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Lisungwe plc - Interim Results


LISUNGWE PLC - NEWS ANNOUNCEMENT 18 DECEMBER 2006

INTERIM REPORT - HALF YEAR ENDED 30 SEPTEMBER 2006



CHAIRMAN'S STATEMENT

I AM PLEASED TO REPORT THAT LISUNGWE HAS CONTINUED TO MAKE PROGRESS DURING
2006. THE KEY HIGHLIGHTS SINCE THE 2006 ANNUAL REPORT WAS PUBLISHED IN AUGUST
HAVE BEEN AS FOLLOWS:

FINANCE

* The results for the 6 month period to 30 September 2006 show a loss of
GBP158,000 including exploration expenditure of GBP83,000 and
amortisation of goodwill GBP47,000. Overheads have been kept to a
minimum.

* At 30 September 2006 the Group had a cash balance of GBP246,000.

* No dividend has been proposed for the period.

* The Company raised GBP200,000 of new money from a single investor during
September 2006 by the issue of 8,888,888 new Ordinary shares at 2.25
pence per share.

NICKEL EXPLORATION

Mineral processing at Chimwadzulu

* Initial extraction tests using hot sulphuric acid resulted in an
exceptional 99% recovery of nickel.

* Following the successful hot acid tests, thirteen samples with an average
grade of about 0.9% Ni were leached using a cold aqueous sulphuric acid
solution. Nickel extraction averaged 90% with significant amounts being
recovered in the early leaching stage. This excellent result suggests a
favourably rapid dissolution of the nickel.

* Further tests are now being carried out with the object of determining
the nature and distribution of the nickel and the most favourable leach
parameters with a view to proceeding to economic modelling.

Definition of potentially commercial mineralisation at Chimwadzulu

* A detailed pitting programme, designed to cover the total extent of the
ultra-basic rocks, is underway to define the near surface limits of
potentially commercial nickel mineralisation at Chimwadzulu. It is
planned carry out follow-up surveys including drilling in selected areas.

Nickel prices

* Demand for nickel has continued to drive prices higher during the second
half of 2006 to touch USD35,000 per tonne, up from USD13,825 in early
January 2006.

Further areas for nickel exploration

* Additional areas within Malawi with nickel potential and a similar
geological setting to that at Chimwadzulu are being researched. These
are in addition to the Likudzi licence a few kilometres from Chimwadzulu
already held by Lisungwe over which recent pitting has confirmed the
presence of potentially commercial nickel.

* In particular a new area with known highly anomalous nickel in weathered
bedrock has been identified and an application for an exploration licence
submitted to the authorities.

URANIUM EXPLORATION

New licence areas

Two Reconnaissance licences with a combined area of 2,195 square kilometres
have been issued. Both have significant airborne radio-metric anomalies to be
followed up by ground surveys.

Current exploration

* Ground follow-up over well developed airborne uranium anomalies has
identified the presence of bedrock uranium in several areas. Although
the grades identified to date are of sub-economic levels, the majority of
the prospective area remains to be tested.

Uranium prices

* Demand has continued to drive the spot price of uranium oxide which
recently closed at USD63 per lb, a further increase on USD47.25 per lb we
quoted in August 2006.

GOLD EXPLORATION

Current exploration

* Results from a detailed auger survey completed across the structure
associated with underground gold workings active until the 1960s in the
Phalula area returned values up to 312ppb gold in a 150 metre wide
anomalous zone. In addition, historical gold workings and prospect
trenches dug during the same period in the Kambewe area a few kilometres
north of Phalula have been cleaned, mapped and sampled for gold
analysis.

* It is hoped that further detailed sampling in these areas will lead to
further drilling targets.

COPPER / GOLD EXPLORATION

* Assays from an outcropping copper showing at Niyuludzi returned 1.5%
copper and 189ppb gold.

* Detailed auger sampling across the area returned values up to 385ppm
copper over a broad zone along a strike of more than one kilometre.

* Further detailed auger sampling followed by pitting is planned to test
for further bedrock mineralisation.

MARKET REVIEW

* Metal markets continue to be strong. The Directors believe that the
demand from China, India and other developing countries, which has
underpinned world prices, is likely to continue for the foreseeable
future.

BOARD

* Following the AGM in September, Shaun Dowling was appointed to the Board
as an additional non executive director. Shaun brings considerable
experience to our deliberations; we welcome him.

THE FUTURE

* The progress made so far leads your Board to view the future with
cautious optimism. With a combination of NICKEL prices at the current
high level and the nature and location of the Chimwadzulu deposit we
believe that extraction leading to revenue is a realisitic expectation.
In addition, we continue to search for other commercially viable projects
on our tenements.

* Early in 2007, we expect to announce details of a further fundraising to
support our development plans through the year.

* Those Shareholders who have registered their email address on the Company
website will continue to receive progress reports as they are issued. I
encourage others to register at www.lisungwe.com to receive future
updates promptly.

I wish to record my gratitude to all investors who have continued to support
Lisungwe and look forward to further developments during 2007.

John Watkins
Chairman
18 December 2006