG deposits include Australia’s famous two billion tonne Olympic Dam project with 1.61% copper, 3.5 g/t of silver, 0.6 g/t of gold as well as uranium credits. Others are the 790 million tonne 1% copper, 0.5 g/t gold Salobo deposit in Brazil and the 366 million tonne Candelaria deposit in Chile with grades of 1.1% copper and 0.26 g/t of gold.

Eagle Eye is a huge mineralised system and African Eagle’s exploration has revealed that copper mineralisation occurs over a strike length of at least 25 km. The company did some phase 1 drilling on an obvious outcrop and confirmed that the mineralisation achieves potentially economic grades and thicknesses in places. African Eagle also undertook soil geochemistry and airborne geophysics, based upon which it decided it needed to do more surface work before it undertakes a second phase of drilling. During the first half of 2005 African Eagle did an induced polarisation survey and geological mapping for Eagle Eye.

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Drilling at Miyabi.

“We are glad we did this because this resulted in targets for drilling, which began in September,” Parker says.

The Sasare licence also contains Zambia’s earliest gold mine, which was worked sporadically between 1906 and 1942. Records are sparse but gold production is recorded as 12,280 oz (390 kg). Two orebodies, Sasare East and Sasare West, were mined via adits and shafts to a depth of about 100 m. These are located 8 km southeast of the Eagle Eye mineralisation.

“If Eagle Eye turns out to be as big as we think it will be a company maker. Mind you, exploring these deposits is not easy – it took eight years to pin down the Prominent Hill IOCG in Australia,” Parker says. “We have just begun drilling again at Eagle Eye, on the big geophysical anomalies around Ndomba, and should get an answer by the end of 2005.”

In comparison the project Parker ranks third in African Eagle’s portfolio, also in Zambia, is Mkushi, located 180 km northeast of Lusaka and 160 km southeast of Kitwe in the central Copperbelt. “This is a more moderate, more certain project,” Parker says.

Mkushi contains seven known copper deposits along a 14 km length of a shear zone that runs through African Eagle’s license. Two of these deposits were mined in the past, one of these being Mtuga, which was mined underground in the 1920s. It was closed due to the global great economic depression of that era. The other is Mushiwemba, which was mined as an open pit operation in the 1960s and was closed after nationalisation of Zambia’s copper assets.

“Neither was closed because the deposit had been exhausted and we have reports dating from the 1970s through the ’90s that there is still a lot of copper there.”

In total Mkushi has a reported 30 million tonne resource at 1.25% copper for 350,000 tonnes of copper, which is worth US$1 billion at current prices. The project could potentially be brought into production quickly and at a relatively low capital cost. African Eagle is drilling to confirm the existing resource according to JORC standards. Once it is happy with this it will drill out its own resource estimate. This is a straightforward project which can move quickly to a feasibility study and implementation if results justify it.

A potential project at Mkushi has the advantages of simple sulphide mineralogy that should allow for a low cost plant. Smelters and bioleach plants are available nearby in the Copperbelt and the area has excellent infrastructure – a powerline, roads and rail. There is also potential for early cash flow from reprocessing the tailings dumps.

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African Eagle undertook drilling to
confirm the economic mineralisation
potential of Eagle Eye.

These three projects are followed in about equal order in African Eagle’s priority list by three more relatively advanced projects in Tanzania. One of these Msasa, a shear zone hosted gold target located in the western Lake Victoria goldfield, 15 km southeast of the newly commissioned high grade Tulawaka gold mine (with more than 700,000 ounces of gold, operated by Barrick and Northern Mining; Tulawaka poured its first gold on 15 March 2005 and is expected to produce 110,000 ounces of gold by the end of 2005).

In mid-2005, African Eagle completed a 31 hole, 2,886 metre reverse circulation drilling programme at Msasa to follow up on its previous rotary air blast drilling results. This follow up drilling was to test mineralisation associated with the gold geochemical anomaly and related geophysical anomalies. It produced encouraging results, especially one very high grade intersection of 81g/t gold over 9 metres including 241 g/t over 3 metres, which is associated with quartz veining. The area is clearly gold enriched and contains at least one zone of high grade gold in quartz veins similar to those seen at Tulawaka.

The second of this tier of projects is Igurubi, a shear zone hosted gold target that has been the site of artisanal mining for the past 20 or 30 years. African Eagle is trying to see if it offers bulk mineralisation and hopes to drill there soon. It has been doing surface surveying there. The other project is Kakumbi, located 1.5 km from Nyakafuru where Spinifex Gold has reported a resource of 730,000 ounces of gold at a grade of 6.3 g/t. Resolute, which owns and operates Golden Pride, has entered into a joint venture with Spinifex to explore Nyakafuru and adjacent areas. Parker says that if Resolute was to go ahead with the development of a mine at Nyakafuru, even a modest discovery by African Eagle at Kakumbi would make this property an attractive acquisition target.

African Eagle has a formula it uses to guide its evaluation of which targets and properties to prioritise. It is related to the profit margin on possible production from an envisaged project and an estimate of the probability of exploration success.

Using such a system African Eagle, which has one or two expatriate and six local geologists in Tanzania, turns over properties in that country at a high rate. It typically takes a six month option. It does sampling and then takes a decision as to whether it will undertake more serious work on a property.

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Deposits at Mkushi were mined
in the past.

In Mozambique African Eagle’s major focus is on its Namama licences where it has concluded a primary gold source could be found. It is also investigating some promising nickel potential, but its work in this country has been held back due to some poor assaying work done by one of its contractors. African Eagle has a long history in Mozambique, in the form of its predecessor, a company called Twig. Twig, which became African Eagle, has been active in Mozambique since 1987. It operated a graphite mine in the north of that country for six years.

Over the next 12 months, however, African Eagle will focus strongly on Zambia. It will drill targets at Eagle Eye, verify the old resources at Mkushi, and will start accelerated exploration at its recently acquired Ndola license. This new licence, granted by the Zambian Ministry of Mines for an initial, renewable period of two years, covers 428 km2, much of it underlain by the highly prospective Mine Series geological sequence. That sequence hosts most of the world-class deposits in Zambia and the neighbouring DRC.

The Ndola licence surrounds First Quantum’s mining lease and showcase SX/EW plant at Bwana Mkubwa. Five other major copper deposits lie within 30 km.

In addition to its Zambian work African Eagle will continue drilling for ounces at Miyabi and will steward progress on the best of its portfolio of Tanzanian grassroots projects.

And the company plans to actively seek out joint venture partners for its various projects during the coming 12 months.MRA