Projects Overview: Mkushi

Mkushi Copper Joint Venture Ltd

• Pre-feasibility study announced Jan 08
• Projected total net pre-tax cash flow ~US$215M
• Capital requirement US$ 65-70M
• Minimum mine life 8 years at 1.6 Mt per annum
• Open pit contract mining
• Mill and float plant delivering 96% recovery to a 28% copper concentrate
• Sale of concentrate to smelters in Zambia
• Definitive feasibility study in Q4 2008

Location

The Mkushi Project is located in the Mkushi Region, 184km north-northeast of the capital, Lusaka, and 160km southeast of the provincial mining centre of Kitwe.

African Eagle interest

African Eagle (AFE) has a 49% interest in the Joint Venture and CGA Mining holds a 51% share.

History

Mkushi is an historic copper mining area which operated from the 1920s to the mid 1970s. It is one of the few places in Zambia where copper was exploited on a commercial basis outside the Copperbelt. The style of copper mineralisation is very different from that seen in the Copperbelt, occurring in association with granitic intrusions within a major shear zone cutting considerably older basement rocks.

Two deposits were mined in the past: Mtuga, which was mined underground to a depth of 80m with development down to 120m in the 1920's, and Munshiwemba in the 1960’s when a switch was made to open pit mining.

Archive data from previous operators indicates that Mkushi as a whole contains a global exploration target of the order of 30Mt averaging 1.2% copper, or more than 350,000 tonnes of contained metal.

The project is favourably situated, with a good network of roads, water supply and nearby rail link. Copper concentrates could easily be shipped to nearby smelters in the Copperbelt.

AFE began exploration at Mkushi in 2005 with a drilling programme concentrated mainly at H zone, one of several known copper deposits, where an independently audited JORC compliant inferred resource containing 80,000 tonnes of contained copper was estimated.

Current status

In July 2006 AFE entered into an alliance with Australian miner, CGA Ltd, and signed a joint venture agreement in May 2007 establishing an incorporated joint venture company, Mkushi Joint Venture Ltd. CGA hold a 51% interest in the joint venture and African Eagle 49%. CGA is responsible for directing and fully funding the feasibility study in a central “core zone” of the project to be completed by Q4, 2008, while AFE is exploring the area outside the core zone funded pro-rata by both parties.

Exploration potential

The potential for discovery of additional copper deposits is good within the 467Km² held under prospecting licences. The known copper mineralisation gives clear induced polarisation (IP) anomalies. African Eagle's extensive IP surveys outside the core zone have defined 40 similar anomalies, the majority of which have yet to be drill tested. Limited drilling undertaken at Munda has shown potential for economic mineralisation. The copper mineralisation is up to 40m wide and has been traced over a strike length of 1,300m.

Drilling at Munshiwemba pit November 2007

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Ore zones at Munshiwemba G & H zones shown in black

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Cross section along drill holes

Mkushi fact sheet - January 2008
(PDF - 1MB)