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REVIEW OF PROGRESS AND RESULTS FOR THE HALF YEAR ENDED 3O JUNE 2004

News Report
29 September 2004

CHAIRMAN'S STATEMENT

Exploration at the extensive Eagle Eye copper and precious metals project in Zambia has progressed well with our regional surveys showing that the mineralisation extends throughout the entire 28km strike length of the mapped volcanic belt. Drilling, while so far restricted to the central Mweze prospect area, has demonstrated that the mineralisation has the potential to reach economic grades and thicknesses. Drilling has just commenced on the Sasare Gold Mine target, which we now believe to be part of the same mineralised system as Eagle Eye.

In Tanzania, we have acquired a 75% interest in the Igurubi project, a shear zone hosted gold system lying along a granite-greenstone contact. Ten years or more of shallow, manual mining of the gold veins by local people attests to the potential of the area. At Miyabi, where we are continuing our diamond drilling programme, the time spent early in the year assessing all our results to date has paid off, with the discovery of a wide zone of gold mineralisation at the Faida prospect. Several other targets in the Miyabi mineralised corridor have been earmarked for drilling.

On the corporate side we are pleased to have welcomed Bevan Metcalf to the African Eagle team as Financial Controller, and Clive Arthur as Exploration Manager for Zambia and Mozambique. Bevan is a chartered accountant who has held senior financial posts in the UK, Belgium, USA, Australia and New Zealand. Clive is an experienced economic geologist with over twenty years in exploration and mining, mostly in Africa.

With cash resources in excess of £1.8 million at mid year, I believe your Company remains well positioned to continue to add value to our projects in east and southern Africa.

Zambia

Our exploration at Eagle Eye proceeds apace. Drilling at the Mweze prospect has shown that the iron-oxide-copper-gold (IOCG) mineralisation extends over several hundred metres, reaching potentially economic grade and thickness with intercepts including 60m at 0.75% copper and 21m at 1.06 % copper. We have completed an airborne geophysical survey over the whole 800km2 licence area and geological/geochemical mapping over about half of the 28km strike length of the prospective volcanic belt. The additional results are giving our technical team a better understanding of the geological factors controlling the mineralisation. We have experienced very slow turnaround of our drill and soil samples from SGS assay laboratories, however, which continues to delay our receipt of the drill results.

Reconnaissance work has shown that copper-silver-gold mineralisation extends over the whole volcanic belt, while reverse circulation (RC) drilling at the Mweze prospect near the centre of the belt has confirmed that the mineralisation is locally developed to a substantial thickness, as reported in our announcement of 14 September 2004. Numerous geochemical anomalies remain to be tested within the belt, from the Chikupi prospect in the west, where initial grab samples of mineralised material have yielded up to 13.4% copper, 12.5g/t gold and 125g/t silver, via a new prospect east of Mweze which recently yielded visible gold, to the Katumpa prospect in the east where a newly excavated trench returned 3m at 1.82% Cu in carbonaceous schists and marbles.

Initial trial drilling at the historic Sasare Gold Mine is also underway. The old mine records show that between 1906 and 1942, the mine worked a gold-bearing quartz vein system up to 2m wide with average grade reported to be between 8 and 10g/t.

We are also making good progress on our other Zambian projects. Airborne geophysical surveying has been completed at the Lunga base metal project. The results add considerably to our understanding of the geology of this area which has very little outcrop but is known to be part of the Neoproterozoic Katangan System which hosts the giant deposits of the Copper Belt.

An airborne geophysical survey is also underway at Kampumba, coupled with a re-interpretation of all remote sensing data for the area. Trenching, geochemistry and other surface work will follow at Tandalwe Hill and other targets in the Kampumba licence area. The 5.5km long Tandalwe Hill copper geochemical anomaly was tested in the 1960s by extensive trenching and by a solitary diamond drill hole which gave a mineralised intersection of 57m, with zones within it assaying up to 0.7% copper. We are also re-compiling and reviewing all existing data from the Nyimba Project, which lies between Kampumba and Eagle Eye.

At the Mkushi prospect, a former open pit copper mine which has a reported unclassified resource of 30Mt grading 1.25% copper, ground geophysical surveys are planned to determine possible extensions to the resource. If results are favourable, a programme of resource definition will be undertaken.

Tanzania

Among our most exciting recent developments in Tanzania has been the acquisition of a 75% interest in the Igurubi project, which covers 111 km² of granite and greenstone rocks. Sixty kilometres east of the Golden Pride Mine, Igurubi was being investigated by SAMAX, the discoverers of Golden Pride, at the time of its take-over by Ashanti Goldfields in 1998, but little work has been done since.

The licence area contains a system of northwest-trending gold veins close to a granite-greenstone contact. Shallow artisanal workings to extract gold from these quartz veins extend over 10km². Grab samples from the artisanal miners' production material range from 10 to 60 g/t. More rigorous sampling of one set of workings along a 350m strike length yielded values averaging 6 g/t, with footwall material averaging 8.6 g/t and hanging wall sheared granite averaging 2.2g/t.

Exploration of the area has started using high resolution ground magnetic surveys and induced polarisation (IP) in combination with geochemical sampling, geological mapping and trenching to establish the locations, nature and grade of the gold veins. Further information and a map of the Igurubi area may be viewed at www.africaneagle.co.uk/projects-igurubi.html

We have continued to make steady progress on the Miyabi gold project. A wide-ranging review of all our results to date, completed in May, drew our attention to the Faida prospect and subsequent diamond drilling has confirmed a wide zone of gold mineralisation there, with intersections of 23m at 2.7g/t and 27m at 2.2g/t. We are currently drilling more holes to quantify the resource but we expect Faida at least to double our gold resources at Miyabi.

As well as the work on the Miyabi Mineralised Corridor, we have been exploring the rest of our 626 km² holdings in the area using airborne geophysical and multi-element soil geochemical surveys to identify other mineralised targets. These surveys have already revealed at least one significant gold anomaly which is being followed up.

Shanta Mining withdrew from its joint venture with us at the Zanzui nickel-platinum prospect in July, but we believe the reconnaissance results show promise and plan to conduct further geochemistry and ground geophysics, subject to agreement with the licence holders.

Elsewhere in Tanzania, IP, high-resolution ground magnetic and infill soil geochemical surveys were completed and drill targets selected at Msasa, while of the nine new licences acquired this year, four gave positive soil geochemical results and are being followed up, two are still at reconnaissance stage and the other three have been dropped.

Mozambique

We plan to carry out test drilling of the Majele gossan during the final quarter of 2004. Exploration plans for the Muazua nickel and Majele gold and base metal areas include geochemical soil sampling, followed by magnetic surveys and trenching.

Corporate & Financial

We are pleased to have welcomed to the African Eagle team Bevan Metcalf as Financial Controller and Clive Arthur as Exploration Manager for Zambia and Mozambique. For the last seven years, Bevan was Finance Director and Company Secretary of the UK subsidiary of a Finnish pharmaceuticals company. Bevan is a chartered accountant, holds a Bachelor of Management Studies and has held financial posts in Belgium, USA, Australia and New Zealand as well as in the UK. We envisage that Bevan will be appointed Finance Director and join the Board at its next full meeting in late October.

Clive, who holds masters degrees in Geology and Business Administration, is an experienced economic geologist with twenty-two years in exploration and mining for precious metals, base metals and precious stones, including fifteen years in southern and central Africa.

During the half year to 30 June 2004, 1,550,770 warrants and 20,000 options were exercised, raising £94,646 for the company's exploration programmes. In July, the Company granted 2,000,000 options at an exercise price of 17.5p per share to directors and employees of the Group, under the Company's share option scheme.

For a review 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 2004 and profit and loss account for the six months ended 30 June 2004 are set out below. The results for the same period of 2003 are provided for comparison.

AFRICAN EAGLE RESOURCES plc - CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTHS FROM 1 JANUARY 2004 TO 30 JUNE 2004 (UNAUDITED)

Notes

1. The interim financial statements have been prepared on the basis of the accounting policies set out in the company's 2003 statutory financial statements, which can be downloaded from
   www.africaneagle.co.uk/downloads.html

2. These financial statements are unaudited and were approved by the Board of Directors on 29 September 2004. 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 2003 has been extracted from the statutory accounts for that year, which have been 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 £182,840 (June 2003 = £143,278; Dec 2003 = £365,084) divided by the time-weighted average number of shares in issue during the period of 76,479,741 (June 2003 = 31,325,823; Dec 2003 = 41,069,155). There is no dilutive effect of share options or warrants on the basic loss per share.
5. The share premium account includes a VAT refund of £26,140 relating to share issue expenses from 2003.