African Eagle Resources is set for next stage in cycle, says City analyst

African Eagle Resources (LON:AFE) continues to move forward and has set itself up for the next stage in its lifecycle, according to analyst Matthew McDonald of City firm Seymour Pierce.

Mirroring the decline in the junior market, African Eagle's shares have been under pressure since April.

But McDonald said the stock is still 'attractive' as he repeated a 'buy' recommendation today. The analyst's punchy 20 pence price target implies that the shares could rise 176 per cent from the current market price of 7.25 pence.

"The stock may have suffered over the last few months, but African Eagle continues to move forward by setting itself up for the next stage of its lifecycle," said the analyst.

He noted positively the news released by the firm yesterday, that seasoned mining executive Trevor Moss had been hired as chief executive designate of the company to advance the Dutwa nickel project, Tanzania.

The 54-year-old, who starts as CEO on December 1, will be responsible for completing the bankable feasibility study, mine construction and commissioning of the proposed nickel/cobalt mine there.

Moss was most recently responsible for the development and construction of the Bisha Gold mine in Eritrea for Nevsun Resources, the analyst highlighted in a note.

"That mine is now expected to produce 1.14 million ounces of gold, 11.9 million ounces of silver, 821 million pounds of copper and over 1 billion pounds of zinc over its lifetime," he said.

Similarly, in a research note, Edison described the appointment of the new CEO as "marking change".

The research boutique says the group's shares are worth 25 pence per share, using Edison's numbers - including a nickel price of US$10 per pound and annual production of 3 million tonnes for 26 years from 2015.

Yesterday, African Eagle described Moss's appointment as a major milestone in the firm's transition from explorer to nickel producer and also revealed that, on December 1,  Mark Parker will change role from managing director to director for business development.

The company discovered Dutwa in 2008 and is now conducting a feasibility study. The project now has a JORC resource of 99 million tonnes at 0.93 percent Nickel, which could be readily mined from two hilltop deposits. According to African Eagle the Dutwa ore is amenable to simple, low consumption atmospheric acid leaching.

Edison said that a second bulk sample from Dutwa was due to be shipped to Australia for further studies.

The firm has told how previous analysis yielded positive results in that it showed potential to upgrade much of the nickel into a fine-grain fraction which requires no grinding and might be processed in a smaller plant in the early years, with benefits to the bottom line.

Results of the second round of metallurgical testing will feed into the Definitive Feasibility Study (DFS) and provide product samples for potential off-takers, said Edison analysts today.

African Eagle plans to deliver a definitive feasibility study (DFS) on Dutwa by the end of the fourth quarter of 2012.

Several elements of the DFS are already underway in parallel with the pre-feasibility work, including the environmental and social impact assessment.