African Eagle Resour : Placing oversubscribed

African Eagle Resources plc
PLACING TO RAISE £3.7 MILLION OVERSUBSCRIBED

African Eagle Resources plc ("African Eagle" or the "Company", AIM: AFE and AltX: AEA) is pleased to announce that a placing of 23,860,000 new ordinary shares in the London market was oversubscribed, and successfully raised GBP3.7 million at 15.5p per share.

The proceeds of the placing, together with the Company's current net cash of some GBP3.25 million, will be used to maintain the momentum of work on the pre-feasibility study and bankable feasibility study for the Dutwa nickel laterite project in Tanzania, and to fund the general working capital requirements of the Group.

African Eagle chairman Euan Worthington, commented today: "We are delighted to have received such a high level of support from new and existing institutional shareholders for this capital raising, which was oversubscribed. With our brokers, we have been putting a lot of effort into explaining the Dutwa project to UK institutional investors. It recently became clear that there was strong demand for our shares, not only from existing shareholders but also from other institutional investors. Although we budgeted our current cash to be sufficient to complete the pre-feasibility study, we considered it prudent to have a reserve, in view of the weak pound and current inflationary trends."

"I would like to thank MWB Limited and Anglo Pacific Group plc, two important shareholders, for raising their stakes and to welcome two new major institutions onto our shareholders' register."

"We are maintaining good progress on the Dutwa project and expect continuing news flow between now and the completion of the pre-feasibility study in Q3. We continue to deliver on our intention to spin out our legacy assets, with valuable deals already completed on uranium and gold projects. The Board recently delegated our COO, Chris Davies, to spin out our Zambian copper assets into a new vehicle, with a view to a listing or sale."

Details of the placing

Seymour Pierce and Ocean Equities, the company's joint brokers, arranged a placing of 23,860,000 new ordinary shares at a price of 15.5p each (the "Placing"), to raise gross proceeds of approximately £3.7 million with new and existing investors. The Placing represents approximately 5.83% of the issued ordinary share capital of the Company, as enlarged by the Placing. The expenses of the Placing will be approximately £0.2 million.

The Company has made an application for the 23,860,000 new shares to be admitted to trading on AIM and listing on AltX, with dealings expected to commence on 26 January 2011. Following the placement, the total number of shares allotted and issued will be 409,154,128.

For further information on African Eagle, see the Company's web site www.africaneagle.co.uk:
http://www.africaneagle.co.uk or contact one of the following:

Euan Worthington / Mark Parker
African Eagle Resources plc, London
+44 20 7248 6059
+44 77 5640 6899

Jeremy Stephenson / Nicola Marrin
Seymour Pierce Limited, London
Nominated Adviser and Co-Broker
+ 44 20 7107 8000

Guy Wilkes
Ocean Equities Limited, London
Co-broker
+ 44 20 7786 4370

Ed Portman / Leesa Peters
Tavistock Communications, London
+44 20 7920 3150
+44 77 3336 3501

Charmane Russell / Marion Brower
Russell & Associates, Johannesburg
+ 27 11 8803924
+27 82 8928052

Dutwa project overview

African Eagle is developing the major Dutwa nickel project in Tanzania. The Company discovered Dutwa in 2008 and is now conducting a feasibility study.

Economic modelling in late 2010 indicated a pre-tax project NPV of US$650 million at a nickel price of $8/lb, with an estimated average cash cost of $3.37/lb nickel. The model was based on throughput of 3 million tonnes per year for 26 years with processing by atmospheric tank leaching to a mixed hydroxide intermediate product, requiring estimated initial capex of $600M and yielding life of mine earnings of $8.2bn at $8/lb nickel. The mining schedule was derived from Whittle optimisations of block models of an October 2010 inferred mineral resources. The financial models will be progressively improved as the feasibility study progresses.

Mineral resources are currently 98.6 million tonnes grading 0.93% nickel and 0.02% cobalt, of which 46.2 million tonnes are in the JORC indicated category and the remainder in the JORC inferred category. The Company believes that further drilling will increase the total resource by up to 10Mt.

The Dutwa project consists of two nickel laterite deposits which form the caps of two ridges about 7km apart. The current JORC mineral resources, at a 0.43% nickel equivalent cut-off, are 98.6Mt grading 0.93% nickel and 0.02% cobalt, containing in total 948,000 tonnes nickel metal equivalent. Of this, about half is now in the indicated category and half in the inferred. Because the deposits are at the surface, mining will be straightforward and strip ratios very low. The Ni equivalent grade (NiEq) is calculated using the following formula:
NiEq = Ni + [ Co * (RCo/RNi) * (PCo/PNi) ] = Ni + (Co * 1.32)
using metal prices (P) of US$10/pound Ni and US$17/pound Co, and metal recovery factors (R) of 90% for Ni and 70% for Co, derived from metallurgical test work conducted by African Eagle.

The Company believes that the resources can be increased by another 8Mt to 10Mt with further drilling. There is also future upside at Zanzui, 50km to the south, where the Company is evaluating another significant nickel laterite resource, and at Nyawa, 15km west of Dutwa.

Metallurgical tests have shown that the nickel ores are unusually easy to process, giving good recoveries from heap or tank leaching at atmospheric pressure, with no need for costly high pressure acid leach (HPAL).

African Eagle currently holds a 90% interest in the eastern Wamangola deposit, which hosts approximately 60% of the total resource, with an option to acquire 100%. The Company has signed a joint venture with the SAFINA Group of the Czech Republic under which African Eagle will earn an interest of between 50% and 75% in the western Ngasamo deposit by conducting and funding evaluation work. On completion of the feasibility study, the two companies' joint venture interests will be converted into equity in the combined project. African Eagle estimates that it will then hold about 76% of the equity.

About African Eagle

Since discovering a major nickel oxide deposit at Dutwa in Tanzania, African Eagle is in transition from an explorer into a nickel company. The company completed a positive scoping study on the Dutwa deposit in July 2009 and is now working towards a feasibility study.

In addition to Dutwa, African Eagle is also evaluating a second promising nickel oxide at Zanzui, which is located 60km from Dutwa. The Company holds a 49% interest in the Mkushi Copper Mines joint venture in Zambia, for which a draft feasibility study was completed in Q4 2008. It also holds a half million ounce gold resource at the Miyabi project in Tanzania, and a portfolio of gold and base metal exploration assets, including two projects in the Zambian Copperbelt.