News > News Releases

REVIEW OF PROGRESS
AND
RESULTS FOR THE HALF YEAR ENDED 3O JUNE 2005

News Report
29 September 2005

CHAIRMAN'S STATEMENT

The year to date has been an active and fruitful period for African Eagle. Your Company conducted drilling campaigns on four projects and obtained promising surface results from increased exploration activity at a number of others. We acquired title over new areas with great potential in all three countries in which we operate and we signed joint venture agreements over two of our existing properties.

As I write, we are drilling the first series of holes on the new geophysical targets at our Eagle Eye copper-gold project in Zambia. The first of these holes intersected a wide zone of iron oxide and sulphide mineralisation, with all the characteristics of IOCG deposits.

Also in Zambia, we have been granted a substantial licence over a strategically key section of the Copperbelt. At Mkushi, we have been drilling successfully to verify the reported pre-JORC copper resource and have recently begun geophysical surveys there. Our JV partner at Lunga continues to generate results from an extensive geochemical programme.

In Tanzania, resource drilling at Miyabi has intersected some impressive gold mineralisation while a single 3m intersection of 241g/t gold at Msasa has intrigued and excited us. Several of our grass-roots areas in Tanzania are also beginning to show promise.

The award of new licences in the Fingoe belt in Mozambique, close to the Sasare licence in Zambia, positions us extremely well in an area long known for copper occurrences but remaining relatively unexplored.

On the corporate side, warrant exercises in the first quarter of the year raised £ 1.2 million for the Company's exploration work. After the end of September there will be no large warrant positions outstanding.

With cash resources in excess of £ 1.4 million as I write, the Company remains well able to continue to generate results and add value to our projects.

---

Zambia

At the large Eagle Eye iron-oxide-copper-gold (IOCG) system in southeast Zambia we entered a new phase of exploration this year with the completion of an extensive induced polarisation (IP) survey and the commencement of diamond drilling on targets identified from the IP and other surface surveys. One of the first of these new holes intersected extensive iron oxide and sulphide mineralization, confirming our contention that this is a major IOCG system. The core has now been submitted for assay. We look forward to completing the drill programme to get a clearer picture of the rocks and mineralisation causing our IP highs and geochemical anomalies. Recently, we were granted a licence over an additional 800km2 area to the north and east of the Sasare / Eagle Eye licence and contiguous with it.

The Mkushi prospect, near Kapiri Mposhi is a former open pit copper mine with a reported but unclassified resource of 30Mt grading 1.25% copper, which the Company has been drilling this year to verify. There have been some significant copper intersections from the first two parts of this programme, at Coloquo and H-Zone, close to the old Munshimwemba open pit. The intersections at Coloquo included 33m at 1.9% copper and 16.8m at 2.4% copper, while in the H-Zone we encountered 40m at 1.2% copper and 70.5m at 0.8% copper. These early results justify our optimism and broadly confirm the old reports. The geophysical team recently moved to Mkushi to undertake an IP survey, after completing its programme at Eagle Eye, and the first results indicate that significant mineralisation exists outside the reported structures.

In early August, African Eagle was granted the 480 km2 Ndola licence in the heart of the Zambian Copperbelt. This licence contains known copper occurrences and extremely prospective geology, and represents an exploration gap in the sequences successfully investigated in neighbouring DRC by First Quantum Minerals and others. The Company has commissioned a thorough review of all existing data over the area and will conduct drilling and surface surveys over the coming months. We are very excited to have the chance to become a part of the resurgence of the Zambian Copperbelt as a major copper producing area.

We are also making good progress on our other Zambian projects. At Lunga, our JV partner completed a 500m x 1km soil geochemical grid of the whole 2000 sq km licence at the end of August and the samples have been submitted for multi-element analysis. We also completed an IP and other surveys at Tandalwe Hill on the Kampumba licence.

Tanzania

At the Miyabi gold project In Tanzania, the Company continued resource drilling on the Faida, Shambani and Kilimani zones and exploration drilling on the Ngaya and Shule anomalies. The drilling intersected some impressive gold mineralization with mineralised intercepts including 9.4g/t over 3m and 7.3g/t over 4m, within a wider zone of 2.4g/t over 66.5m in hole MBDH-26 at Faida. I was also impressed with the 47m at 1.97g/t and 44m at 1.88g/t in the nearby holes MBDH-24 and MBDH-21 respectively. Drilling continues on the Ngaya and Shule area as I write and we expect to release an upgrade in resources for the Miyabi project before the year end.

Drilling at the Msasa gold project in June gave a single 3m intersection of 241g/t gold, which intrigued and excited us because of the geological similarities to the recently commissioned Tulawaka gold mine 15km northwest. We plan to carry out step-out drilling to investigate this discovery.

We carried out geophysical and geochemical surveys at the Igurubi gold project and combined these results with exploration data obtained from a previous holder of the area into a GIS database, which allowed us to identify more targets for our planned drilling there in October.

We also concluded a joint venture agreement for Resolute Mining to explore our Kakumbi licence, which lies adjacent to its 750,000 ounce Nyakafura deposit. Resolute is operator of Tanzania's first modern gold mine, at Golden Pride near Nzega.

African Eagle has established a considerable portfolio of other projects in Tanzaia including a number where shrewd negotiation and good judgement have allowed us to assemble multiple licences over highly prospective areas. Surface surveys at several of these early stage and grass-roots projects have given very promising results, notably at Iramba, Kiwasi Hills and Gloria. We have also acquired strategically located ground at Kagulamu, adjacent to Anglo-Ashanti Gold's Geita gold mine, and the Mabale Hills licence, which is surrounded by Gallery Gold's 480,000 ounce Kitongo project on one side, the Nyanzaga prospect, to which Barrick Gold has committed $2.7M in exploration over the next 12 months, on another, and the new Mwamazengo discovery on a third. We intend to develop these projects ourselves or with appropriate joint venture partners keen to participate in Tanzania's continuing gold boom.

Mozambique

The award of five new licences with a total of 909km2 in the Fingoe Belt in western Mozambique gives us a large holding in a relatively unexplored area known to hold copper occurrences similar to those we see at Eagle Eye and we look forward to beginning our work there.

At our Namama project in eastern Mozambique, we continue to investigate the nickel anomalies at Muazua and will be conducting surface surveys over the gold and base metal targets at Majele.

Information on all of our projects and the news releases which relate to them can be found on our web site at www.africaneagle.co.uk We endeavour to keep our web pages as up to date as possible and are currently preparing a new section to provide update information on our Tanzanian early-stage projects.

Corporate & Financial

In April, our Finance Director Bevan Metcalf took on the role of Company Secretary and in May, we changed our brokers to Evolution Securities.

Warrant exercises to end June raised £ 1.2 million for the Company's exploration work. After 30 September, there will be no substantial warrant positions outstanding, with only 1.14 million warrants remaining, plus the 9.6 million options issued under the Company's employee incentive scheme.

In line with our policy of encouraging the Company's workforce to share in the rewards and risks of our exploration, we set up an employee Share Scheme in August. This will grant some shares to employees and will encourage them to purchase more through tax incentives. We expect to issue about 180,000 shares under the scheme this year.

With cash resources as I write of more than £1.4 million, the Company is well positioned to continue to generate results and add value to its projects.

Comments

The year to date has been a successful one in exploration terms despite continuing industry-wide shortages of drilling equipment and services, skilled exploration geologists and laboratory throughput, which have imposed some limitations on our activities. We have drilled successfully on four projects and plan to drill on at least one more before the year end. We have conducted a good deal of successful surface surveying, the highlights being the IP surveys at Eagle Eye and the soil geochemistry at our Tanzanian grass-roots areas.

African Eagle has built up a well-balanced portfolio of advanced and early-stage exploration projects, which provides a spread of risk across commodities and jurisdictions and is the envy of many of our peers. Several of our projects have the potential to be company-makers. We have excellent teams in the field, but clearly we cannot fully explore and develop all of these projects ourselves, so we are actively seeking farm-in partners to provide finance and conduct exploration. So far this year, we have signed up partners on two projects and we are in advanced discussions regarding several more.

Our shareholders' register is a well-balanced mix of institutions and private investors, and the exercise or expiry this year of almost all the outstanding warrants with their perceived overhang in the market, now paves the way for real growth in market capitalisation based on continued progress and announcements.

For reviews of all our projects and other information, visit our web site www.africaneagle.co.uk

John Park
Chairman
African Eagle Resources plc

---

The African Eagle Group consists of African Eagle Resources plc and its wholly-owned subsidiaries Twigg Resources Limited in the UK, Twigg Gold Ltd in Tanzania and Katanga Resources Limited in Zambia. The Group's consolidated balance sheet at 30 June 2005 and profit and loss account for the six months ended 30 June 2004 are set out below. The results for the same period of 2005 and for the full year ended 31 December 2004 are provided for comparison.

AFRICAN EAGLE RESOURCES plc - CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTHS FROM 1 JANUARY 2005 TO 30 JUNE 2005 (UNAUDITED)

PROFIT AND LOSS ACCOUNT
		Six months to 30 June 2005 £	Six months to 30 June 2004 £	Year to 31 Dec 2004 £
Group turnover		-	-	-
Administrative expenses		(280,181)	(222,317)	(569,175)
Operating loss		(280,181)	(222,317)	(569,175)
Interest receivable and similar income		55,729	39,477	78,904
Loss on ordinary activities before taxation		(224,452)	(182,840)	(490,271)
Tax on loss on ordinary activities		-	-	-
Loss for the financial period		(224,452)	(182,840)	(490,271)
Loss per share (pence)		(0.2p)	(0.2p)	(0.6p)
STATEMENT OF RECOGNISED GAINS AND LOSSES
		Six Months to 30 June 2005 £	Six months to 30 June 2004 £	Year to 31 Dec 2004 £
Loss for the financial period		(224,452)	(182,840)	(490,271)
Currency differences on foreign currency net investments		189,199	(22,983)	(103,143)
Total recognised gains and losses		(35,253)	(205,823)	(593,414)
BALANCE SHEET
		At 30 June 2005 £	At 30 June 2004 £	At 31 Dec 2004 £
Fixed assets
Intangible assets		4,557,151	2,361,077	3,224,310
Tangible assets		169,485	87,040	85,522
Investments		18,262	13,592	13,591
		4,744,898	2,461,709	3,323,423
Current assets
Debtors		158,101	104,944	149,293
Cash at bank and in hand		2,228,827	1,864,638	2,296,217
Creditors - amounts falling due within one year		(370,350)	(65,760)	(171,201)
Net current assets /(liabilities)		2,016,578	1,903,822	2,274,309
Total assets less current liabilities		6,761,476	4,365,531	5,597,732
Capital and reserves
Called up share capital		1,039,350	772,403	928,747
Share premium account		7,050,968	4,499,126	5,962,574
Other reserves		705,723	705,723	705,723
Profit and loss account		(2,034,565)	(1,611,721)	(1,999,312)
Shareholders’ funds		6,761,476	4,365,531	5,597,732
CASH FLOW STATEMENT
		Six months to 30 June 2005 £	Six months to 30 June 2004 £	Year to 31 Dec 2004 £
Net cash outflow from operating activities		(11,265)	(262,114)	(448,159)
Returns on investments and servicing of finance – interest received		37,367	39,498	78,904
Capital expenditure and financial investment		(1,295,566)	(459,628)	(1,498,641)
Cash outflow before use of liquid resources and financing		(1,269,464)	(682,244)	(1,867,896)
Management of liquid resources
Net cash (outflow)/inflow from management of liquid resources – funds withdrawn from/placed on deposit		(1,448,497)	312,242	1,319,899
Financing		1,198,997	120,786	1,740,578
(Decrease)/increase in cash	5	(1,518,964)	(249,216)	1,192,581

NOTES

1. The interim financial statements have been prepared on the basis of the accounting policies set out in the company's statutory financial statements for 2004, which can be downloaded from www.africaneagle.co.uk/downloads.html



2. These financial statements have been approved by the Board of Directors but are un-audited . The financial information contained in these statements does not constitute statutory accounts as defined in Section 240 of the Companies Act 1985. The financial information for the year ended 31 December 2004 has been extracted from the statutory accounts for that year, as filed with the Registrar of Companies and on which the auditors issued an unqualified report.



3. Legislation in the United Kingdom governing the preparation and dissemination of the financial statements may differ from legislation in other jurisdictions.



4. The loss per share was calculated from the loss for the period attributable to ordinary shareholders of £224,452 (June 2004 = £182,840; Dec 2004 = £490,271) divided by the time-weighted average number of shares in issue during the period of 99,628,952 (June 2004 = 76,479,741; Dec 2004 = 78,243,027). There is no diluting effect of share options or warrants on the basic loss per share.



5. ANALYSIS OF CHANGES IN NET FUNDS PER CASH FLOW

	At 1 Jan 2005 £	Cash flows £	Exchange movement £	At 30 June 2005 £
Net cash:
Cash in hand and at bank	2,296,217	(70,467)	3,077	2,228,827
Less: deposits treated as liquid resources	(687,927)	(1,448,497)	–	(2,136,424)
	1,608,290	(1,518,964)	3,077	92,403
Liquid resources:
Deposits included in cash	687,927	1,448,497	–	2,136,424
Net funds	2,296,217	(70,467)	3,077	2,228,827