African Eagle’s change of play

[miningmx.com] — JSE and London-listed African Eagle Resources is on the brink of major corporate changes as it drives its Dutwa Nickel project in Tanzania closer to development.

That became apparent on a recent visit by financial media to the project site, during which CEO Mark Parker laid out the company’s future strategy regarding what he describes as a “world-class’ nickel deposit.

Parker said: “As an exploration company you live for the day when you find the big one – and Dutwa is it for African Eagle. This is a project that would sit comfortably in the portfolio of a major mining company.’

African Eagle’s exploration results show Dutwa contains an inferred resource of 100m t of ore grading 1% nickel, which amounts to 1m t of contained nickel worth around $25bn at current nickel prices of about $11/lb. That’s the equivalent of an 18 million oz gold deposit.

Despite Parker’s strong convictions, he readily admits the project has some way to go before various key players in its future – bankers, investment institutions and possible strategic partners – are convinced the company is correct in its assessment.

He comments: “We need to gain better recognition in the market. Everybody has heard such hugely optimistic stories from junior explorers before.’

The first stage of that is to improve the current “inferred’ status resource to a higher-rated “indicated’ resource through further drilling and assay work. “London investors like that extra degree of comfort afforded by an indicated resource,’ Parker said.

A pre-feasibility study should be completed by third quarter 2011, with a full feasibility study due to be completed by third quarter 2012.

Parker is also keen to bring a strategic partner on board to help develop Dutwa but concedes that’s a difficult task for African Eagle at this early stage.

“It’s worth pointing out Sherritt International brought in a strategic partner in the form of Sumitomo for development of its Ambatovy nickel project in Madagascar. If even the big boys like Sherritt are prepared to bring in a strategic partner then we shouldn’t be shy about it. Having a partner like Sumitomo on board helps convince the banks and other potential backers.

“We’ve been talking to potential strategic partners and investors but it’s difficult, because we aren’t in a good position at this stage. We need to take more perceived risk out of the project and also get our own share price up.’

Parker said the decision to focus on the Dutwa’s development as the company’s top priority meant African Eagle was looking at spinning off two of its other major exploration interests into separate listings: its copper projects in Zambia and uranium project in Mozambique.

Dutwa is located about 100km east of Mwanza, near the south-eastern tip of Lake Victoria in northern Tanzania.

Parker says Tanzania had been one of the great success stories of mining in Africa and, although recent changes to legislation would make it a bit more difficult for mining companies, “they aren’t going to kill the goose that lays the golden eggs’.

He said there have been major improvements in Tanzania’s infrastructure over the past decade. “When we started here a decade ago you had to go through Nairobi in neighbouring Kenya to get to Dar es Salaam by road.

Now there’s a tar road running direct from Mwanza to Dar es Salaam, bar a last remaining stretch of about 10km of gravel.’

Despite that development, Parker acknowledges logistics would be a key challenge to the development of a nickel mine at Dutwa, in particular bringing in the volumes of sulphur required for the metallurgical recovery process.

– Finweek