African Eagle avoids JSE

[] — AIM and Alt-X listed African Eagle Resources (African Eagle) is looking to raise up to ₤2.16m from “eligible’ shareholders but that definition excludes South African investors despite the company’s JSE listing.

The money is in addition to the ₤1.2m African Eagle will receive through a private placing of shares. The funds are needed to finance the feasibility study for the company’s Dutwa nickel laterite project in Tanzania.

Reason for the exclusion of South Africans from the offer is the lack of interest shown by local institutional and private investors despite a roadshow carried out recently by African Eagle executives.

African Eagle MD Mark Parker commented, “we were warned by our advisors that the investment climate in SA at present is not good and, in fact, a lot worse than the prevailing sentiment in London.

“We still carried out the road show targeting our key institutional and private shareholders in SA but it only proved that the initial advice we had been given was correct.

“We had a very disappointing response and, when we combined that with the difficulties of jumping through the various SA Reserve Bank hoops and dealing with the JSE, we decided it was just not worth the extra cost.

“Instead, we found there was considerable interest from London investors and we have been able to utilise a new regulation allowing us to make an open offer to shareholders to the equivalent sterling amount of 2.5m euros without requiring an approved prospectus to be produced.’

The issue of a prospectus would considerably increase the costs of the fundraising and also make it far longer to complete.

“About 15% of our shares are held by South Africans and it is a pity we cannot make the offer to them but it was not for the lack of trying on our part,’ Parker said.

Asked whether this development might have implications for African Eagle’s continued listing on the JSE Parker replied, “obviously we will review the situation but feeling is it’s a sign of the current times and not necessarily a long-term issue.

“For whatever reason it seems South African investors are feeling more pessimistic than United Kingdom investors at this stage.’

The African Eagle offer – which has been pitched at 4p a share offering a 20% discount to the ruling share price – is only available to shareholders with addresses in the United Kingdom (excluding the Channel Islands), Ireland and Germany.

African Eagle acquired Dutwa as a gold prospect but swiftly recognised the potential of the nickel laterite deposits that its geologists discovered.

Drilling work started in June last year with encouraging results and, in November, African Eagle announced an initial inferred mineral resource of 31mt at an average grade of 1.1% nickel and 0.034% cobalt.

At that point African Eagle designated Dutwa as its top priority because it had the greatest potential to create value out of all the company’s various projects.

A positive scoping study was delivered in June after which African Eagle decided to go for the next stage of development which was the feasibility study at an estimated cost of ₤1.5m to ₤2m.