London, England — 16 May 2013 – AIM and JSE-listed nickel exploration and development company African Eagle Resources plc “’ struggling to raise funding for further development of its assets, mainly in Tanzania “’ has announced that it is cutting back on expenditure prior to restructuring and re-organisation of its exploration activities.
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. It is also continuing its strategic partner search with regard to the development of the Dutwa nickel laterite project.
However, says a company statement released here, it has become apparent to the directors of the company 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.
“Therefore, the directors have determined that the company needs to take immediate steps to minimise costs, in order to preserve its cash position, and undertake a restructuring. It will take the steps necessary to retain the main licences related to its nickel assets, but will no longer provide funding to its Tanzanian subsidiary, Red Hill Nickel Limited (RHN),” the statement continued.
“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 African Eagle directors and their local Tanzanian advisors to evaluate the options available,” it added.
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 its Tanzanian gold licences, as a means to provide funding for the restructured Group.
“In order to reduce the operating costs, further employment reductions will result in additional senior management leaving in due course. 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 its day-to-day operations,” the statement revealed.
“The directors will continue to engage with the company’s major shareholders to consider its strategic options, which may include new investment opportunities in the natural resources and related sectors, subject to the availability of financing,” it concluded..
Further announcements will be made as and when required.