African Eagle Resources plc

Results for the Half Year ended 30 June 2007

News Report
28 September 2007

AIM and AltX quoted African Eagle Resources plc ("African Eagle" or "the Company", ticker AIM: AFE, AltX: AEA) today announces its interim results. For the first time, the interim results have been prepared in accordance with International Financial Reporting Standards (IFRS). The condensed consolidated financial statements for the period, accounting policies, and notes, including an explanation of the transition from UK Generally Accepted Accounting principles (UK GAAP) to IFRS are detailed below.

The Chairman's Statement is shown as a separate release.

Prior to 2007, the Group prepared its audited financial statements and unaudited interim financial statements under UK GAAP. From 1 January 2007, the Group is required to prepare annual consolidated financial statements in accordance with IFRS as adopted by the European Union (EU).

The note may be viewed at www.africaneagle.co.uk/african-eagle-investors-annual-reports.html.

Bevan Metcalf
Company Secretary
African Eagle Resources plc

28 September 2007

Condensed Consolidated interim income statement

	Note	6 months to 30 June 2007 Unaudited £	6 months to 30 June 2006 Unaudited £	Year to 31 December 2006 Unaudited £

Depreciation expense		(41,894)	(39,851)	(68,895)
Employee benefits expense		(271,099)	(243,776)	(498,287)
Impairment of deferred exploration expenditure		(44,008)	(163,297)	(215,201)
Foreign exchange gain/(loss)		27,082	(52,124)	(263,378)
Other expenses		(174,100)	(166,025)	(354,432)

Operating loss		(504,019)	(665,073)	(1,400,193)
Operating loss		(504,019)	(665,073)	(1,400,193)
Financial income:
Bank interest receivable		59,310	26,629	101,266

Loss before tax		(444,709)	(638,444)	(1,298,927)
Income tax expense		-	-	-

Loss for the period		(444,709)	(638,444)	(1,298,927)

Loss per share:
Basic loss per share	4	(0.3p)	(0.5p)	(1.0p)
Diluted loss per share	4	(0.3p)	(0.5p)	(1.0p)

All operations are continuing.

The accompanying notes form an integral part of these consolidated financial statements.

Condensed Consolidated interim balance sheet

	Note	30 June 2007 Unaudited £	30 June 2006 Unaudited £	31 December 2006 Unaudited £

ASSETS

Non-current assets
Property, plant and equipment		178,426	204,933	153,495
Goodwill		106,188	106,188	106,188
Available for sale investments		9,819	8,091	10,117
Deferred exploration costs		8,683,795	7,698,774	7,172,869

Total non-current assets		8,978,228	8,017,986	7,442,669

Current assets
Other receivables		294,364	140,765	240,466
Cash and cash equivalents		1,711,806	3,717,063	2,516,712

Total Current assets		2,006,170	3,857,828	2,757,178

Total assets		10,984,398	11,875,814	10,199,847


LIABILITIES

Current liabilities
Trade and other payables		(193,262)	(147,424)	(180,820)

Total liabilities		(193,262)	(147,424)	(180,820)


Net assets		10,791,136	11,728,390	10,019,027


EQUITY

Equity attributable to equity holders of the parent
Share capital	3	1,540,341	1,475,358	1,478,249
Share premium account	3	12,415,012	11,789,457	11,803,913
Merger reserve		705,723	705,723	705,723
Available for sale revaluation reserve		(8,169)	(10,138)	(7,929)
Foreign currency reserve		(1,006,936)	(308,581)	(1,471,535)
Retained losses		(2,854,835)	(1,923,429)	(2,489,394)

Total equity		10,791,136	11,728,390	10,019,027

The accompanying notes form an integral part of these consolidated financial statements.

Condensed Consolidated interim statement of changes in equity

	Note	Share capital £	Share premium account £	Merger reserve £	Available for sale revaluation reserve £	Foreign currency reserve £	Retained losses £	Total equity Unaudited £

Balance at 31 December 2005		1,129,550	7,953,968	705,723	(9,957)	-	(1,390,051)	8,389,233

Changes in equity for first half of 2006
Loss for period		-	-	-	-	-	(638,444)	(638,444)
Exchange differences on translation of foreign operations		-	-	-	-	(308,581)	-	(308,581)
Available for sale investments		-	-	-	(181)	-	-	(181)

Total recognised income and expense for the period		1,129,550	7,953,968	705,723	(10,138)	(308,581)	(2,028,495)	7,442,027
Issue of share capital		345,808	4,037,576	-	-	-	-	4,383,384
Share issue costs		-	(202,087)	-	-	-	-	(202,087)
Share based payments		-	-	-	-	-	105,066	105,066

Balance at 30 June 2006		1,475,358	11,789,457	705,723	(10,138)	(308,581)	(1,923,429)	11,728,390


Balance at 31 December 2005		1,129,550	7,953,968	705,723	-	-	(1,390,051)	8,399,190
Changes in accounting policy		-	-	-	(9,957)	-	-	(9,957)

Restated balance at 31 December 2005		1,129,550	7,953,968	705,723	(9,957)	-	(1,390,051)	8,389,233

Changes in equity for 2006
Loss for period		-	-	-	-	-	(1,298,927)	(1,298,927)
Exchange differences on translation of foreign operations		-	-	-	-	(1,471,535)	-	(1,471,535)
Available for sale investments		-	-	-	2,028	-	-	2,028

Total recognised income and expense for the period		1,129,550	7,953,968	705,723	(7,929)	(1,471,535)	(2,688,978)	5,620,799
Issue of share capital		348,699	4,052,531	-	-	-	-	4,401,230
Share issue costs		-	(202,586)	-	-	-	-	(202,586)
Share based payments		-	-	-	-	-	199,584	199,584

Balance at 31 December 2006		1,478,249	11,803,913	705,723	(7,929)	(1,471,535)	(2,489,394)	10,019,027


Changes in equity for 2007
Loss for period		-	-	-	-	-	(444,709)	(444,709)
Exchange differences on translation of foreign operations		-	-	-	-	464,599	-	464,599
Available for sale investments		-	-	-	(240)	-	-	(240)

Total recognised income and expense for the period		1,478,249	11,803,913	705,723	(8,169)	(1,006,936)	(2,934,103)	10,038,677
Issue of share capital		62,092	613,535	-	-	-	-	675,627
Share issue costs		-	(2,436)	-	-	-	-	(2,436)
Share based payments		-	-	-	-	-	79,268	79,268


Balance at 30 June 2007		1,540,341	12,415,012	705,723	(8,169)	(1,006,936)	(2,854,835)	10,791,136

The accompanying notes form an integral part of these consolidated financial statements

Condensed Consolidated interim cash flow statement

	Note	6 months to 30 June 2007 Unaudited £	6 months to 30 June 2006 Unaudited £	Year to 31 December 2006 Unaudited £

Cash flows from operating activities
Loss after taxation		(444,709)	(638,444)	(1,298,927)
Adjustments for:
Depreciation		41,894	39,851	68,895
Profit on disposal of property, plant and equipment		(512)	-	(1,615)
Interest income		(59,310)	(26,629)	(101,266)
Impairment of deferred exploration expenditure		44,008	163,297	215,201
Share based payments		79,268	105,066	199,584
(Increase)/decrease in other receivables		(43,149)	31,438	(92,970)
Increase in trade and other payables		21,315	8,655	12,801

Net cash used in operating activities		(361,195)	(316,766)	(998,297)

Cash flows from investing activities
Payments to acquire property, plant and equipment		(55,917)	(3,504)	(20,977)
Payments for deferred exploration expenditure		(1,134,568)	(1,258,652)	(1,834,550)
Proceeds from sale of equipment		512	-	1,615
Interest received		59,310	26,629	101,266

Net cash used in investing activities		(1,130,663)	(1,235,527)	(1,752,646)

Cash flows from financing activities
Proceeds from issue of share capital		673,191	4,181,297	4,198,644

Net cash used in financing activities		673,191	4,181,297	4,198,644

Net (decrease)/increase in cash and cash equivalents		(818,667)	2,629,004	1,447,701
Cash and cash equivalents at beginning of period		2,516,712	1,097,881	1,097,881
Exchange gain/(loss)		13,761	(9,822)	(28,870)

Cash and cash equivalents at end of period		1,711,806	3,717,063	2,516,712

The accompanying notes form an integral part of these consolidated financial statements

Notes to the condensed consolidated interim financial statements

1. NATURE OF OPERATIONS AND GENERAL INFORMATION

African Eagle Resources plc ("African Eagle" or the "Company") is a public limited company incorporated and domiciled in England and is listed on the Alternative Investment Market ("AIM") of the London Stock Exchange. African Eagle is a holding company of a mineral exploration and development group of companies (the "Group"). The principal activities of the Group are the exploration and development of mineral deposits, especially copper and gold, in eastern and central Africa.

African Eagle listed on the Alternative Exchange of the Johannesburg Exchange (AltX) on 24 August 2007 (see note 5 "Events after the balance sheet date"). The listing was accompanied by a fund raising which raised gross circa £7.4M. This ensures the Group has sufficient resources to finance its exploration activities over the next 2 years. For this reason the Directors continue to adopt the going concern basis in preparing the financial statements.

African Eagle's consolidated interim financial statements are presented in Pounds Sterling (£), which is also the functional currency of the parent company.

These consolidated interim financial statements have been approved for issue by the Board of Directors on 27 September 2007.

The financial information set out in this interim report does not constitute statutory accounts as defined in Section 240 of the Companies Act 1985. The Group's statutory financial statements for the year ended 31 December 2006, prepared under UK GAAP, have been filed with the Registrar of Companies. The auditor's report on those financial statements was unqualified.

2. SUMMARY OF ACCOUNTING POLICIES

a) Statement of Compliance and basis of preparation

Prior to 2007, the Group prepared its audited financial statements and unaudited interim financial statements under UK Generally Accepted Accounting principles (UK GAAP). From 1 January 2007, the Group is required to prepare annual consolidated financial statements in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union (EU). As the 2007 annual financial statements will include comparatives for 2006, the Group's date of transition to IFRS is 1 January 2006 with the 2006 comparatives restated to IFRS. Thus these interim financial statements for the period ended 30 June 2007 have been prepared by applying the recognition and measurement provisions of IFRS and the accounting policies to be adopted for the annual accounts.

An exercise to assess the full impact that the change to IFRS has had on the Group's reported equity, reported losses and accounting policies, has been completed. In preparing its opening IFRS balance sheet, the Group has adjusted amounts reported previously in financial statements prepared in accordance with its previous basis of accounting (UK GAAP).

The financial information for the twelve months ended 31 December 2006 has been derived from the group's audited financial statements for the period as filed with the Registrar of Companies and adjusted for the transition to IFRS. It does not constitute the financial statements for that period. The auditor's report on the statutory financial statements for the year ended 31 December 2006 was unqualified and did not contain any statement under Section 237(2) or (3) of the Companies Act 1985.

The accounting policies have been applied consistently throughout the Group for the purposes of preparation of these condensed consolidated interim financial statements.

The Group has elected to apply the following IFRS 1 exemptions and transitional provisions:

Business combinations exemption

The Group has taken advantage of the business combinations exemption which allows the Group not to restate business combinations prior to 1 January 2006. Instead, the existing goodwill has been frozen at that date, tested for impairment and not subsequently amortised.

Share based compensation

The Group has used the exemption under IFRS 1 and has only included those equity instruments granted after 7 November 2002 that had not vested as of 1 January 2006. All share options issued subsequent to that date have been expensed as appropriate in accordance with IFRS 2, "Share Based Payments".

Cumulative translation differences exemption

The Group has elected to set previously accumulated translation differences to zero at the transition date.

b) Basis of consolidation

The Group financial statements consolidate those of the Company and its subsidiary undertakings drawn up to 30 June 2007.

The acquisition of African Eagle Resources Limited and its subsidiary Katanga Resources Limited in 2002 was accounted for using the acquisition method of accounting. The Company took advantage of the merger relief provisions of section 131 of the Companies Act 1985 to record the shares issued in connection with the acquisition at their nominal value. In the consolidated accounts the shares issued were accounted for at fair value with an appropriate transfer to the merger reserve. African Eagle Resources Limited has since been dissolved and its investment in Katanga Resources Limited transferred to Twigg Resources Limited and the Company. Under IFRS 1 the Group has elected to apply the business combination exemption which allows the Group not to restate business combinations prior to 1 January 2006. From this date the goodwill arising on acquisition has been frozen. There have been no business combinations since the 1 January 2006.

The combination of the Company with Twigg Resources Limited and its subsidiaries in 2000 was accounted for using merger accounting as applicable to group reconstructions.

Profits or losses on intra group transactions, and balances are eliminated on consolidation.

c) Property, plant and equipment

Property, plant and equipment are held at historical cost net of depreciation and any provision for impairment. Depreciation is calculated to write down the cost or valuation less estimated residual value of all property, plant and equipment over their estimated useful economic lives. The rates generally applicable are:

Motor vehicles	25%
Fixtures and fittings	25%
Leasehold Improvements	Depreciated over the life of the lease

Material residual value estimates are updated as required, but at least annually, whether or not the asset has been revalued. Where the carrying amount of an asset is greater than its estimated recoverable amount, it is written down immediately to its recoverable amount.

d) Exploration and development costs

The Group has elected to apply the transitional provisions under IFRS 6 ("Exploration for and Evaluation of Mineral Resources") which permits the existing accounting policy under UK GAAP for accounting for and capitalisation of mineral exploration costs. The policy adopted under UK GAAP is based on the Statement of Recommended Practice "Accounting for Oil and Gas Exploration, Development, Production and Decommissioning Activities" revised in June 2001 (the SORP currently in effect).

In accordance with the full cost method as set out in the SORP, expenditure including directly attributable overheads on the acquisition, exploration and evaluation of interests in licences not yet transferred to a cost pool is capitalised under intangible assets.

All costs incurred prior to obtaining the legal right to undertake exploration and evaluation activities on a project are written-off to the income statement as incurred.

Exploration and evaluation costs arising following the acquisition of an exploration licence are capitalised on a project-by-project basis, pending determination of the technical feasibility and commercial viability of the project. Costs incurred include appropriate technical and administrative overheads. Deferred exploration costs are carried at historical cost less any impairment losses recognised.

When it is determined that such cost will be recouped through successful development and exploitation or alternatively by sale of the interest, expenditure will be transferred to tangible assets and depreciated over the expected productive life of the asset. Whenever a project is considered no longer viable the associated exploration expenditure is written-off to the income statement.

e) Impairment

Whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable an asset is reviewed for impairment. An asset's carrying value is written down to its estimated recoverable amount if that amount is less than the asset's carrying amount. The recoverable amount is the higher of fair value less costs to sell and value in use.

Impairment reviews for deferred exploration and evaluation costs are carried out on a project by project basis, with each project representing a potential single cash generating unit. An impairment review is undertaken when indicators of impairment arise but typically when one of the following circumstances apply:

title to the asset is compromised;
variations in metal prices that render the project uneconomic; and
unexpected geological occurrences that render the resource uneconomic

f) Taxation

Current income tax assets and liabilities comprise those obligations to, or claims from fiscal authorities relating to the current or prior reporting period, that are unpaid at the balance sheet date. They are calculated according to the tax rates and tax laws applicable to the fiscal periods to which they relate, based on the taxable profit for the period.

Deferred income taxes are calculated using the liability method on temporary differences. Deferred tax is generally provided on the difference between the carrying amounts of assets and liabilities and their tax bases. However, deferred tax is not provided on the initial recognition of goodwill or on the initial recognition of an asset or liability unless the related transaction is a business combination or affects tax or accounting profit. Deferred tax on temporary differences associated with shares in subsidiaries is not provided if reversal of these temporary differences can be controlled by the Group and it is probable that reversal will not occur in the foreseeable future. In addition tax losses available to be carried forward as well as other income tax credits to the Group are assessed for recognition as deferred tax assets.

Deferred tax liabilities are provided in full, with no discounting. Deferred tax assets are recognised to the extent that it is probable that the underlying deductible temporary differences will be able to be offset against future taxable income. Current and deferred tax assets and liabilities are calculated at tax rates that are expected to apply to their respective period of realisation, provided they are enacted or substantively enacted at the balance sheet date.

Changes in deferred tax assets or liabilities are recognised as a component of tax expense in the income statement, except where they relate to items that are charged or credited directly to equity in which case the related deferred tax is also charged or credited to equity.

g) Share based payments

Share based payment arrangements granted after 7 November 2002 which have not vested by 1 January 2006 are recognised in the financial statements.

All goods and services received in exchange for the grant of any share based payment are measured at their fair values. Where employees are rewarded using share based payments, the fair values of employees' services are determined indirectly by reference to the fair value of the instrument granted to the employee. This fair value is appraised at the grant date and excludes the impact of non-market vesting conditions. Shares options granted by the Group vest 1 year from the date of grant.

All equity-settled share based payments are ultimately recognised as an expense in the income statement with a corresponding credit to retained losses in the balance sheet.

If vesting periods or other non-market vesting conditions apply, the expense is allocated over the vesting period, based on the best available estimate of the number of share options expected to vest. Estimates are revised subsequently if there is any indication that the number of share options expected to vest differs from previous estimates. Any cumulative adjustment prior to vesting is recognised in the current period. No adjustment is made to any expense recognised in prior periods if share options that have vested are not exercised.

Upon exercise of share options, the proceeds received net of attributable transaction costs are credited to share capital, and where appropriate share premium.

h) Financial instruments

A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity. Financial assets include cash and cash equivalents, trade and other receivables, equity instruments of another enterprise and are initially recognised in the balance sheet at fair value, net of transaction costs where applicable. Thereafter, their carrying value depends on how those financial instruments have been classified. Cash and cash equivalents includes cash in hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less from acquisition.

Financial assets are divided into the following categories: loans and receivables; financial assets at fair value through the income statement; available for sale assets; and held to maturity investments. Financial assets are assigned to the different categories by management on initial recognition, depending on the purpose for which they were acquired. The designation of financial assets is re-evaluated at every reporting date at which a choice of classification or accounting treatment is available.

Trade and other receivables are categorised as "loans and other receivables". Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. After initial recognition these assets are measured at amortised cost using the effective interest method less provision for impairment. Any change in their value is recognised in the income statement.

Financial liabilities are obligations to pay cash or other financial assets and are recognised when the Group becomes a party to the contractual provisions of the instrument. The financial liabilities included in the accounts are recorded initially at fair value, net of direct issue costs.

Recognition of trade and other payables occurs when a Group company becomes a party to the contractual provisions of the instrument. Most obligations are legally enforceable and arise under contractual arrangements. These include amounts owed for assets purchased or services obtained (trade creditors). Accrued expenses are liabilities to pay for goods or services that have been received or supplied but have not been paid, invoiced or formally agreed with the supplier. The recognition of accrued expenses results directly from the recognition of expenses for items of goods and services consumed during the period. The initial measurement of trade and other payables is usually at fair value.

The Group has not entered into any derivative financial instruments for hedging or any other purpose.

Interest is recognised using the effective interest method which calculates the amortised cost of a financial asset and allocates the interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the net carrying amount of the financial asset.

i) Available for sale

Available for sale financial assets include non-derivative financial assets that are either designated as such or do not qualify for inclusion in any of the other categories of financial assets. All financial assets within this category are measured subsequently at fair value, with changes in value recognised in equity, through the statement of changes in equity. Gains and losses arising from investments classified as available for sale are recognised in the income statement when they are sold or when the investment is impaired.

In the case of impairment of available for sale assets, any loss previously recognised in equity is transferred to the income statement.

j) Income and expense recognition

The Group's only income is interest receivable from bank deposits. Operating expenses are recognised in the income statement upon utilisation of the service or at the date of their origin. Interest received is recognised using the effective interest method which calculates the amortised cost of a financial asset and allocates the interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the net carrying amount of the financial asset. All other income and expenses are reported on an accrual basis.

k) Foreign currency translation

The financial information for the Group is presented in pounds sterling, which is also the functional currency of the parent company. Sterling is the currency that management uses when controlling and monitoring the performance of the group.

Items included in the financial statements of each of the Group's subsidiaries are measured using the functional currency with the exception of Twigg Gold Limited (a Tanzanian based subsidiary) which is measured in US dollars.

In the financial statements of the parent and subsidiaries, foreign currency transactions are translated into the functional currency of the subsidiary using the exchange rates prevailing at the date of the transaction. Exchange rate differences arising when monetary items are settled or upon translation at the spot rate ruling at the end of the period are separately reported in the income statement.

In the consolidated financial statements, all separate financial statements of subsidiary entities, originally presented in a currency different from the Group's presentation currency, have been converted into sterling.

Assets and liabilities have been translated into sterling at the closing rate at the balance sheet date. Income and expenses have been translated into sterling at the average rates over the reporting period. Any differences arising from this procedure have been charged/credited to the "Foreign currency reserve" in equity.

Exchange differences arising on a reporting entities net investment in a foreign operation are recognised in the consolidated financial statements in a separate component of equity ("Foreign currency reserve"). These exchange differences will be recognised in the income statement on disposal of the net investment.

l) Equity

Equity comprises the following:

"Share capital" is the nominal value of equity shares.
"Share premium account" represents the excess over nominal value of the fair value of consideration received for equity shares, net of expenses of the share issue.
"Merger reserve" is the difference between the net assets of the subsidiary acquired and the nominal value of the consideration (e.g. shares issued) to acquire the subsidiary
"Available for sale revaluation reserve" represents the difference between the fair value of the available for sale investments and the acquisition cost of those investments.
"Foreign currency reserve" represents the differences arising from translation of investments in overseas subsidiaries.
"Retained losses" represents retained earnings.

m) Operating lease agreements

Rentals applicable to operating leases where substantially all of the benefits and risks of ownership remain with the lessor are charged against profits on a straight line basis over the period of the lease.

n) Cash and cash equivalents

Cash and cash equivalents in the balance sheet comprise cash on hand and demand deposits together with other short term, highly liquid investments that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value.

o) Goodwill

Goodwill which represents the excess of the cost of acquisition over the fair value of the Group's share of the identifiable net assets acquired is capitalised and reviewed annually for impairment. Goodwill is carried at cost less accumulated impairment losses.

Goodwill written off to reserves prior to date of transition to IFRS remains in reserves. There is no re-instatement of goodwill that was amortised prior to transition to IFRS. Goodwill previously written off to reserves is not written back to the income statement on subsequent disposal.

3 SHARE ISSUES

During the period to 30 June 2007 6,209,254 shares were issued of which 300,500 shares were issued to satisfy share options previous granted under the Company's employee share option scheme and 5,908,754 shares were issued to Phelps Dodge Mining (Zambia) Limited (PDMZ) under the terms of the Ndola, Zambia earn-in agreement. Shares issued and allotted during the period to 30 June 2007, together with the 2006 comparatives are summarised below:

6 months to 30 June 2007

	Number	Share capital £	Share premium £
At 1 January 2007	147,824,890	1,478,249	11,803,913
Issue of shares	6,209,254	62,092	613,535
Expenses on share issues	-	-	(2,436)

At 30 June 2007	154,034,144	1,540,341	12,415,012


6 months to 30 June 2006

	Number	Share capital £	Share premium £
At 1 January 2006	112,954,962	1,129,550	7,953,968
Issue of shares	34,580,825	345,808	4,037,576
Expenses on share issues	-	-	(202,087)

At 30 June 2006	147,535,787	1,475,358	11,789,457


Year to 31 December 2006

	Number	Share capital £	Share premium £

At 1 January 2006	112,954,962	1,129,550	7,953,968
Issue of shares	34,869,928	348,699	4,052,531
Expenses on share issues	-	-	(202,586)

At 31 December 2006	147,824,890	1,478,249	11,803,913

The issue of shares yielded £675,627 gross in the period with related expenses amounting to £2,436. PDMZ acquired 5,908,754 shares for £651,588 at a price of 11.0275 pence per share representing a 10% premium to the average closing mid-market price of African Eagle's shares for the 10 consecutive dealing days immediately proceeding 15 February 2007.

The employee share options were exercised at 8 pence per share and the weighted average share price at the date of exercise was 10.14 pence per share.

An agreement dated 14 March 2007, was entered into between African Eagle and Loeb Aron & Company Ltd., under which, warrants to subscribe for up to 600,000 ordinary shares in the Company will be issued in two tranches at a subscription price of 18 pence per warrant share. The subscription period terminates on the third anniversary of the date of issuance.

Additional shares have been issued after the balance sheet date and these are listed under "Events after the balance sheet date" in note 5.

4 LOSS PER SHARE

The calculation of basic loss per share is based on the loss for the period of £444,709 (June 2006: £638,444; December 2006: £1,298,927) divided by the weighted average number of shares in issue during the period of 152,144,955 (June 2006: 123,437,168; December 2006: 135,728,466).

In calculating the diluted loss per share potential ordinary shares such as share options and warrants have not been included as they would have the effect of decreasing the loss per share. Decreasing the loss per share would be antidilutive.

Headline loss per share has been calculated in accordance with the Institute of Investment Management and Research's ("IIMR") Statement of Investment Practice No.1 entitled 'The Definition of Headline Earnings'. The calculation of headline loss per share is based on the loss for the period adjusted for profit on sale of fixed assets, loss on impairment of exploration assets and the tax impact of these adjustments as calculated below divided by the weighted average number of shares in issue during the year. No diluted headline loss per share has been calculated as it would be antidilutive by reducing the headline loss per share.

	6 months to 30 June 2007 Unaudited £	6 months to 30 June 2006 Unaudited £	Year to 31 December 2006 Unaudited £

Loss for the period	(444,709)	(638,444)	(1,298,927)
Adjusted for:
Profit on sale of fixed assets	(512)	-	(1,615)
Loss on impairment of exploration assets	44,008	163,297	215,201
Tax impact of these adjustments	(13,049)	(48,989)	(64,076)

Headline loss	(414,262)	(524,136)	(1,149,417)


Weighted average number of shares in issue	152,144,955	123,437,168	135,728,466


Basic & diluted headline loss per share	(0.3p)	(0.4p)	(0.8p)

5 EVENTS AFTER THE BALANCE SHEET DATE

The financial statements were authorised for issue by the Board of Directors on the 27 September 2007. The following non-adjusting events arose after the balance sheet date:

Placing of Shares

The Company announced the exercise of employee share options on the 27 July 2007 whereby employees exercised 15,000 share options at 8p to purchase ordinary shares in the Company.

On 31 July 2007 African Eagle announced a £7.4M (ZAR 104,231,315 at ZAR 14.07 to the pound) capital raising in South Africa and confirmed its intention to list on the Johannesburg Stock Exchange (AltX). African Eagle's corporate adviser and AltX Sponsor, Nedbank Capital, advised the Company that it had received irrevocable applications from South African investors to subscribe for 45,457,310 shares for a total of ZAR 88,641,755 gross. In addition African Eagle had received an irrevocable application from JP Morgan Fleming Natural Resources Fund, a long standing UK shareholder, for 8,000,000 shares, equivalent to ZAR 15,600,000 gross.

On the 24 August the Company announced that it had listed on the Alternative Exchange of the Johannesburg Stock Exchange (AltX).

Other Announcements

On 18 September 2007 the Company announced that it had been awarded Mokambo South prospecting licence.

6 EXPLANATION OF TRANSITION TO IFRS

Basis of transition to IFRS

As stated in the Basis of Preparation, these are the Group's first condensed consolidated interim financial statements for part of the period covered by the first IFRS annual consolidated financial statements prepared in accordance with IFRS. An explanation of how the transition from UK GAAP to IFRS has affected the Group's financial position, financial performance and cash flows is set out below.

The accounting policies as set out in note 2 have been applied in preparing the restatement of the financial statements for the periods ending 30 June 2006 and 31 December 2006 and the actual performance for the period ending 30 June 2007.

The rules for first time adoption under IFRS 1, "First time adoption of IFRS" allow the Group to take advantage of a number of exemptions. These exemptions are designed to simplify the transition process. The Group has adopted the following exemptions:

IFRS 1 exemptions:

Business combinations exemption
The Group has elected the business combinations exemption under IFRS 1, which allows the Company not to restate business combinations prior to 1 January 2006.
Share based compensation
The Group has used the exemption under IFRS 1 and has only included those equity instruments granted after 7 November 2002 that had not vested as of 1 January 2006. All share options issued subsequent to that date have been expensed as appropriate in accordance with IFRS 2, "Share Based Payments".
Cumulative translation differences exemption
The Group has elected to set previously accumulated translation differences to zero at the transition date.

Reconciliation of equity at 1 January 2006

	UK GAAP Audited £	Note a £	Note b £	IFRS Unaudited £

ASSETS
Non-current assets
Property, plant and equipment	250,362	-	-	250,362
Goodwill	106,188	-	-	106,188
Available for sale investments	18,372	(9,957)	-	8,415
Deferred exploration costs	7,169,287	-	-	7,169,287
Current assets
Other receivables	176,039	-	-	176,039
Cash and cash equivalents	1,097,881	-	-	1,097,881
Current liabilities
Trade and other payables	(418,939)	-	-	(418,939)

Net assets	8,399,190	(9,957)	-	8,389,233


EQUITY
Share capital	1,129,550	-	-	1,129,550
Share premium account	7,953,968	-	-	7,953,968
Merger reserve	705,723	-	-	705,723
Share based payment reserve	92,871	-	(92,871)	-
Available for sale revaluation reserve	-	(9,957)	-	(9,957)
Retained losses	(1,482,922)	-	92,871	(1,390,051)

Total equity	8,399,190	(9,957)	-	8,389,233

Reconciliation of equity at 30 June 2006

	UK GAAP Unaudited £	Note a £	Note b £	Note d £	Note e £	IFRS Unaudited £

ASSETS
Non-current assets
Property, plant and equipment	204,933	-	-	-	-	204,933
Goodwill	72,890	-	-	33,298	-	106,188
Available for sale investments	18,229	(10,138)	-	-	-	8,091
Deferred exploration costs	7,698,774	-	-	-	-	7,698,774
Current assets
Other receivables	140,765	-	-	-	-	140,765
Cash and cash equivalents	3,717,063	-	-	-	-	3,717,063
Current liabilities
Trade and other payables	(147,424)	-	-	-	-	(147,424)

Net assets	11,705,230	(10,138)	-	33,298	-	11,728,390


EQUITY
Share capital	1,475,358	-	-	-	-	1,475,358
Share premium account	11,789,457	-	-	-	-	11,789,457
Merger reserve	705,723	-	-	-	-	705,723
Share based payment reserve	197,937	-	(197,937)	-	-	-
Available for sale revaluation reserve	-	(10,138)	-	-	-	(10,138)
Foreign currency reserve	-	-	-	-	(308,581)	(308,581)
Retained losses	(2,463,245)	-	197,937	33,298	308,581	(1,923,429)

Total equity	11,705,230	(10,138)	-	33,298	-	11,728,390

Reconciliation of equity at 1 January 2007

	UK GAAP Audited £	Note a £	Note b £	Note d £	Note e £	IFRS Unaudited £

ASSETS
Non-current assets
Property, plant and equipment	153,495	-	-	-	-	153,495
Goodwill	39,593	-	-	66,595	-	106,188
Available for sale investments	18,046	(7,929)	-	-	-	10,117
Deferred exploration costs	7,172,869	-	-	-	-	7,172,869
Current assets
Other receivables	240,466	-	-	-	-	240,466
Cash and cash equivalents	2,516,712	-	-	-	-	2,516,712
Current liabilities
Trade and other payables	(180,820)	-	-	-	-	(180,820)

Net assets	9,960,361	(7,929)	-	66,595	-	10,019,027


EQUITY
Share capital	1,478,249	-	-	-	-	1,478,249
Share premium account	11,803,913	-	-	-	-	11,803,913
Merger reserve	705,723	-	-	-	-	705,723
Share based payment reserve	292,455	-	(292,455)	-	-	-
Available for sale revaluation reserve	-	(7,929)	-	-	-	(7,929)
Foreign currency reserve	-	-	-	-	(1,471,535)	(1,471,535)
Retained losses	(4,319,979)	-	292,455	66,595	1,471,535	(2,489,394)

Total equity	9,960,361	(7,929)	-	66,595	-	10,019,027

Reconciliation of profit for the 6 months ended 30 June 2006

	UK GAAP Unaudited £	Note b £	Note c £	Note d £	IFRS Unaudited £

Depreciation expense	-	-	(39,851)	-	(39,851)
Administrative expenses	(541,181)	-	507,883	33,298	-
Share based payments	(105,066)	105,066	-	-	-
Employee benefits expense	-	(105,066)	(138,710)	-	(243,776)
Impairment of deferred exploration expenditure	-	-	(163,297)	-	(163,297)
Foreign exchange losses	(52,124)	-	-	-	(52,124)
Other expenses	-	-	(166,025)	-	(166,025)

Operating loss	(698,371)	-	-	33,298	(665,073)
Financial income:
Bank interest receivable	26,629	-	-	-	26,629

Loss before tax	(671,742)	-	-	33,298	(638,444)
Income tax expense	-	-	-	-	-

Loss for the period	(671,742)	-	-	33,298	(638,444)

Reconciliation of profit for the year to 31 December 2006

	UK GAAP Audited £	Note b £	Note c £	Note d £	IFRS Unaudited £

Depreciation expense	-	-	(68,895)	-	(68,895)
Administrative expenses	(1,003,826)	-	937,231	66,595	-
Share based payments	(199,584)	199,584	-	-	-
Employee benefits expense	-	(199,584)	(298,703)	-	(498,287)
Impairment of deferred exploration expenditure	-	-	(215,201)	-	(215,201)
Foreign exchange losses	(263,378)	-	-	-	(263,378)
Other expenses	-	-	(354,432)	-	(354,432)

Operating loss	(1,466,788)	-	-	66,595	(1,400,193)
Financial income:
Bank interest receivable	101,266	-	-	-	101,266

Loss before tax	(1,365,522)	-	-	66,595	(1,298,927)
Income tax expense	-	-	-	-	-

Loss for the period	(1,365,522)	-	-	66,595	(1,298,927)

RECONCILIATIONS BETWEEN IFRS AND UK GAAP

Notes to the Reconciliations

(a) Investments in Listed Companies

The Group in applying IAS 32 and IAS 39 has valued the listed shares in Sub-Sahara Resources N.L. at fair value. This investment is treated as "available for sale financial assets" and the movement in fair value has been recognised through equity.

(b) Share based payments

Under UK GAAP, the Group recorded the credit to equity arising on share based payments as a separate reserve. On moving to IFRS, it has been determined that this reserve may be eliminated against retained losses.

(c) Administrative expense

Under IFRS the Group has adopted the consolidated income statement, "expense by nature" as opposed to "expense by function". The main change is to replace administrative expense and share based payments as reported under UK GAAP with: employee benefits; depreciation; impairment of deferred exploration and other expenses.

(d) Goodwill amortisation

IFRS 3 prohibits the amortisation of goodwill. The standard requires goodwill to be carried at cost from the transition date. Impairment reviews are required annually or when there are indications the carrying value may not be recoverable. The goodwill amortised under UK GAAP during 2006 has been reversed in the income statement with a resulting impact on retained losses in the balance sheet. The directors are satisfied that the value of goodwill has not been impaired.

(e) Foreign currency reserve

A translation reserve was created for the exchange differences arising from the retranslation of the opening net investment in subsidiaries.

Explanation of material adjustments on the cash flow statement

Interest received has been reclassified under net cash used in investing activities where, under UK GAAP, it formed part of the return on investments and servicing of finance.

The movement in liquid resources, which comprise the cash equivalents of the Group, was classified as a cash flow under UK GAAP. Under IFRS, liquid resources have been reclassified as cash equivalents and movements and are a component of the increase or decrease in cash and cash equivalents in the year.

There are no other material differences between the cash flow statement presented under IFRS and the cash flow statement presented under UK GAAP.