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PROGRESS REPORT

News Report
31 Jan 2007

• More encouraging results from continuing drilling at the Company's near-term production project, the Mkushi Copper Mines in Zambia.
• Drill rig now mobilising to priority targets at the Ndola Copperbelt project in Zambia
• New targets at Eagle Eye from advanced re-interpretation of the geochemical data
• Airborne geophysical surveys underway at Ndola, Mkushi and Lunga, Zambia
• Advanced discussions with potential JV partners for Miyabi gold project, Tanzania

African Eagle Resources plc ("African Eagle" or "the Company") (ticker: AIM:AFE) recently completed its six-monthly project review and I am pleased to report excellent progress on our key projects.

Mkushi Copper Mines - Zambia
The feasibility study in the Mkushi core area is progressing well. Joint venture partner CGA Mining Limited (formerly Central Asia Gold Limited) has completed 3,930m of reverse circulation drilling and 1,954m of diamond drilling since taking over operations in the core area in July 2006. They have submitted 2,716 drill samples for assay, of which about half of the results have been reported and another 25% are expected shortly. CGA has also commissioned an environmental baseline study, currently underway, and metallurgical testing which has confirmed copper recoveries in excess of 95%.

The latest drill results include 82.7m at 1.7% copper and 66.1m at 1.0% copper. The on going drill programme continues to confirm the substantial width and grade of the deposit and is on track to increase the JORC-compliant copper resource at Mkushi.

In tandem with CGA's feasibility study in the core area, African Eagle is managing the exploration of the remaining 467km2 area of the tenement, funded pro rata by the two companies. The results of a high resolution airborne geophysical survey have just been delivered and are being interpreted: the first indications are promising.

We believe that the potential for discovery of additional copper mineralised zones is good: African Eagle's extensive IP surveys have defined 40 anomalies with IP signatures similar to those over the known copper mineralisation. One promising exploration target is the Munda prospect, which lies on a mineralised trend parallel to and 2km southeast of the core zone. Mineralised drill intercepts from six test holes drilled by African Eagle at Munda included 40m at 0.48% copper and 32m at 0.57% copper.

Miyabi - Tanzania
The Miyabi project area is host to a major shear zone gold system which forms a 7km x 2km gold-bearing corridor. To date, African Eagle has drilled only part of the system, but we have been able to define a JORC resource of 520,000 ounces gold. Moreover, metallurgical tests have shown that the gold can readily be extracted by conventional leaching. The Company holds licences covering more than 500km2 around the Miyabi gold corridor and has defined several other targets from regional exploration, which we plan to follow up during the year.

Since the completion of the last drill programme and the release of the updated resource estimate of 520,000 ounces gold, we have been in discussion with a number of potential JV partners with a view to taking this project forward rapidly towards feasibility study as quickly as possible. We expect to make an announcement with regards to the future development of Miyabi soon.

Ndola - Zambia
We are excited by the latest results from our Ndola project, which lies in the Zambian Copperbelt adjacent to the border with the Democratic Republic of Congo (DRC).

We have largely completed our basic surveys over this highly prospective licence and a drill rig is currently mobilising to site to commence drilling on our priority target.

For the soil geochemical survey, we collected 1600 samples over a 400m grid covering most of the licence area. Initial results obtained using our own portable XRF analyser have revealed several new anomalous areas as well as confirming the known mineralised horizon in the northwest of the licence area. All samples have now been submitted to an accredited analytical laboratory for full multi-element analysis and we will be conducting follow up sampling of the identified anomalies in order to define additional drill targets.

In early January, we completed a helicopter-borne geophysical magnetic and gamma-ray spectrometric survey over the whole of the Ndola licence. The data shows an excellent correlation with our preliminary geochemical data and makes a very useful contribution to our understanding of the geology and mineral deposits of the area. The map at left shows the airborne magnetic data and copper geochemical anomalies.

Our priority target area is in the northwest of the licence, where copper mineralisation is known to occur within a structurally complex zone in the Lower Roan Mine Series. Such zones elsewhere in the Copperbelt are often associated with enhancements of both grade and thickness of copper mineralisation. Moreover, the continuation of the same zone into DRC is a current First Quantum Mining drill target. We will drill up to five relatively deep diamond drill holes to investigate this zone, with wedged offsets where necessary to define the mineralisation intersected.

Phelps Dodge Mining Zambia Ltd (PDMZ) will initially fund exploration at Ndola under an Option agreement and the subscription of US$2.27M for African Eagle shares. PDMZ can ultimately earn an interest of up to 70% in the project by expending an additional $3 million and completing a bankable feasibility study. Regulatory hurdles in Zambia have now been surmounted and we expect the first $1.27 subscription tranche to be completed soon.

Eagle Eye - Zambia
Late last year, we completed the westward extension of a soil geochemical survey and geological mapping to cover a further 60 square kilometres of the Sasare Volcanics and other prospective geological units within the Eagle Eye project area. The geological mapping identified an area of potassic hydrothermal alteration with associated haematite, which may indicate the potential for copper mineralisation in the granite. This discovery could have major positive implications for future resource development at Eagle Eye.

As at Ndola, we used a portable XRF analyser to expedite preliminary copper assaying. The 390 samples have now been submitted to an accredited lab for full multi-element analysis.

African Eagle is currently conducting a thorough re-interpretation of the Eagle Eye database. Careful imaging of the multi-element soil geochemical data in particular has given us important insights into the mineralised system and will allow us to plan the next phase of drilling with confidence.

We are keen to bring in a partner on the Eagle Eye project, and negotiations are underway with several interested parties.

Early exploration projects
African Eagle holds several additional early stage project areas in Tanzania, Zambia and Mozambique and we are seeking partners to work with us, to evaluate these and take them forward. Two of these projects have recently delivered particularly promising results.

Dutwa is a gold and platinum prospect in the historic Kilimafedha greenstone belt, 100km east of the regional capital of Mwanza in Tanzania. The colonial-era Ngasamo gold mine lies at the western end of the belt. We have acquired five contiguous licences covering 500km² at Dutwa, containing 90% of the prospective part of the belt. Previous exploration has been very limited and the ground has not been subjected to modern exploration techniques.

To date, we have completed 1500 line kilometres of ground magnetic survey, collected and analysed 3392 soil samples and 421 auger samples. The results have been particularly encouraging, with three gold in soil anomalies defined, including one with values up to 7 g/t gold.

The magnetic survey and soil sampling programs are continuing and it is anticipated that a drilling programme will commence in the near future.

In our large Lunga licence in central Zambia, our partner MinEx Projects has completed the collection of some 5000 follow-up soil samples over the copper-gold anomalies revealed by reconnaissance geochemistry on the flanks of the Karenda Dome. An airborne geophysical survey is scheduled for May and drill targets will be selected by the start of the dry season.

Corporate and Partner activities
During 2006, we shifted African Eagle's strategic emphasis towards taking our most advanced and significant projects into production as quickly as possible. To this end, we set out to bring suitably qualified partners into joint venture or farm-in deals.

As reported above, we have signed deals with Phelps Dodge on the Ndola project, CGA Mining over Mkushi Copper Mines and MinEx Projects at Lunga.

Resolute Mining exercised its option to farm in to the Kakumbi Gold Project in Tanzania, having fulfilled its first year's expenditure commitments and obtained encouraging results. Northern Mining has this decision still to make at Msasa when its option period ends in May. Negotiations are underway with potential partners on several other projects.

These Option and Farm-in agreements represent minimum expenditure commitments by our partners of US$5 million. If all the earn-in agreements already signed and under negotiation are taken through to fruition, our partners will invest in the order of US$50 million in African Eagle's assets.

There is still a shortage of good new mineral projects in the world, mineral commodity prices are still attractive and Africa remains one of the more favourable investment destinations for mining. We are confident that African Eagle is well placed to capitalise on these strengths.

 

John Park
Chairman
African Eagle Resources plc

 

Qualified Person

Information in this report relating to exploration results is based on data reviewed by Mr Christopher Davies BSc, MSc, DIC, Operations Director for African Eagle, who is a Fellow of the Australasian Institute of Mining and Metallurgy, has more than 25 years relevant experience in mineral exploration and is a Qualified Person under AIM rules. Mr Davies consents to the inclusion of the information in the form and context in which it appears.