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PROGRESS REPORT AND ACCOUNTS OF THE AFRICAN EAGLE GROUP TO 31st DECEMBER 2002

News Report
30 May 2003

The last year was an exciting one for the Company. We made good progress on our exploration projects, acquired an extremely promising asset portfolio in Zambia through the share for share take over of an Australian junior exploration company, welcomed Gold Fields on board as a major shareholder and partner in the Miyabi project, changed the Company's name to reflect better its focus, and planned our move onto the AIM market. We would have liked to have completed this move in 2002, but because of the market situation during the latter part of the year, we decided to defer it until 2003.

We added substantially to our Tanzanian licence portfolio during the year, more than doubling our land holdings around Miyabi. The quality of Miyabi, and our Tanzanian operations in general, was recognised by Gold Fields, one of the world's top five gold producers. In partnership with Gold Fields, our exploration at Miyabi adopted a wider perspective to improve our understanding of the geological structures and processes which produced the gold deposits. This understanding will help us to plan an effective drilling campaign in the coming months.

Our acquisitions in Zambia are already bearing fruit, with Chris Davies' preliminary exploration early this year giving rise to some stunning early results which indicate that we have an iron-oxide-copper-gold deposit, (IOCG in the parlance), at Eagle Eye. The chemistry of the samples and their geological setting show many similarities to the huge Olympic Dam deposit in Australia.

Tanzania
In our Miyabi project area, Exploration Manager John McDonald negotiated 90% interests for AER over three additional licences which more than double the land area held, to 576 sq km. The Company has subsequently negotiated a second placing agreement with Gold Fields, under which Gold Fields will invest a further £320,000 in the equity of the Company and the new licences will become subject to a similar Agreement to that made originally. Gold Fields' exclusive right to enter into a joint venture with the Company on Miyabi will be extended until 31 December 2003. On exercise of that right, Gold Fields will be able to earn 51% of the Miyabi project by spending another £2,000,000 on exploration, an increase of £500,000 over the original £1,500,000 commitment. Gold Fields' other rights under the original Agreement remain unchanged, including the right to earn an additional 19% by completing a bankable feasibility study on the property.

AER is delighted with the continuing confidence shown by Gold Fields in its projects, operations and management, and looks forward to continuing progress on the Miyabi gold project. Work completed by Project Geologist Ben Clavery and Consultant Geologist Mark Davey at Miyabi so far, has included deep regolith sampling by RAB and aircore drilling, airborne geophysics, multi-element geochemistry and regolith mapping. An extensive drilling campaign to investigate targets identified to date is programmed to start in June or July 2003.

Work has also progressed on our other Tanzanian holdings. We have acquired airborne geophysics over the Kakumbi and Msasa projects and added another licence to the Msasa holdings. At our Zanzui licence, where we are targeting platinum, a ground magnetic survey by Project Geologist Chanyari Mjanja and his team revealed strong concentric layering in the ultramafic complex, and we are negotiating with the operators of the northern half of the complex to explore the area jointly.

Zambia
Our acquisition of AERL in August brought us five excellent projects in Zambia. Of these, two have already yielded results which have given rise to considerable internal optimism for the success of the exploration we are planning in Zambia.

Early in 2003, prospecting by Chris Davies and Boniface Lefayi in the north of the Sasare licence led to recognition of the Eagle Eye IOCG deposit. The initial lab results, analysed in Zambia, showed copper values up to 35%. Three samples were brought back to the UK for specialised multi-element analysis and gave truly impressive results, with up to 44% copper, 5.7 grams per tonne (g/t) gold, 22g/t palladium, 13g/t platinum, 81g/t silver and 82g/t uranium.

These are early results from a few samples and we have a lot of work to do before we can state that we have discovered an economic resource, but your directors are very excited by the indications so far. IOCG deposits can have very high grades and big tonnages, as at Olympic Dam and Ernest Henry in Australia, Candelaria in Chile and Salobo in Brazil.

Meanwhile, at Lunga, where Avmin is exploring under an option to joint venture, drilling has also begun to yield some promising results, including intersections of 90m grading 0.3% copper and 0.7% zinc, 4m grading 1.4% copper and 12m of 3.6% zinc. Avmin has completed five diamond drill holes and numerous air core holes.

Mozambique
In Mozambique, the 1% nickel stream sediment anomaly found last year led Dinis Napido's exploration team to discover extensive nickel-bearing gossans on the Mount Muazua ultramafic complex. Initial channel chip sampling across these gave results with grades up to 2% nickel. A full prospecting licence has now been awarded over the area.

The Mozambique exploration team also demonstrated the southwest extension of the Majele sulphide unit, beneath the strong aeromagnetic anomaly which indicates that it may extend for more than 40km. A gold panning survey further narrowed down the location of the gold in the Majele streams, but the source continues to elude us.

This year sees the introduction of Mozambique's new mining law. As one of the few juniors active in Mozambique, AER was able to contribute to the consultations that preceded the framing of this law, which provides better incentives for exploration and better licence terms.

Corporate & Financial
It was our intention during 2002 to move AER's share listing onto London’s AIM, in order to take advantage of AIM's generally larger investor base, greater liquidity and better access to institutional investors. We completed a good deal of the preparatory work for this move but towards the end of the year, for a number of reasons, principally the decline in the state of the markets in general and for junior exploration companies in particular, we decided to defer our move to AIM until mid-2003.

During the year 5,868,903 shares were placed and 183,760 shares were issued on exercise of warrants, raising in total £ 736,434 for the Group's exploration activities. The placings included 3,703,703 shares with Gold Fields and 1,000,000 additional shares with J P Morgan Fleming Natural Resources Fund (formerly Save and Prosper Commodity Share Fund), bringing the Fund's total holding to almost 7%. During the year, Tiger Resources Fund acquired 1,241,714 shares, just over 4% of the issued capital. We also issued 2,500,000 shares to the original shareholders in AERL, the Australian junior we acquired, in full consideration for the Zambian properties and operating companies.

After a significant 2002, and with 2003 well underway as I write this, I am already looking forward to the positive developments which I believe I will be able to report to you this time next year.

John Park
Chairman
African Eagle Resources plc

Note 1 Increase in intangible investments represents deferred exploration costs for the period

Note 2 See the Company’s Annual Report of 29Žth May 2003 for details of accounting policies etc.