2007 Audited Results

14th May 2008 07:00



14 May 2008

African Minerals Limited

 ("African Minerals" or "the Company")

Final Audited Results for the year ended 31 December 2007

Exploration projects progressing well and significant drilling programmes underway

African Minerals Limited (AIM:AMI), the mineral exploration company with significant interests in Sierra Leone, West Africa, today announces its audited results for the 12 months ended 31 December 2007.

Highlights

Tonkolili Iron Ore Project - 28 km magnetite signature identified from aeromagnetic and ground mapping, up to 1.5 km wide; - Conceptually, potential for in excess of two billion tonnes of contained iron ore;- Down-hole mineralisation proven to in excess of 400 m and still open at depth;- Concentrate product grades in excess of 68% Fe;- Significant drilling programme, metallurgical test work and engineering now underway. 

These key appointments bring additional industry experience to the Company and are an important 

step in strengthening the Board.

Post year end highlights

Commenting on the results, Frank Timis, Executive Chairman said:

 "We are delighted with the advancement of our multiple exploration projects and are particularly encouraged by the considerable progress at the Tonkolili iron ore project. This, together with the exclusive MoU signed with the Government in respect of key port and rail infrastructure in Sierra Leone, represents important progress towards our transformation into a diversified minerals producer and substantial metals business."

ENQUIRIES: 

African Minerals Limited	Tel: +44 (0) 20 7849 3002
Frank Timis, Executive Chairman
Roy Pitchford, Chief Executive Officer
Canaccord Adams Limited	Tel: +44 (0) 20 7050 6500
Mike Jones
Robin Birchall
Mirabaud Securities Limited	Tel: +44 (0) 20 7878 3360
Rory Scott
Citigate Dewe Rogerson	Tel: +44 (0) 20 7638 9571
Media enquiries: Martin Jackson
Analyst enquiries: Kate Delahunty / George Cazenove

Note:

It should be noted that potential quantities in this report are conceptual in nature and insufficient exploration has been undertaken to define a Mineral Resource and it is uncertain if further exploration activities will result in the determination of a Mineral Resource.

NOTES TO EDITORS

African Minerals (AIM: AMI) is a mineral exploration company operating principally in the West African country of Sierra Leone. Since 1996, African Minerals has assembled the largest portfolio of mineral rights in Sierra Leone. Since its admission to AIM in 2005, the Company's activities in Sierra Leone have evolved into diversified mineral exploration. In addition to the iron ore projects at Tonkolili and Marampa, the Company has for the past two years been undertaking a country-wide, multi-element analysis of stream and till sediments, primarily to determine sources of diamonds. As a result of this programme, the Company has located several sites which offer the potential for the discovery of base, precious and minor metals.

Chairman's Statement

The past financial year has been a period of intense activity for the Company and our planned transformation into a diversified minerals producer is progressing well. Since our listing on AIM in 2005, the Company's activities in Sierra Leone have developed beyond diamond exploration and production. Through our detailed multi-element analysis of stream and till sediments primarily to determine diamond sources over the Company's extensive licence holdings, we have located two exciting iron ore projects, as well as several sites where initial results indicate the discovery of base and precious metals and uranium. In recognition of this enlarged focus and our plans to consider further strategic acquisitions, principally on the African continent, we changed our name to African Minerals Limited in August 2007.

During the year, we also strengthened the Board and management of the Company with the appointment of Roy Pitchford as Chief Executive Officer and Bruce Kirk as an Executive Director and President of Iron Ore and Base Metals. Roy has over 20 years' senior management experience, including 15 in the mining industry, and we are confident in his ability to lead the Company and advance our planned strategy of becoming a diversified exploration and production company. The appointment of Bruce and his significant experience at BHP Billiton and Rio Tinto in iron ore exploration and evaluation will, in particular, be instrumental in the Company realising the full potential of the Tonkolili and Marampa iron ore projects. Subsequent to the year end, we appointed Mark Ashurst and Lord Peter Truscott as Non-Executive Directors. Two Non-Executive Directors stepped down from their roles during the year, Mr Francesco Scolaro on 23 July 2007 and Mr Gordon Stein on 9 October 2007. I would like to thank Frank and Gordon for their respective contributions to the Company. Their commitment during the Company's rapid growth has been considerable and I wish them both all the best in their future endeavours.

In 2007, we started the geological and metallurgical analysis at our Tonkolili iron ore project in earnest. Surface trenching and geophysical magnetic surveys were carried out and an indicative strike of 28 km was defined. Following the airborne magnetic survey, the first of its kind flown over Sierra Leone, over 78,000 metres of trench sampling was carried out and core drilling started mid-2007. Results of the first metallurgical tests from the drill core, carried out by an independent consultant, indicated export product grades in excess of 68% Fe containing low levels of contaminants. Furthermore, the geophysical modelling, available geological information and preliminary metallurgical tests resulted in a conceptual mineralised envelope potentially containing in excess of two billion tonnes of contained iron ore.

In addition to the encouraging iron ore results, two base metals discoveries - nickel-cobalt at Gori Hills and nickel at Nimini Hills - were made during the year, as well as the discovery of a kimberlite in the Lake Popei project area.

Endorsing the quality of the assets we have assembled in Sierra Leone, we also completed a successful share placing in July with institutional investors raising £31.85 million before expenses, up from the original £20-25 million target due to substantial demand, enabling the Company to undertake an enlarged scope in its exploration programmes to unlock further shareholder value.

Iron Ore

Tonkolili Iron Ore Project

The Tonkolili iron ore deposit, located in the Sula Mountains Greenstone Belt of Sierra Leone, approximately 180 km from the Pepel deep water port near Freetown, has become a key area of focus for African Minerals. The exploration target at Tonkolili, defined via aeromagnetic survey and ground mapping, has the potential to be a large tonnage magnetite resource hosted in a Banded Iron Formation ('BIF'). This style of mineralisation can be upgraded by simple magnetic separation to produce a magnetite iron ore fines product with high iron content and low silica and alumina contaminants. The resulting high grade magnetite concentrate is suitable for producing high quality iron ore pellets.

During the year, more than 78,000 m of channel sampling was completed over portions of the prospective strike length, verifying BIF and iron mineralisation. A 3-D geophysical inversion model was then completed by independent consultants, Resource Potentials of Perth, using the available geophysical and geological data.

The current iron ore exploration programme is focused on the Numbara and Simbili prospects located at the southern end of the defined 28 km aeromagnetic anomaly. At the Numbara prospect, core drilling has commenced with encouraging results. 11 deep diamond drill holes were completed during the year, with a further two in progress, using the Company's light reconnaissance rigs. While these light rigs were well suited to the reconnaissance phase, heavy-duty diamond core and reverse circulation ('RC') drill rigs are being used for the proposed major drilling programme, which is currently under way. Two drilling contracts have been signed, providing the Company with further drilling capacity of four large diamond drill rigs and five RC rigs. In July and August 2007, 12 short vertical RC percussion holes were drilled by a tractor-mounted RC rig and seven of the 12 holes intersected magnetic BIF at the base of the hole, but as only very short intersections were achieved, these are insufficient to establish continuity of magnetite BIF at depth.

The primary geology consists of a central zone of BIF inter-bedded with lower grade sediments. The drilling conducted at Numbara to date is not adequate to establish the continuity of iron grades in BIF. The current drilling programme is designed to determine iron ore mineralisation grade, continuity and size potential.

Drilling is underway on the Simbili project area and planning well advanced, with on-going engineering work creating further drill site access and drill pad preparation.

In February 2007, the Government of Sierra Leone granted the Company an exploration licence extension area immediately to the north of the existing Tonkolili project, bringing the total area under licence at Tonkolili to approximately 209 km².

The early stage iron ore exploration results on the Tonkolili and Marampa projects have been encouraging. Using the 3-D geophysical model, available geological information and preliminary metallurgical results, a conceptual mineralised envelope potentially containing in excess of two billion tonnes of contained iron ore exists at Tonkolili.

The Company has scheduled a work programme during 2008 of up to 100,000 m of drilling to define the extent of the Tonkolili mineralisation with a view to producing a JORC-compliant resource. Further metallurgical testwork, flowsheet development and preliminary engineering are to be undertaken to complete a pre-feasibility level study by the end of 2008.

Marampa Iron Ore Project

The Company's Marampa iron ore project, located approximately 75 km from the Pepel deep water port, is contiguous with the historical Marampa mine operated by Delco between 1920 and 1970. Interpretation of aeromagnetic and ground gravity surveys by Resource Potentials has defined 20 km of prospective strike extending out from the historical Marampa mine. 

Five targets have been defined, two of which correspond to significant gravity anomalies and represent high priority 'walk-up' drill targets. Resource Potentials believe these anomalies have the potential to host hematite mineralisation. The Company commenced a drilling campaign late in 2007 to define the extent of iron mineralisation along with initial metallurgical testwork, flowsheet development and preliminary engineering studies. 

While this work progresses on the hematite hard rock potential, the Company is also analysing the benefits of an earlier phase of tailings retreatment. Early stage testwork analysis suggests acceptable levels of alumina, silica and phosphates but further, more detailed analysis will be required. 

Infrastructure

Tonkolili and Marampa are located approximately 180 km and 75 km respectively from the Pepel deep water port, where suitable stockpiling and ship loading infrastructure, last operated in the 1970s and owned by the Government of Sierra Leone, already exists. A disused railway also extends from Pepel to the former iron ore mine at Marampa. A preliminary study by external consultants retained by African Minerals has been commissioned to assess the condition of the port and rail infrastructure, its capacity and rehabilitation requirements and also to study the potential extension of the Marampa rail line to the Tonkolili project. 

Subsequent to the year end, on 6 May 2008, the Company announced that it had signed an exclusive MoU with the Government of Sierra Leone in respect of the Pepel deep water port, Marampa railway and Bumbuna hydro-electric power facilities.

The MoU underlines the Company's strong working relationship with the Government and commitment to improving the country's infrastructure whilst securing the rail, port and power capacity requirements for our iron ore projects.

Base Metal and Gold Exploration

Over 300,000 line km of aeromagnetic interpretation is now complete and the Company has received results for 6,157 stream sediment samples, which have been analysed for multi elements. Aeromagnetic interpretation and coincident geochemistry resulted in 14 high priority, 11 priority targets and 40 carbonatite targets being identified as potential drill targets. To date, three discoveries have been made: an extensive nickel-cobalt anomaly with elevated copper in the Gori Hills Greenstone Belt, 50 km west of the border with Liberia, a nickel discovery in the Nimini Hills Greenstone Belt, located to the west of Koidu in the Kono region and the Laminia Greenstone Belt gold prospect. 

The Gori Hills prospect is a 20 km2 target where a nickel-cobalt anomaly has been identified by reconnaissance stream sediment sampling. Results from the first surface trenches excavated over this anomaly returned an average grade of 0.73% nickel and 0.061% cobalt over an interval of 56 m between depths of 1.0 m and 3.2 m. Our principal objective is to drill test the potential for the supergene enriched nickel-cobalt mineralisation below surface and to identify a primary ultramafic body as a source of nickel. Drilling commenced during April 2008.

At Nimini Hills a circular geophysical target was identified from aeromagnetics. Soil sampling has identified a 1.7 km by 1.2 km nickel anomaly interpreted to be ultramafic intrusive with possible associated nickel sulphide mineralisation. In the short term, exploration work will concentrate on infill soil sampling and trenching.

At the Laminaia Greenstone Belt gold prospect a regional soil survey has identified a 14 km long by 1.5 km gold trend with initial results of over 10 ppb gold. Within this broad trend three discrete anomalies have been identified each with over 100 ppb gold (peak grade of 680 ppb gold) and an overall strike length of approximately two km. Further infill soil sampling and mapping is required to take place during the first half of 2008 in order to further quantify the size and extent of these anomalies before surface trenching can be instigated on this early stage project.

Uranium Exploration

The Company's high priority uranium target is the Lovetta anomaly, located in eastern Sierra Leone near the Liberian border, comprising an area of 160 km2. In the immediate project area, seven anomalies of over 10 ppm uranium and over 450 counts per minute uranium have been identified by a programme of soil and scintillometer sampling over a four km strike length. The ongoing trenching programme has delineated up to 150 m strike length and widths of 66 m of anomalous uranium and thorium and is open in both directions. 

In 2008, exploration work at Lovetta will entail detailed mapping, trenching and further definition of the uranium anomaly using ground radiometric infill. Following completion of work at the Lovetta anomaly, a ground reconnaissance programme of radiometrics and soil sampling will be conducted to test the other areas of anomalism. Field crews have been mobilised and are in the process of sampling and mapping. A complementary satellite imagery study will be conducted to investigate the applicability of the technology to the refinement of target delineation.

Kimberlite Exploration

As a result of the continued follow-up sampling being undertaken and the compilation of these results along with aeromagnetic survey data, the Company has been able to refine its drilling target potential. Drilling identified the discovery of a kimberlite in the south-west of the country in the Lake Popei project area. This result is encouraging because, as far as the Company is aware, no known kimberlite has previously been discovered in this part of the country. 

Elsewhere in the country, 13 high priority aeromagnetic targets, with coincident positive kimberlite grains and 10 high priority drainage targets, have been defined and these will form the basis of any future kimberlite drilling programmes.

Alluvial Diamond Operations

The Company implemented a cost-effective bulk sampling programme at the Konama alluvial diamond project during the second half of 2007, in order to define a sustainable economic resource. 

The Company completed two sales of rough diamonds during the year, both fully compliant with the Kimberley Process Certification Scheme. A total of 18,071.45 carats were sold during the year at an average price of US$468.85 per carat, realising gross sales proceeds of approximately US$8.5 million. We were pleased with the overall quality of carats produced at the mine.

An impairment loss of US$15.97 million was recognised to reflect that certain costs incurred on the Group's alluvial diamond operations were not deemed recoverable. Steady state production was not achieved at the alluvial diamond operations during the first six months of 2007 which resulted in management's decision to refocus on bulk-sampling activities in the latter half of the year. The carrying value of intangible fixed assets in respect of the Group's alluvial diamond operations has been written-down to the Board's assessment of the recoverable amount.

Acquisition of White River Resources

Subsequent to the year end, on 14 April 2008, African Minerals Limited announced that it had acquired 100% of the share capital of White River Resources Inc., a privately held Canadian exploration Company with mineral claims and rights to earn-in mineral claims in the Yukon province on the Kluane ultramafic belt.

The Kluane belt has significant potential and despite being largely under-explored, encouraging mineralisation has already been identified along with a small non-compliant resource. With the additional benefit of the Company being able to draw on experienced local expertise to advance the exploration project, communicate with indigenous groups and acquire additional mineral claims in the project area, we will be well positioned to add further shareholder value. This acquisition also provides us with geographical diversification within the base metals sector and will not in any way distract the Company from realising the full potential of its strong portfolio of assets in Sierra Leone.

Strategic Investment in Baobab Resources 

Subsequent to the year end, on 13 May 2008, the Company announced that is had acquired 11,425,000 fully paid ordinary shares in Baobab Resources plc ("Baobab"), an AIM-listed company (AIM:BAO) with a balanced portfolio of projects in the Republic of Mozambique. Baobab has exclusive long term tenure of 3,799 km2 with projects at varying stages of development, ranging from advanced resource definition drill targets to brownfield exploration, and greenfield prospects targeting an array of commodities. Principal assets include the Tete Project, featuring Iron-Titanium-Vanadium mineralisation with the potential for high grade magnetite mineralisation to extend over a strike length of 25 km and the Mundonguara Project, a Copper-Gold-Nickel-Silver deposit with historic production.

Financial Review

The financial performance of the Company throughout the year ended 31 December 2007 reflects expenditure on its extensive country-wide, multi-element exploration portfolio and the continued development of the alluvial operations. 

The Company completed two sales of rough diamonds during the year and generated total net revenue for the Company of US$7.5 million compared to US$1.1 million in 2006.

Loss after taxation for the year ended 31 December 2007 was US$42.3 million (2006: US$5.8 million). Loss per share was 30.05 cents (2006: 5.34 cents).

The total assets of the Group amounted to approximately US$115.6 million as at the year end, which includes intangible assets amounting to approximately US$42.5 million. Intangible assets relate to accumulated deferred exploration and evaluation costs in respect of the Company's licence interests in Sierra Leone. The Company's accounting policy is to capitalise these costs pending determination of the feasibility of the project to which they relate. 

On 25 July 2007, the Company announced that it had completed an institutional placing of 24,500,000 new common shares at a price of 130 pence per share, raising £31.85 million (approximately US$64.5 million), before expenses. The funds raised are enabling the Company to finance scoping studies on the Tonkolili and Marampa iron ore projects and accelerate exploration programmes at its base metals, uranium and gold projects. As at 31 December 2007, the Company had cash at bank and short-term deposits of US$44.2 million (2006: US$23.6 million). 

Outlook

The Company is focused on following up the key exploration targets across its portfolio over the coming year and is actively pursuing strategic acquisitions that the Board believes will add further shareholder value. 

We are delighted with the progression of our multiple exploration projects and are particularly encouraged by the significant progress at the Tonkolili iron ore project. This is important progress towards our transformation into a diversified minerals producer.

Frank Timis

Executive Chairman

13 May 2008

AFRICAN MINERALS LIMITED

CONSOLIDATED INCOME STATEMENT

For the year ended 31 December 2007

		Year ended		Year ended
		31 December		31 December
	Note	2007		2006
		US$		US$
Revenue	1	7,492,811		1,077,560
Cost of sales		(16,535,455)		(1,520,037)
Gross loss		(9,042,644)		(442,477)
Impairment of intangible fixed assets	12	(15,969,396)		-
Net operating expenses	3	(17,331,654)		(6,555,597)
Operating loss		(42,343,694)		(6,998,074)
Interest receivable	7	1,608,884		215,759
Interest payable	8	-		(34,710)
Loss before tax		(40,734,810)		(6,817,025)
Tax	9	(1,520,562)		995,474
Loss for the year		(42,255,372)		(5,821,551)
Basic and diluted loss per share - cents	10	30.05		5.34

All activities are continuing operations.

There were no recognised gain and losses other than those stated above.

  AFRICAN MINERALS LIMITED

CONSOLIDATED AND COMPANY BALANCE SHEETS

At 31 December 2007

		Group		Company		Group		Company
		2007		2007		2006		2006
	Note	US$		US$		US$		US$
Non-current assets
Intangible fixed assets	12	42,463,439		-		30,747,662		-
Tangible fixed assets	13	22,830,262		-		31,035,102		-
Investments	14	-		502		-		2
Debtors	15	-		113,497,812		-		72,599,950
Deferred tax asset	16	-		-		1,520,562		-
Total non-current assets		65,293,701		113,498,314		63,303,326		72,599,952
Current assets
Inventories	17	2,607,033		-		1,976,109		-
Trade and other receivables	15	3,582,248		2,451,899		259,917		36,071
Short term investments	18	41,158,671		41,158,671		21,538,435		21,538,435
Cash and cash equivalents	19	3,002,816		1,945,210		2,095,756		2,089,754
Total current assets		50,350,768		45,555,780		25,870,217		23,664,260
Total assets		115,644,469		159,054,094		89,173,543		96,264,212
Equity
Share capital	20	1,552,582		1,552,582		1,300,032		1,300,032
Share premium account		161,811,643		161,811,643		101,056,581		101,056,581
Equity reserves		5,999,876		5,999,876		1,940,026		1,940,026
Translation reserve		(311,744)		(194,858)		(311,744)		(194,858)
Profit and loss account		(58,657,095)		(11,621,201)		(16,455,983)		(7,988,191)
Total equity		110,395,262		157,548,042		87,528,912		96,113,590
Non-current liabilities
Provisions	22	669,587		-		438,962		-
Total non-current liabilities		669,587		-		438,962		-
Current liabilities
Trade and other payables	23	4,579,620		1,506,052		1,205,669		150,622
Total liabilities		5,249,207		1,506,052		1,644,631		150,622
Total equity and liabilities		115,644,469		159,054,094		89,173,543		96,264,212

 

The financial statements were approved by the Board on 13 May 2008 and were signed on its behalf by:

ROY PITCHFORD

Director and Chief Executive Officer

JAMIE ALPEN

Director and Chief Financial Officer

AFRICAN MINERALS LIMITED

CONSOLIDATED CASH FLOW STATEMENT

For the year ended 31 December 2007

		Year ended		Year ended
		31 December		31 December
		2007		2006
		US$		US$
Loss for the year before taxation		(40,734,810)		(6,817,025)
Share-based payments		4,209,991		1,546,585
Depreciation of tangible fixed assets		5,124,775		3,190,671
Amortisation of intangible fixed assets		2,768,000		-
Impairment of intangible fixed assets		15,969,396		-
Loss on disposal of tangible fixed assets		20,121		82,728
Loss on disposal of intangible fixed assets		209,267		-
Increase in provisions		230,625		-
Interest received		(1,608,884)		(215,759)
Interest paid		-		34,710
Operating loss before working capital changes		(13,811,519)		(2,178,090)
Increase in inventories		(630,924)		(1,976,109)
Increase in trade and other receivables		(3,322,331)		(25,455)
Increase in trade and other payables		3,373,951		995,044
Cash flow from operating activities		(14,390,823)		(3,184,610)
Interest paid		-		(34,710)
Net cash flow from operating activities		(14,390,823)		(3,219,320)
Cash flows from investing activities
Interest received		1,608,884		215,759
Proceeds of sales of tangible assets		12,485		-
Payments to acquire tangible assets		(9,153,970)		(24,441,755)
Payments to acquire intangible assets		(18,461,011)		(9,727,161)
Increase in short term deposits with banks		(19,620,236)		(6,058,435)
Net cash outflow from investing activities		(45,613,848)		(40,011,592)
Cash flows from financing activities
Proceeds of ordinary share issue		60,604,336		25,253,177
Proceeds of exercise of options		307,395		5,165,255
Proceeds of exercise of warrants		-		14,446,393
Loan proceeds		-		3,100,000
Loan repayment		-		(3,100,000)
Net cash inflow from financing activities		60,911,731		44,864,825
Net increase in cash and cash equivalents		907,060		1,633,913
Cash and cash equivalents at beginning of year		2,095,756		461,843
Cash and cash equivalents at end of year		3,002,816		2,095,756

AFRICAN MINERALS LIMITED

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the year ended 31 December 2007

			Share			Profit and
		Share	premium	Equity	Translation	loss
		capital	account	reserves	reserves	account	Total
	Note	US$	US$	US$	US$	US$	US$
As at 1 January 2006		967,632	54,255,510	3,211,082	(311,744)	(13,183,427)	44,939,053
Allotments during the year		332,400	48,542,311	-	-	-	48,874,711
Issue expenses - shares		-	(1,769,293)	-	-	-	(1,769,293)
Issue expenses - warrants		-	(528,180)	528,180	-	-	-
Share-based payments		-	-	1,305,992	-	-	1,305,992
Reserves transfer - options		-	-	(1,137,503)	-	1,137,503	-
Reserves transfer - warrants		-	556,233	(1,967,725)	-	1,411,492	-
Loss for the year		-	-	-	-	(5,821,551)	(5,821,551)
As at 31 December 2006		1,300,032	101,056,581	1,940,026	(311,744)	(16,455,983)	87,528,912
As at 1 January 2007		1,300,032	101,056,581	1,940,026	(311,744)	(16,455,983)	87,528,912
Allotments during the year		252,550	66,324,736	-	-	-	66,577,286
Issue expenses - shares		-	(3,869,619)	-	-	-	(3,869,619)
Issue expenses - warrants		-	(1,700,055)	1,700,055	-	-	-
Share-based payments		-	-	2,414,055	-	-	2,414,055
Reserves transfer - options		-	-	(54,260)	-	54,260	-
Loss for the year		-	-	-	-	(42,255,372)	(42,255,372)
As at 31 December 2007	20/21	1,552,582	161,811,643	5,999,876	(311,744)	(58,657,095)	110,395,262

1. ACCOUNTING POLICIES

African Minerals Limited is registered and domiciled in Bermuda and is listed on the AIM market of the London Stock Exchange. 

Statement of compliance

The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) adopted by the International Accounting Standards Board (IASB), and interpretations issued by the Standing Interpretations Committee of the IASB. 

Basis of preparation

The Group financial statements have been prepared in accordance with the historical cost basis and are presented in US dollars. All values are rounded to the nearest dollar.

The preparation of financial statements in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and factors that are believed to be reasonable under the circumstances, the results of which form the basis of making judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision only affects that period, or in the period of revision and future periods if the revision affects both current and future periods.

The accounting policies set out below have been applied consistently to all periods presented in the financial statements by all Group entities.

 

Basis of consolidation

Subsidiaries

The consolidated financial statements incorporate the financial information of African Minerals Limited and its subsidiaries. Subsidiaries are those entities over whose financial and operating policies the Group has the power to exercise control. Where necessary, the accounting policies of the subsidiaries are adjusted to ensure consistency with the policies adopted by the Group.

Transactions eliminated on consolidation

Intra-group balances and any unrealised gains and losses or income and expenses arising from intra-group transactions, are eliminated in preparing the consolidated financial statements.

  

Intangible fixed assets

Exploration and evaluation costs arising following the acquisition of an exploration licence are capitalised on a project by project basis pending determination of the technical feasibility and commercial viability of the project. Costs incurred include appropriate technical and administrative overheads. Deferred exploration costs are carried at historical cost less any impairment losses recognised.

If an exploration project is successful, the related costs will be transferred to mining assets and amortised over the estimated life of mineral reserves on a unit of production basis. Where a project is relinquished, abandoned, or is considered to be of no further commercial value to the Company, the related costs are written off.

 

The recoverability of deferred exploration costs is dependent upon the discovery of economically recoverable mineral reserves, the ability of the Company to obtain necessary financing to complete the development of mineral reserves and future profitable production or proceeds from the disposal thereof.

1. ACCOUNTING POLICIES

Tangible Fixed Assets

Exploration costs are capitalised as intangible fixed assets until a decision is made to proceed to development. Related costs are then transferred to mining assets. Before reclassification, exploration costs are assessed for impairment and any impairment loss recognised in the profit and loss account. Subsequent development costs are capitalised under mining assets, together with any amounts transferred from intangible exploration assets. Mining assets are amortised over the estimated life of the commercial mineral reserves on a unit of production basis.

Plant and machinery, fixtures and fittings, motor vehicles and leasehold improvements are shown at cost less accumulated depreciation and impairment losses. The cost of tangible fixed assets is their purchase cost, together with any incidental cost of purchase.

Depreciation is charged to the income statement on a straight-line basis over the expected useful lives of the assets concerned. The depreciation rates are as follows:

	%
Plant and machinery	20-30
Fixtures and fittings	20-30

Subsequent expenditure relating to a fixed asset item is capitalised when it is probable that future economic benefits from the use of the asset will be increased. All other subsequent expenditure is recognised as an expense in the period in which it is incurred. Repairs and maintenance which neither materially add to the value of assets nor appreciably prolong their useful lives are charged against income. Surpluses/(deficits) on the disposal of fixed assets are credited/(charged) to income. The surplus or deficit is the difference between the net disposal proceeds and the carrying amount of the asset.

Financial instruments:

Trade and other receivables

Trade and other receivables are stated at cost less provision for doubtful debts.

Cash and cash equivalents

Cash and cash equivalents are measured at fair value, based on the relevant exchange rates at balance sheet date.

Short-term investments

Deposits with financial institutions that are not repayable on demand without penalty are classified as short-term investments and are included within investing activities in the cash flow statement. Interest on short-term investments is recognised on an accruals basis over the life of the investment.

Derivative instruments

Derivative instruments are measured at fair value.

Impairment

The carrying amounts of the Group's assets are reviewed at each balance sheet date to determine whether there is any indication of impairment. An asset's carrying value is written down to its estimated recoverable amount, being the higher of its net selling price and value in use, if that is less than the asset's carrying amount.

Impairment reviews for deferred exploration and evaluation costs are carried out on a project by project basis, as each project has the potential to be an economically viable cash generating unit. An impairment review is undertaken when indicators of impairment arise but normally when one of the following conditions apply;

unexpected geological occurrences render a deposit uneconomic

title to an asset is compromised 

variations in commodity prices render the project uneconomic

variations in the currency of operation

variations to the fiscal and tax legislation in the country of operation

Borrowings

Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortised cost with any difference between the proceeds (net of transaction costs) and the redemption value recognised in the income statement over the period of the borrowings using the effective interest rate method.

Revenue

Revenue comprises gross diamond sale proceeds less selling costs. Selling costs include marketing commissions and costs, transportation, insurance and security costs and government royalty payments.

Operating leases

Payments made under operating leases are recognised on a straight-line basis over the term of the lease.

Net financing costs

Net financing costs comprise interest payable on borrowings calculated using the effective interest rate method and interest receivable on funds invested.

Deferred taxation

Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit or loss. Deferred tax is provided using the full liability method.

A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which the associated unused tax losses and deductible temporary differences can be utilised. 

Foreign currencies

Transactions denominated in foreign currencies are translated at the exchange rate ruling at the date of transaction. Monetary assets and liabilities denominated in foreign currencies are translated at the rates of exchange ruling at the balance sheet date. Any gain or loss arising from a change in exchange rates subsequent to the date of the transaction is included as an exchange gain or loss in the profit and loss account. 

Inventories

Inventories of rough diamonds, have been valued at estimated market values prevailing at 31 December 2007, with the amounts so determined reduced by the application of anticipated margins. The use of this method results in a carrying value of rough diamond inventory which approximates to the lower of cost and net realisable value.

Provisions

Provisions are recognised when the Group has a legal or constructive obligation as a result of past events, for which it is probable that an outflow of resources will be required to settle the obligation and the amount can be reliably estimated. 

The estimated cost of environmental rehabilitation on mine closure is based on the present value of estimated costs and a provision is raised accordingly.

Share- based payments

The Group issues equity-settled share-based payments to certain Directors, officers, employees and suppliers. Fully-paid shares are valued at market value at the date of issue. Options and warrants are valued at fair value at the date of grant and are expensed on a straight-line basis over the estimated vesting period.

Fair value is measured by use of the Black-Scholes pricing model. The estimated life of the instrument used in the model has been adjusted, based on management's best estimate, for the effects of non-transferability, exercise restrictions and behavioural considerations.

Segment reporting

A segment is a component of the Group distinguishable by geographical location (geographical segment), or by its economic activity (business segment), which is subject to risks and rewards that are different from those of other segments. 

2. SEGMENT REPORTING
		Gold and
Business Segments	Iron Ore	base metals	Diamonds	Corporate	Total
2007	US$	US$	US$	US$	US$
Revenue	-	-	7,492,811	-	7,492,811
Operating loss	(97,135)	(51,589)	(34,065,801)	(8,129,169)	(42,343,694)
Interest receivable	-	-	-	1,608,884	1,608,884
Tax	-	-	(1,520,562)	-	(1,520,562)
Loss for the year	(97,135)	(51,589)	(35,586,363)	(6,520,285)	(42,255,372)
Segment assets	18,145,074	855,383	50,202,635	46,441,377	115,644,469
Segment liabilities	724,522	271,065	690,666	3,562,954	5,249,207
Cash utilised in operations	(182,671)	228,927	(10,993,660)	(3,443,419)	(14,390,823)
Cash flows from investing	(15,605,919)	(2,704,480)	(9,185,454)	(18,117,995)	(45,613,848)
Cash flows from financing	-	-	-	60,911,731	60,911,731
Net movement in cash and cash equivalents	(15,788,590)	(2,475,553)	(20,179,114)	39,350,317	907,060
Capital expenditure on tangible assets	5,973,203	46,308	3,015,331	119,128	9,153,970
Capital expenditure on intangible assets	9,632,716	2,658,172	6,170,123	-	18,461,011
Depreciation of tangible fixed assets	39,943	9,451	4,990,763	84,618	5,124,775
Amortisation of intangible fixed assets	-	-	2,768,000	-	2,768,000
Impairment of tangible fixed assets	-	-	15,969,396	-	15,969,396
Geographical segments		Sierra Leone	Bermuda	UK	Total
2007		US$	US$	US$	US$
Revenue		6,860,535	632,276	-	7,492,811
Segment assets		69,467,386	45,555,780	621,303	115,644,469
Segment liabilities		3,505,082	1,506,052	238,073	5,249,207
Cash utilised in operations		(10,401,007)	(2,137,933)	(1,851,883)	(14,390,823)
Cash flows from investing		(27,526,587)	(18,019,982)	(67,279)	(45,613,848)
Cash flows from financing		-	60,911,731	-	60,911,731
Net movement in cash and cash equivalents		(37,927,594)	40,753,816	(1,919,162)	907,060
Capital expenditure on tangible assets		9,065,576	-	88,394	9,153,970
Capital expenditure on intangible assets		18,461,011	-	-	18,461,011
Depreciation of tangible fixed assets		5,083,201	-	41,574	5,124,775
Amortisation of intangible fixed assets		2,768,000	-	-	2,768,000
Impairment of tangible fixed assets		15,969,396	-	-	15,969,396

GEOGRAPHICAL ANALYSIS OF NET OPERATING EXPENSES

Year ended 31 December 2007		Sierra Leone		Bermuda		UK	Total
		US$		US$		US$	US$
Depreciation of tangible fixed assets		5,083,201		-		41,574	5,124,775
Amortisation of intangible fixed assets		2,768,000		-		-	2,768,000
Loss on disposal of tangible fixed assets		-		-		20,121	20,121
Loss on disposal of intangible fixed assets		209,267		-		-	209,267
Employee costs		-		715,556		814,419	1,529,975
Foreign exchange differences		46,698		(609,166)		(2,631)	(565,099)
Other operating charges		1,238,460		1,603,420		1,192,744	4,034,624
Share-based payments		-		4,209,991		-	4,209,991
		9,345,626		5,919,801		2,066,227	17,331,654
Year ended 31 December 2006		Sierra Leone		Bermuda		UK	Total
		US$		US$		US$	US$
Depreciation of tangible fixed assets		3,164,445		-		26,226	3,190,671
Loss on disposal of tangible fixed assets		82,728		-		-	82,728
Employee costs		97,829		783,330		279,883	1,161,042
Foreign exchange differences		(5,375)		(873,106)		(7,822)	(886,303)
Other operating charges		106,149		661,020		693,705	1,460,874
Share-based payments		-		1,546,585		-	1,546,585
		3,445,776		2,117,829		991,992	6,555,597
3. NET OPERATING EXPENSES
					2007			2006
					US$			US$
Depreciation of tangible fixed assets					5,124,775			3,190,671
Amortisation of intangible fixed assets					2,768,000			-
Loss on disposal of tangible fixed assets					20,121			82,728
Loss on disposal of intangible fixed assets					209,267			-
Employee costs					1,529,975			1,161,042
Foreign exchange differences					(565,099)			(886,303)
Other operating charges					4,034,624			1,460,874
					13,121,663			5,009,012
Share-based payments:
Options (Note 21)					2,414,055			1,305,992
Fully-paid shares (Note 20)					1,795,936			240,593
					4,209,991			1,546,585
					17,331,654			6,555,597

Net operating expenses include:
				2007				2006
				US$				US$
Auditors' remuneration:
-audit services				150,000				150,000
-other services				24,549				20,962
Operating leases payments				391,107				52,440
4. DIRECTORS' EMOLUMENTS
		2007			2006
		US$			US$
Aggregate emoluments		2,915,469			823,132

Detailed disclosures of the Director's remuneration and interests in shares and options over the Company's shares are shown in the Report of the Remuneration Committee.

No Director has retirement benefits accruing to him as a result of his services to the Group.

5. EMPLOYEE INFORMATION

The number of employees at the various mining and exploration operations (excluding the non-executive Directors of the Group) at the end of the year was 748 (2006:699)

6. EMPLOYEE COSTS
	2007		2006
	US$		US$
Wages and salaries	8,779,354		8,849,695
Social security costs	315,047		154,211
	9,094,401		9,003,906

Staff costs include an amount of US$3,170,576 capitalised to intangible assets. (2006: Tangible assets US$3,198,069 and intangible assets US$3,537,191)

7. INTEREST RECEIVABLE
	2007		2006
	US$		US$
Interest receivable on short term investments	1,608,884		215,759
8. INTEREST PAYABLE
	2007		2006
	US$		US$
Interest payable on loan	-		34,710

9. TAXATION
	2007		2006
	US$		US$
Deferred tax charge / (credit)	1,520,562		(995,474)

10. LOSS PER SHARE
	2007		2006
	US$		US$
Loss for the year	(42,255,372)		(5,821,551)
	Shares		Shares
Basic weighted average number of common shares in issue	140,590,557		108,843,600
Basic loss per share - cents	30.05		5.34

Given the Group's loss for the year, the diluted loss per share is the same as the basic loss per share.

11. COMPANY RESULT FOR THE FINANCIAL YEAR

The result for the year for African Minerals Limited was a loss of US$3,687,270 (2006: loss $1,548,709).

12. INTANGIBLE FIXED ASSETS
				Total
				US$
Cost
At 1 January 2007				30,747,662
Additions				18,461,011
Disposals				(209,267)
Transfer from tangible assets				12,201,429
As at 31 December 2007				61,200,835
Amortisation
At 1 January 2007				-
Charge for the year				2,768,000
Impairment				15,969,396
As at 31 December 2007				18,737,396
Net book value
At 31 December 2007				42,463,439
At 31 December 2006				30,747,662

Intangible fixed assets comprise of the cost of purchasing mineral exploration licences and certain deferred exploration expenditures on the Company's mineral licences located in Sierra Leone. The Board of Directors regularly assess the potential of each mineral licence and write off any deferred exploration expenditure that they believe to be unrecoverable.

The impairment loss was recognised to reflect that certain costs incurred on the Group's alluvial diamond operations were not deemed recoverable. Steady state production was not achieved at the alluvial diamond operations during the first six months of 2007 which resulted in management's decision to refocus on bulk-sampling activities in the latter half of the year in order to identify sustainable economic resources. The carrying value of intangible fixed assets in respect of the Group's alluvial diamond operations has been written-down to the Board of Directors assessment of the recoverable amount.

13. TANGIBLE FIXED ASSETS
		Mining		Plant &		Fixtures &
		Assets		machinery		fittings		Total
		US$		US$		US$		US$
Cost
At 1 January 2007		12,201,429		22,515,678		975,016		35,692,123
Additions		-		8,775,991		377,979		9,153,970
Transfer to intangible assets		(12,201,429)		-		-		(12,201,429)
Disposals		-		(28,326)		(40,340)		(68,666)
As at 31 December 2007		-		31,263,343		1,312,655		32,575,998
Depreciation
At 1 January 2007		-		4,331,701		325,320		4,657,021
Charge for the year		-		4,839,222		285,553		5,124,775
Disposals		-		(17,138)		(18,922)		(36,060)
As at 31 December 2007		-		9,153,785		591,951		9,745,736
Net book value
At 31 December 2007		-		22,109,558		720,704		22,830,262
At 31 December 2006		12,201,429		18,183,977		649,696		31,035,102

14. INVESTMENTS
	Company		Company
	2007		2006
	US$		US$
Cost and net book value
At 1 January	2		2
Additions	500		-
At 31 December	502		2

The undertakings in which the Group's interest at the year end is more than 20% are as follows:

		Country of	Class of share		Percentage	Percentage
Subsidiary undertaking		incorporation	capital held	Principal activity	held 2007	held 2006
African Minerals (UK) Ltd	*	England	Ordinary	Service and holding company	100%	100%
SLDC Management Ltd		Sierra Leone	Ordinary	Holding company	100%	100%
SLDC Exploration Ltd		Sierra Leone	Ordinary	Diamond exploration	100%	100%
Tonkolili Iron Ore Ltd		Bermuda	Ordinary	Holding company	100%
Marampa Iron Ore Ltd		Bermuda	Ordinary	Holding company	100%
Sierra Leone Gold Ltd		Bermuda	Ordinary	Holding company	100%
Sierra Leone Hard Rock Ltd		Bermuda	Ordinary	Holding company	100%
Gori Hills Nickel Ltd		Bermuda	Ordinary	Holding company	100%
Tonkolili Iron Ore (SL) Ltd		Sierra Leone	Ordinary	Iron ore exploration	100%
Marampa Iron Ore (SL) Ltd		Sierra Leone	Ordinary	Iron ore exploration	100%
Sierra Leone Gold (SL) Ltd		Sierra Leone	Ordinary	Gold and base metals exploration	100%
Sierra Leone Hard Rock (SL) Ltd		Sierra Leone	Ordinary	Diamond exploration	100%

* The company changed its name from SLDC (UK) Limited on 6 August 2007.

15. TRADE AND OTHER RECEIVABLES
	Group		Company		Group		Company
	31 December		31 December		31 December		31 December
	2007		2007		2006		2006
	US$		US$		US$		US$
Non-current
Amounts owed by Group companies	-		113,497,812		-		72,599,950
	-		113,497,812		-		72,599,950
Current
Trade receivables	2,317		-		105,798		-
VAT Recoverable	68,261		-		84,589		-
Other debtors	307,403		307,395		7,598		25,429
Prepayments and accrued income	3,204,267		2,144,504		61,932		10,642
	3,582,248		2,451,899		259,917		36,071

16. DEFERRED TAXATION

		Asset	Liability	Net
Recognised deferred tax asset and liabilities 2007		US$	US$	US$
Property plant and equipment		-	-	-
Employee benefit plan		-	-	-
Site restoration provision		-	-	-
Tax loss carry forward		-	-	-
		-	-	-
		Opening	Recognised in	Recognised	Closing
		balance	profit & loss	in equity	balance
Movement in temporary timing differences 2007		US$	US$	US$	US$
Property plant and equipment		11,200,838	(11,200,838)	-	-
Employee benefit plan		(78,439)	78,439	-	-
Site restoration provision		(53,250)	53,250	-	-
Tax loss carry forward		(12,589,711)	12,589,711	-	-
		(1,520,562)	1,520,562	-	-
		Asset	Liability	Net
Recognised deferred tax asset and liabilities 2006		US$	US$	US$
Property plant and equipment		-	11,200,838	11,200,838
Employee benefit plan		(78,439)	-	(78,439)
Site restoration provision		(53,250)	-	(53,250)
Tax loss carried forward		(12,589,711)	-	(12,589,711)
		(12,721,400)	11,200,838	(1,520,562)
		Opening	Recognised in	Recognised	Closing
		balance	profit & loss	in equity	balance
Movement in temporary timing differences 2006		US$	US$	US$	US$
Property plant and equipment		4,047,575	7,153,263	-	11,200,838
Employee benefit plan		(14,349)	(64,090)	-	(78,439)
Site restoration provision		-	(53,250)		(53,250)
Tax loss carried forward		(4,558,314)	(8,031,397)	-	(12,589,711)
		(525,088)	(995,474)	-	(1,520,562)
		2007	2006
Deferred Tax Account		US$	US$
Balance brought forward		(1,520,562)	(525,088)
Charge / (credit) for the year		1,520,562	(995,474)
		-	(1,520,562)

17. INVENTORIES
				31 December			31 December
				2007			2006
				US$			US$
Diamonds held for resale				1,884,187			1,024,030
Gold				285,092			-
Consumables and stores				437,754			952,079
				2,607,033			1,976,109
18. SHORT TERM INVESTMENTS
	Group		Company			Group			Company
	31 December		31 December			31 December			31 December
	2007		2007			2006			2006
	US$		US$			US$			US$
Short term deposits with banks	41,158,671		41,158,671			21,538,435			21,538,435
	41,158,671		41,158,671			21,538,435			21,538,435
19. FINANCIAL INSTRUMENTS

The Group uses financial instruments comprising cash, liquid resources and items such as short term debtors and creditors that arise from its operations. The principal risks relate to currency exposure and liquidity. Short term debtors and creditors have been excluded from the following disclosures.

The Group uses financial instruments to maximise returns from funds held on deposit. The Group's policy is to raise cash in advance of when it is required by analysing the costs and benefits of equity and debt financing.

The breakdown of the Group and Company financial assets as at 31 December 2007 is shown below:

	Group		Company		Group		Company
	31 December		31 December		31 December		31 December
	2007		2007		2006		2006
	US$		US$		US$		US$
Cash and bank balances	3,002,816		1,945,210		2,095,756		2,089,754
Short term investments:
Short term deposits with banks	41,158,671		41,158,671		21,538,435		21,538,435
	44,161,487		43,103,881		23,634,191		23,628,189

In respect of monetary assets and liabilities held in currencies other than US Dollars, the Group ensures that net exposure is kept to an acceptable level by buying or selling foreign currencies at spot rates where necessary to address short term imbalances. Foreign exchange differences on retranslation of such assets and liabilities are taken to the income statement. 

Financial assets consist of short-term deposits in US Dollars and Sterling which earn market interest rates. 

20. SHARE CAPITAL
	2007			2006
	Number	2007		Number	2006
	of shares	US$		of shares	US$
Authorised
Common shares of US$ 0.01 each	250,000,000	2,500,000		250,000,000	2,500,000
Preference shares of US$ 0.01 each	100,000,000	1,000,000		100,000,000	1,000,000
Issued and fully paid common shares
At 1 January	130,003,241	1,300,032		96,763,240	967,632
Issued during the year	25,255,000	252,550		33,240,001	332,400
At 31 December	155,258,241	1,552,582		130,003,241	1,300,032

On 12 January 2007, 55,000 new common shares with a value of US$134,303 were issued pursuant to a contractual obligation to award shares by way of bonus following achievement of performance targets.

On 31 July 2007, 24,500,000 new common shares were issued by way of a placing for gross proceeds of US$64,473,955 before issue expenses of US$3,869,619. 

On 6 September 2007, 500,000 new common shares with a value of US$1,661,633 were issued pursuant to the achievement of performance related objectives.

On 26 October 2007, 200,000 new common shares were issued for consideration of US$307,395 on the exercise of share options.

21. EQUITY RESERVES

a.) OPTIONS

The Group has issued share options under a share option scheme adopted by the Group on 5 November 2004. Movements in share options over US$ 0.01 common shares in the Company were as follows:

		2007		2006
		Weighted	2007	Weighted	2006
		average price	Number	average price	Number
Outstanding at beginning of year		63.5p	5,825,000	56.6p	11,125,000
Lapsed during year		74.1p	(605,000)	50.0p	(900,000)
Exercised during year		75.0p	(200,000)	54.8p	(5,225,000)
Granted during year		141.7p	5,581,154	86.4p	825,000
Outstanding at the end of the year		103.8p	10,601,154	63.5p	5,825,000
Exercisable at the end of the year			3,841,667		2,708,333

The fair value of options granted during the year was estimated using the Black-Scholes pricing model with the following significant assumptions:

Expected life (years)	5.0
Risk-free interest rate	4.95%
Volatility	62%
Weighted average fair value per option	$1.61

The stock-based compensation recognised as an expense in the year to 31 December 2007 was US$2,414,055 (2006: US$1,305,992). A transfer of US$54,260 was made from the equity reserve to the profit and loss reserve during the year. This represented the reversal of the charge made through the Income Statement prior to 2007 for options exercised in 2007.

Total options existing at 31 December 2007 over US$ 0.01 common shares in the Company are summarised below:

 

 

				At 31 December	At 31 December
Date of grant	Exercise price	Expiry date	Note	2007	2006
21 November 2004	50.0p	21 November 2009	1	1,000,000	1,000,000
21 November 2004	50.0p	21 November 2009	2	800,000	800,000
30 November 2004	50.0p	30 November 2009	3	-	100,000
16 December 2004	50.0p	16 December 2009	3	-	150,000
10 February 2005	75.0p	10 February 2010	3	-	250,000
31 March 2005	75.0p	31 March 2010	2	1,000,000	1,000,000
1 November 2005	50.0p	1 November 2010	2	1,000,000	1,000,000
19 July 2005	75.0p	19 July 2010	2	100,000	300,000
7 September 2005	75.0p	7 September 2010	2	400,000	400,000
28 February 2006	50.0p	28 February 2011	2	75,000	75,000
5 April 2006	75.0p	5 April 2011	2	500,000	500,000
16 October 2006	120.0p	16 October 2008	4	250,000	250,000
29 January 2007	115.0p	28 January 2012	2	1,300,000	-
1 May 2007	129.0p	30 April 2012	2	755,000	-
6 September 2007	165.5p	5 September 2012	2	500,000	-
9 November 2007	156.0p	8 November 2012	2	1,721,154	-
4 December 2007	149.5p	3 December 2012	2	1,200,000	-

Note 1:

Subject to the rules of the Share Option Plan each of these options were fully vested on 10 May 2005.

Note 2:

Subject to the rules of the Share Option Plan and the requirements noted below, each of the outstanding options is exercisable as follows:

- one-third of the shares under option following the first anniversary of the date of grant,

- a further one-third of the shares under option following the second anniversary of the date of grant,

- the final one-third of the shares under option following the third anniversary of the date of grant,

provided that the option holder remains a Director of the Company, or if the option holder's employment is terminated, within ninety days of the termination.

Note 3:

The performance based options vest upon certain performance milestones being met. The vesting period for these is not determinable and an expense is only recognised upon actual vesting.

Note 4:

Subject to the rules of the share option scheme, these share options became fully vested during 2006.

Details of share options exercised and lapsed during the year are as follows:

	Exercise			Number of options
	price	Date of grant	Date of exercise	exercised/lapsed
Senior management	75.0p	19 July 2005	26 October 2007	200,000
	50.0p	30 November 2004	Lapsed	100,000
	50.0p	16 December 2004	Lapsed	150,000
	75.0p	10 February 2005	Lapsed	250,000
	129.0p	1 May 2007	Lapsed	105,000

b.) WARRANTS

Movements in warrants over US$ 0.01 common shares in the Company in the year were as follows:

		2007	2006
		Number	Number
As at 1 January		1,100,000	14,535,001
Warrants granted in the year		1,225,000	600,000
Warrants lapsed in the year		-	-
Warrants exercised in the year		-	(14,035,001)
As at 31 December		2,325,000	1,100,000

CA Fiduciary Services as Trustees of the Timis Trust which wholly owns Timis Diamond Corporation holds 500,000 African Minerals Limited warrants exercisable at CAD0.75 expiry 30 June 2008 in the name of CA Nominees Limited. Frank Timis is a beneficiary of The Timis Trust.

The fair value of warrants included as a share issue cost and charged to the Share Premium Account was US$1,700,055 (2006 US$528,180). In 2006, a transfer of US$556,233 was made from the equity reserve to the share premium account representing the reversal of the charge made against the share premium account prior to 2006 for warrants exercised in 2006. Also in 2006 a transfer of US$1,411,492 was made from the equity reserve to the profit and loss account reserve, representing the charge previously expensed through the Income Statement on warrants exercised in 2006.

The fair value of warrants issued in the year was estimated using the Black-Scholes pricing model with the following significant assumptions.

Expected life (years)	1.5
Risk-free interest rate	5.52%
Volatility	67%
Weighted average fair value per warrant	$1.39

Total warrants existing at 31 December 2007 over US$ 0.01 ordinary shares in the Company are summarised below:

Date of grant	Number of warrants	Exercise price US$	Original expiry date	Revised expiry date
July 2004	500,000	0.77	June 2006	June 2008
December 2006	600,000	2.30	June 2008	June 2008
July 2007	1,225,000	2.60	January 2009	January 2009

22. PROVISIONS
	Group		Company		Group		Company
	31 December		31 December		31 December		31 December
	2007		2007		2006		2006
	US$		US$		US$		US$
Employee benefit provision	419,587				261,462
Alluvial mine restoration	250,000		-		177,500		-
	669,587		-		438,962		-

23. TRADE AND OTHER PAYABLES
	Group		Company		Group		Company
	31 December		31 December		31 December		31 December
	2007		2007		2006		2006
	US$		US$		US$		US$
Trade creditors	3,100,605		1,283,075		417,857		622
Other taxes and social security	409,746		-		603,729		-
Accruals	1,069,270		222,977		184,083		150,000
	4,579,621		1,506,052		1,205,669		150,622

24. OPERATING LEASE COMMITMENTS

At 31 December, the Group had annual commitments under non-cancellable operating leases expiring:

	Land &		Plant &		Land &		Plant &
	buildings		equipment		buildings		equipment
	2007		2007		2006		2006
	US$		US$		US$		US$
Within one year	-		-		43,991		-
Between two and five years	491,891		-		-		3,908

25. CAPITAL COMMITMENTS

At 31 December 2007, amounts contracted for but not provided in the financial statements for the acquisition of property, plant and equipment amounted to US$nil (2006: US$0.52m).

26. POST BALANCE SHEET EVENTS

On 11 April 2008, the Company entered into a management agreement with Umbono Capital Partners LLC ("Umbono") and acquired the entire share capital of White River Resources Inc., a privately held exploration company which owns various mineral claim interests and has rights to earn-in mineral claim interests on the Kluane ultramafic belt in Yukon, Canada. Consideration was met by the issue of a total of 2,000,000 new fully paid common shares of the Company. Umbono will provide corporate, project management and geological services to the Company for exploration activities on the Kluane Project for which Umbono will receive a fixed monthly management fee of CAD 55,000 plus expenses.

On 6 May 2008, the Company announced that it had entered into an exclusive Memorandum of Understanding with the Government of Sierra Leone in respect of key infrastructure including railway, port and power facilities.

On 13 May 2008, the Company announced that it had acquired 11,425,000 fully paid ordinary shares in Baobab Resources plc ("Baobab"), an AIM-listed company (AIM:BAO) with a balanced portfolio of projects in the Republic of Mozambique. The shares were acquired on the basis of the issue and exchange of one fully-paid ordinary share of US$0.01 in the Company ("AML Shares") for every 10 fully-paid ordinary shares in Baobab held by the vendor in an off-market transaction. As a result of the transaction, a total of 1,142,500 AML Shares are to be issued to the vendors.

27. RELATED PARTY TRANSACTIONS

During the year, US$107,474 (2006: US$48,232), excluding VAT, in respect of office rental costs and US$4,961 (2006: US$2,226), excluding VAT, for miscellaneous office services was payable to Regal Petroleum PLC, of which Francesco Scolaro was also a Director.

As at 31 December 2007, US$nil (2006: US$nil) was payable to Regal Petroleum PLC.

28. REPORTING JURISDICTIONS

The Company is a reporting issuer in certain Canadian jurisdictions. However, the Company is a "designated foreign issuer" as defined in Canadian National Instrument 71-102 and is subject to foreign regulatory requirements, including those of the AIM market of the London Stock Exchange. As such, the Company is exempt from certain requirements otherwise imposed on reporting issuers in Canada. In particular, financial statements of the Company may be prepared under International Financial Reporting Standards or accounting principles that meet the non-Canadian disclosure requirements to which the Company is subject.

ENDFR AJMLTMMBBBTP

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Related Shares:

AMI.L