African Energy Resources (AFR) is an ASX listed resources company focussed on the Sese Coal Project, located 50km to the south of the mining hub of Francistown in eastern Botswana. A resource delineation programme on the coal deposit is currently underway with an initial exploration target of between 1billion - 1.5billion tonnes of thermal coal. A conceptual study on the project is also planned for early 2011 to evaluate the feasibility of production at the project.

Additionally the Company has high quality uranium projects in both Zambia and Botswana, including the Chirundu JV project with a 11.1Mlb U₃O₈ mineral resource.

Sese Coal Project

Summary

The Sese coal project in eastern Botswana is wholly owned by African Energy Resources Ltd. The project is 50km to the south of the mining hub of Francistown, and is immediately west of the existing rail, road and power corridor which runs the length of eastern Botswana, and which connects through into neighbouring Zimbabwe and South Africa and on into nearby Zambia and Mozambique.

The coal deposit occurs within Prospecting Licence PL96/2005 which has been recently granted its second extension until 30th September 2012. African Energy has also made additional tenement applications to secure the majority of the up‐dip and down‐dip extensions to the known coal seams.

A drilling campaign on the project is currently in progress to delineate a JORC compliant inferred resource. It is expected that the resource will be announced in April 2011, and that this resource may exceed the Exploration Target* of 1.5 billion tonnes of thermal coal.

Drilling

Systematic resource delineation drilling commenced in October. Diamond drilling to collect core samples of the coal seams is being undertaken on a nominal 2km by 2km grid, with infill RC percussion drilling (to assist defining continuity) on a nominal 1km by 1km grid. Downhole geophysical logging is being undertaken on all holes.

Drilling has been completed in Block‐A and Block‐C, and will commence in Block‐B in late January 2011 (subject to favourable weather). Down‐hole logging has been completed in Block‐A and Block‐C. Core samples have been submitted to ALS Witlab in South Africa for proximate analysis and washing tests, and further tests will be conducted as necessary.

The density of drilling and the geophysical logging, coupled with proximate analyses will permit the classification of an Inferred Resource estimate to JORC standard in April 2011. More detailed drilling to a Measured and Indicated resource category will commence mid‐2011.

The drilling results to date have exceeded original expectations, both in terms of coal seam thickness and coal seam extent. The continuity of the coal has also proven to be extremely good, with a basal seam present in almost all holes.

On the basis of the results to date the Company is confident that the original Exploration Target will prove to have been a conservative estimate. Additional tenements have been pegged to capture the up‐dip and down‐dip extensions of the known coal.

Block A Results

Block‐A drilling has confirmed the presence of an extensive, thick seam of coal which dips at a very low angle (1‐3 degrees) to the southwest. The coal seam occurs in all holes except those in the far northwest of Block‐A where the basement is exposed at surface.

Throughout the remainder of Block‐A the coal averages 16m true thickness from an average depth of 45m. The entire block is thus amenable to very low strip ratio open pit mining. In the northern part of Block‐A the coal extends up to, and in some cases above the base of weathering. In these places, only non‐weathered coal has been included in the thickness assumptions used for resource modeling. The shallow depth to the top of the coal in these areas will permit extremely low strip ratio open pit mining, with strip ratios as low as 1.5:1.

Dolerite dykes and sills have been noted in some of the holes drilled into Block‐A. The sills are typically 20‐30m thick, with coal occurring either above or below the sill. With the exception of localised loss of volatiles, the intrusions do not appear to have had a marked effect on the coal quality.

Block‐C Results

Block‐C drilling was completed on the 16th December. Drilling data gained from Block‐C drilling has confirmed that a thick basal seam of coal extends over approximately 70 square kilometres from the basement contact along the eastern side of the block.

Within this area, the basal coal seam has an average thickness of 11m, with an average depth to the top of the seam being 52m. The lower part of the basal coal seam appears to contain a higher proportion of bright material than the upper portion of this seam. The basal seam contains very few partings.

In most holes, additional thinner seams of coal also occur in the roof position, with between one and three thin seams present in many holes, each of 1 to 3m thickness, separated by shale and sandstone partings. This coal is duller in appearance than the basal coal seam, but may be included in the resource estimate if the coal quality is of a commercial standard.

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Chirundu Project

projects_chirundu1Location of the Chirundu project in southern Zambia projects_chirundu2Location of the named prospects in the Chirundu project in southern Zambia

The Chirundu project occurs approximately 150km southeast of Lusaka by sealed road and is where the Company was able to identify an initial Inferred Resource in September 2006. Since that time African Energy has discovered the Gwabe uranium deposit some 20km to the northeast, and has outlined over 11.1 Mlb of U3O8 (5,035t) in combined resources at the two deposits.

African Energy committed to a bankable feasibility study which commenced in May 2008. During the past year, work on the project concentrated on further metallurgical test work to assess mineral processing paths, environmental baseline surveys and resource delineation drilling. A mining licence for the project was granted for an initial period of 25 years, commencing in October 2009.

The Chirundu feasibility study is based on an operation utilising open pit mining and sulphuric acid heap leaching of the uranium ores, with mining initially from the Njame deposit only, followed by Gwabe once Njame has been exhausted. Uranium will be stripped from the leach solutions by ion-exchange resins, followed by elution and precipitation to produce a granulated UO4 product suitable for export at an annual rate of approximately 1.2 to 1.4 million lb U3O8 equivalent over a 7-8 year project life. A centralised uranium processing facility at Njame will support the combined operations with loaded ion-exchange resins trucked from Gwabe to Njame for final processing and packaging.

Mineral Resources at Chirundu

During the year a programme of reverse circulation (RC) percussion drilling at Njame South discovered additional inferred resources containing approximately 2.4 Mlb U3O8 at an average grade of 250 ppm U3O8. On the basis of this programme a revised mineral resource estimate for the project was completed. Combined Measured and Indicated resources for the Chirundu project now contain 7.4 Mlb U3O8 at an average grade of 293 ppm U3O8,  with a further 3.7 Mlb U3O8 at an average grade of 237 ppm U3O8 in Inferred resources. This may be suitable for a 7-8 year mining project producing 1.2 to 1.4 Mlb U3O8 equivalent per annum.

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Mr Alasdair Cooke BSc(Hons), MAIG
Executive Chairman

Mr. Cooke has served as Chairman of the Board of the Company since its incorporation. Mr. Cooke is qualified as a geologist and has been involved throughout his career in mineral exploration and corporate development, including six years spent with BHP Minerals Business Development Group and over ten years managing public resource companies.

Mr. Cooke is a founding partner of the Mitchell River Group, which over the past eight years has established a number of successful resources companies, including ASX listed Sally Malay Mining Ltd (now known as Panoramic Resources Ltd), operating the Savannah and Lanfranchi nickel projects in Australia, AIM and ASX listed Albidon Ltd, ASX listed Mirabela Nickel Ltd (developing the Santa Rita nickel project in Brazil), ASX listed Exco Resources Ltd (developing copper and gold resources in Australia) and ASX listed Energy Ventures Ltd (developing uranium projects in Sweden). Mr Cooke is a former director of Sally Malay Mining Ltd and is currently an Executive Director of Energy Ventures Ltd, Albidon Ltd, Oval Biofuels Ltd and Exco Resources Ltd.

Dr Frazer Tabeart PhD, BSc (Hons) ARSM, MAIG
Managing Director

Dr. Tabeart is a graduate of the Royal School of Mines with a PhD and Honours in Mining Geology. He has over twenty years experience in international exploration and mining projects, including sixteen years with WMC Resources. Whilst at WMC, Dr. Tabeart managed exploration portfolios in the Philippines, Mongolia and Africa, gaining considerable experience in a wide variety of commodities and operating with staff from diverse cultural backgrounds.

Dr. Tabeart joined the Mitchell River Group of companies in August 2005, initially as Head of Exploration for Albidon Ltd, and subsequently as General Manager for African Energy Resources Ltd. Under his stewardship the Company delineated the uranium resources in the Chirundu JV in southern Zambia and exploration discoveries in the Kariba Valley of Zambia and at Foley in Botswana. He was appointed Managing Director in November 2007 and has since led the Company through Prefeasibility Studies and into Bankable Feasibility Study at Chirundu.

Dr. Tabeart is a Director of the Mitchell River Group and a former Executive Director for Agricola Resources plc. He is also one of the founders of Norrland Resources Ltd which is evaluating a large portfolio of nickel exploration tenements in Sweden.

Mr Bill Fry
Executive Director

Mr Fry has more than 20 years corporate experience in the mining and resources industry, specialising in accounting, management, business development and general corporate activities. He has vast experience in project evaluation and development, project funding, management, finance and operations.

Over the past 14 years Mr. Fry has been a director of several private and public companies with activities ranging from funds management, minerals exploration, mining and quarrying, land development and waste management.

Mr. Fry has been an Executive Director of African Energy Resources since listing and is responsible for the Company's commercial and financial business programs. He is a current director of Energy Ventures Limited, Norrland Resources Limited, and Oval Biofuels Limited and since balance date resigned as director of Agricola Resources plc.

Mr Valentine Chitalu MPhil, BAcc, FCCA
Non-Executive Director

Mr. Chitalu, who is a Zambian national and resident, is a Chartered Certified Accountant, Fellow of the Association of Chartered Certified Accountants (UK) and holds a practicing certificate from the Zambia Institute of Certified Accountants. He also holds a Master's Degree in Economics, Finance and Politics of Development and a Bachelor's Degree in Accounting and Finance.

Mr. Chitalu has had both an international and local career over a period of fifteen years in the fields of private equity, privatisation, merchant banking, corporate finance, accounting, auditing, development economics, capital markets and business/private sector development in transitional economies. He has a significant interest in private sector development in southern Africa and is extensively networked in the region.

Mr. Chitalu has worked for Meridien Financial Services as Manager, Corporate Finance and the Zambia Privatisation Agency as Chief Executive Officer and most recently as Central African Director with CDC (formerly Commonwealth Development Corporation). He currently holds directorships in various private entities.

Mr. Chitalu has been a non-executive director of African Energy Resources since listing and has assisted African Energy through his extensive business and Government contacts in the region. Mr. Chitalu is current a director of Albidon Ltd.

Mr Michael Curnow
Non-Executive Director

Mr. Curnow brings extensive experience in the resources sector in gold, platinum and mineral sands exploration to the Company, which will be significant for the future development of African Energy. He has been involved in the ownership and management of a wide range of businesses in South Africa and Australia. He was a founding director of Gallery Gold Ltd and AGR Ltd. Mr Curnow has been a non-executive director of African Energy Resources since listing and is also a non-executive Director of Energy Ventures Ltd