Charlotte Mathews
6 July 2009
Johannesburg — AFRICAN explorer African Eagle Resources would be seeking a partner for its Dutwa nickel project within about a year as it moved into the prefeasibility study stage, operations director Christopher Davies said on Friday.
Dutwa is a nickel laterite deposit in Tanzania with about 31-million tons of nickel, copper and gold.
The quality of the ore lent itself to a relatively inexpensive heap-leaching extraction method, which made the project more attractive than bigger projects with more complex mineralogy, Davies said.
African Eagle's shares, which had been hit hard by fund selling late last year and early this year because the shares were highly liquid, ha d recovered strongly, which Davies attributed mainly to the potential in Dutwa.
They are about 90c on the JSE from 18c in January, defying the recent exit of a major shareholder, hedge fund manager RAB Capital. Finance director Bevan Metcalf said African Eagle's directors held about 6% of the company and JPMorgan about 8%.
South African project manager TWP Holdings , which is also listed on the JSE, held about 4,5%.
According to African Eagle's scoping study published late last month , a nickel mine at Dutwa could earn $1,5bn over its 21 years of operation, assuming a nickel price of about 7/£. Nickel is now trading at about 7,5/£.
The initial cost of building an open- cast mine and an acid plant would be about 435m (R3,4bn at prevailing exchange rates).
African Eagle held consolidated cash resources of about £2,7m at its December year-end. Metcalf said this was sufficient to take African Eagle to its next phase.
Davies said African Eagle was an exploration company, not a mining company, and would require an institutional partner such as the Industrial Development Corporation or a mining company that was able to offer not only financing but skills to develop the project into a mine.
Other potential sources of strategic partners would be Southeast Asian countries such as Korea, China or Japan. Many big western resources companies were tackling high debt levels and were not interested in making acquisitions at this stage, he said.
Management's immediate target was to conduct more drilling and testing to achieve greater certainty on the economics of the deposit before it started talking to potential partners.
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