Zambian Uranium Projects

In spite of the focus on coal in Botswana, the Company has made significant progress with its uranium projects in Zambia. In early 2011 the Company completed an all cash transaction to buy Albidon’s remaining equity stake in the Chirundu and Kariba Valley joint venture project tenements, resulting in African Energy reaching 100% ownership of these tenements and thereby increasing its attributable uranium inventory to 11.1 Mlb U3O8 in Measured, Indicated and Inferred Resources.

At Chirundu, collection of data for environmental studies continued during the year to establish baseline levels of dust, noise, radon gas, sulphur dioxide, nitrogen dioxide and trace elements in soils, wells, streams and rivers in the region and communities around the Njame and Gwabe uranium deposits. This programme, including all data collection and data management, is managed by external consultants, thus ensuring independent verification of the baseline data should it be required. The Company further demonstrated its commitment to the local communities by funding and supervising the construction of a health post at Sikoongo village, near the Njame deposit.

The Company has also made an exciting new uranium discovery at the Sitwe North prospect. This uranium prospect occurs within the Company’s 100% owned Northern Luangwa Valley project in northern Zambia, and was identified through an airborne radiometric survey that highlighted anomalous uranium responses interpreted to be associated with Karoo-age sedimentary rocks.

The Sitwe North prospect is hosted by strongly sheared feldspathic basement rocks close to an unconformity with the younger sediments of the Karoo Supergroup. Drilling has identified steeply dipping zones of uranium mineralisation of 2-10m true width in these sheared basement rocks, a style of mineralisation not previously encountered by African Energy. A small programme of seven RC percussion holes for 458m was completed at the Sitwe North prospect in late 2010, with best results including 6m@ 735 ppm U3O8, 5m @ 651 ppm U3O8 and 10m @ 458 ppm U3O8. The mineralisation occurs in multiple horizons and is open in all directions. Further work is required to determine the significance of this discovery.