SCOPING STUDY REPORT ON DUTWA NICKEL PROJECT DELIVERED TO AFRICAN EAGLE MANAGEMENT

Work started on Feasibility Study

• Report conclusions indicate that project would be profitable if operating today
• Sensitivity analysis shows significant project upside, based on reasonable economic parameters
• African Eagle begins work on feasibility study

African Eagle announces that it has now received the full Scoping Study report on the Dutwa Nickel Laterite Project in Tanzania, undertaken by GRD Minproc of Perth, Australia, and confirms that work on the feasibility study is now beginning.

African Eagle’s Managing Director Mark Parker commented, ‘Using current metals prices and recent long-term forecast prices, the investment case for the project is very strong.  The study indicates
that if Dutwa were in production today, it would be making a comfortable profit. The report’s conclusions allow the Company to examine further aspects of the project, in particular:

• the potential upside at metals prices higher than base case prices
• opportunities to improve the ‘bottom line’ still further by cost reductions and revenue optimisation.

‘In the context of a gold project, at today’s metal prices the Dutwa nickel project is approximately equivalent to a nine million ounce gold deposit in ‘metal in the ground’ value terms and our discovery cost to date of US$7.50 per tonne of nickel is equivalent in value terms to a gold discovery cost of about US¢35 per ounce, just 1/70th of the long-term gold industry average of US$25/oz.’

Following the Company’s initial announcement of the ‘proof of concept’ scoping study results on 24 June 2009, the final report now delivered shows the potential upside at metals prices higher than the base case and allows the Company to begin work to improve the ‘bottom line’ by reducing costs and optimising revenues.

Recent consensus among a number of analysts is that nickel prices are likely to improve over the long term. For example, in an analysis published on 25 June 2009, BMO Research forecast a long-term price of US$8.50/lb.

As a potentially low-cost producer, the upside for the Dutwa project is considerable if nickel prices are above the $7/lb used in the base case.  The following table shows the key metrics for several upside cases, including the $8.50 BMO long-term forecast and today’s prices of $7.68/lb nickel and $18/lb cobalt (27 July 2009).