Announcement

QUARTERLY ACTIVITIES REPORT FOR THE PERIOD ENDED 30 SEPTEMBER 2007

HIGHLIGHTS:

 Munali Nickel Project

�                      The Company has satisfied all material conditions precedent required by Senior Lenders for initial drawdown under the facility agreement for the Munali Nickel Project.

�                      Byrnecut Mining International Limited has been engaged as the mining contractor for Munali.

�                      Infill drilling was continued at the Enterprise deposit to provide detailed mine planning and metallurgical information for the first year of mine production, results are pending.

�                      The hydrological drilling programme was successfully completed, which demonstrated the existing bore field was capable of providing all water supply needed for the project.

�                      Construction of the concentrator continued with activities focused on earthworks and the commencement of civils during the quarter.

Munali District Exploration

�                      Geochemical soil sampling programmes and geological mapping have been completed over several structural targets in the Chikani Prospect area, 25km south of Munali, results expected in the next quarter.

Nickel Exploration in Southern Africa

Selebi-Phikwe Project, Botswana

�                      IP geophysics was completed at the Sunnyside prospect where a strong 2km-long IP conductor was identified coincident with Ni-Cu soil geochemistry.  Follow-up drilling is planned.

�                      IP geophysics was also completed on the Kgwedi nickel target and a 1km-long conductivity anomaly has been identified.  Soil geochemistry results are pending.

Joint Venture Activity

Chirundu and Kariba Valley Uranium Projects, Zambia (African Energy Resources)

�                      A new discovery of sandstone type uranium mineralisation was made by drilling at the Gwabe prospect in Zambia.

�                      Additional drilling has extended the uranium mineralisation previously reported at the Njame deposit.

�                      Drilling commenced at the Chisebuka prospect in the Kariba Valley JV to test the high grade uranium mineralisation previously reported from surface outcrops.

�                      Formal JV documents were signed for Chirundu and Kariba Valley joint ventures.

�                      African Energy has met its expenditure commitment to earn an initial 30% equity in the Chirundu JV.

�                      The Board of African Energy approved commencement of a Pre-Feasibility Study to evaluate the viability of mining at Njame and Gwabe in the Chirundu JV.

Songea Nickel Project, Tanzania (BHP Billiton)

�                      An airborne electromagnetic survey carried out by BHP Billiton has identified a number of strong conductor responses associated with favorable geology. Results are awaited from detailed data interpretation and follow up sampling.

Nefza-Haffouz Zinc Project, Tunisia (Zinifex)

�                      IP geophysical surveys were completed at Nefza and commenced at Haffouz (formerly Trozza) with the aim of defining drill targets.

�                      Drilling is underway at Nefza, with seven drillholes completed to date. Assay results are pending.

Corporate

The cash position at 30 September 2007 was US$18 million.

�                      1,400,000 unlisted incentive options were issued during the quarter to employees as follows:

Outlook                                

�                      Establishment of safety systems to support the Munali Project.

�                      Continued development of the underground decline to access ore with mechanized equipment.

�                      Mining contractor fully mobilized and establishment of surface and underground infrastructure.

�                      Continue sinking ventilation shafts in advance of the decline development.

�                      Site preparation, earthworks and civils will continue to completion followed by focused construction of the process circuit, including crusher installation and commencement of steel erection.

�                      GRD Minproc, the construction management contractor on site, will continue to engage and mobilize subcontractors to meet construction schedule.

�                      Ongoing recruitment of mining personnel and contractors remains a priority.

�                      Completion of the geochemical soil sampling programmes at Chikani to evaluate the base metal potential.

�                      Completion of the regional geochemical stream sediment survey and soil sampling programmes in the region to the south of Munali.

�                      Plan drilling programmes for the Sunnyside and Kgwedi nickel prospects in Botswana.

�                      Continued drill testing of the Njame uranium deposit, Gwabe mineralisation and Chisebuka target in Zambia.

�                      Completion of ground follow-up assessment and interpretation of the airborne geophysical targets at Songea in Tanzania.

�                      Ongoing drilling at the Nefza zinc project in Tunisia.

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