  The phenomenon of Anderson localization is studied for a class of
one-particle Schr\"odinger operators with random Zeeman interactions. These
operators arise as follows: Static spins are placed randomly on the sites of a
simple cubic lattice according to a site percolation process with density x and
coupled to one another ferromagnetically. Scattering of an electron in a
conduction band at these spins is described by a random Zeeman interaction term
that originates from indirect exchange. It is shown rigorously that, for
positive values of x below the percolation threshold, the spectrum of the
one-electron Schr\"odinger operator near the band edges is dense pure-point,
and the corresponding eigenfunctions are exponentially localized.
  Localization near the band edges persists in a weak external magnetic field,
H, but disappears gradually, as H is increased. Our results lead us to predict
the phenomenon of colossal (negative) magnetoresistance and the existence of a
Mott transition, as H and/or x are increased.
  Our analysis is motivated directly by experimental results concerning the
magnetic alloy Eu_x Ca_1-x B_6.
