The business of conducting feasibility studies and developing mines involves a high degree of risk. Substantial expenditures are required to establish ore reserves through drilling, to determine metallurgical processes to extract metals from ore and, in the cases of new operations, to construct mining and processing facilities. As a result of these uncertainties, no assurance can be given that the programmes undertaken by the Company will result in any new commercial mining operations being brought into operation.

Should the mineral deposits identified contain economically recoverable resources then delays in the construction and commissioning of mining projects or other technical difficulties may result in the Company's current or future projected target dates for production being delayed or further capital expenditure being required.

The operations of the Company may be disrupted by a variety of risks and hazards which are beyond the control of the Company, including geological, geotechnical and seismic factors, environmental hazards, industrial accidents, occupational and health hazards, technical failures, labour disputes, unusual or unexpected rock formations, explosions, flooding and extended interruptions due to inclement or hazardous weather conditions and other acts of God. These risks and hazards could also result in damage to, or destruction of, production facilities, personal injury, environmental damage, business interruption, monetary losses and possible legal liability. No assurance can be given that the Group will be able to obtain insurance coverage at reasonable rates (or at all), or that any coverage it obtains will be adequate and available to cover any such claims. The occurrence of any of these hazards can delay the activities of the Company and may result in liability. The Group may become subject to liability for pollution or other hazards against which it has not insured or cannot insure, including those in respect of past mining activities for which it was not responsible.

The estimation of mineral resources and reserves is in part an interpretative process and the accuracy of any such estimates is a function of the quality of available data, engineering and geological interpretation as well as judgement. No assurances can be given that the volume and grade of reserves recovered, and rates of production achieved, will not be less than anticipated. The Company contracts the services of independent professional experts to prepare resource and reserve estimates.

Political risk is the risk that assets will be lost through expropriation, unrest or war. African Eagle seeks to minimise political risk by operating in countries with relatively stable political systems, established fiscal and mining codes and a respect for the rule of law, however there can be no guarantee that the Group will not be adversely affected by political risk.

Permits and other authorisations and/or such concessions, rights, licences, permits and other authorisations may be suspended, terminated or revoked prior to their expiration.

The Company conducts its operations pursuant to concessions, licences, permits and other authorisations and through contracts with its joint venture partners. In particular, a subsidiary of the Company holds a licence from the Tanzanian authorities in relation to the Wamangola deposit. Any delay in obtaining or renewing a licence, permit or other authorisation may result in a delay in investment or development of resources and may have a material adverse effect on the Company's results of operations, cash flows and financial condition. In addition, any of the Company's existing and future mineral rights and concessions, licences, permits and other authorisations may be suspended, terminated or revoked if the Company fails to comply with the relevant requirements. If the Company fails to fulfil the specific terms of any of its existing or future rights, concessions, licences, permits and other authorisations or if it operates its business in a manner that violates applicable law, government regulators may impose fines or suspend or terminate the relevant right, concession, licence, permit or other authorisation, any of which could have a material adverse effect on the Company's results of operations, cash flows and financial condition.

The Company is exposed to financial and operational risks inherent in joint venture projects. A failure by any of the Company's joint venture partners to meet its obligations in respect of the Dutwa Project may materially and adversely affect the Company's business, cash flow, financial condition and operations and may, in particular, adversely affect the implementation of the Company's development plan for the Dutwa Project.

The Company has an interest in the Ngasamo deposit at Dutwa through its joint venture with Safina AS. The joint venture agreement contains provisions relating to the sharing of costs and obligations of the Dutwa Project. If any joint venture partner defaulted in meeting its obligations or does not pay its proportion of such costs, the Company may be required to meet such costs itself, which may materially and adversely affect the Company's business, cash flow, financial condition and operations and may, in particular, adversely affect the execution of the Company's development plan for the Dutwa Project.

Commodity risk is the risk that the price earned for minerals will fall to a point where it becomes uneconomic to extract them from the ground. The principal metal in African Eagle's portfolio is nickel. The price of nickel and other metals are affected by numerous factors totally beyond the control of the Company, including producer hedging activities, demand, political and economic conditions and production levels. Future commodity prices may go down as well as up.

Liquidity risk is the risk of running out of working and investment capital. African Eagle's goal is to finance its exploration activities with cash flow from operations, but in the absence of such cash flow, the Company relies on the issue of equity share capital and joint venture and option agreements to finance its activities. There can be no assurance that adequate funding will be available when required to finance the Company's activities.

Fluctuations in currency exchange risks can significantly impact cash flows. The Company finances its overseas operations by transferring pounds sterling from the UK to meet local operating costs in its African subsidiaries.

Exploration activities are subject to local laws and regulations governing prospecting, development, production, exports, taxes, labour standards, occupational health and safety, mine safety and other matters. Such laws and regulations are subject to change and can become more stringent, and compliance can therefore become more costly. The Company applies the expertise of its management, its advisors, its employees and contractors to ensure compliance with current laws.

The Company's exploration and development activities are subject to extensive laws and regulations governing environmental protection. The Company is also subject to various reclamation-related requirements. A failure to comply with environmental laws and regulations may result in enforcement actions causing operations to cease or be curtailed, the imposition of fines and penalties, and may include corrective measures requiring significant capital expenditures. In addition, certain types of operations require the submission and approval of environmental impact assessments.

While the Company has undertaken all the customary due diligence in the verification of title to its mineral properties, this should not be construed as a guarantee of title. The properties may be subject to prior unregistered agreements or transfers and title may be affected by undetected defects.