2008 Audited Results

26th May 2009 07:00



For immediate release 26 May 2009

 

 

African Minerals Limited

("African Minerals" or "the Company")

Final Audited Results for the year ended 31 December 2008

Tonkolili - a World Class Iron Ore Project

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 2008.

Highlights

Tonkolili Iron Ore Project

Post year-end highlights at Tonkolili

Marampa Iron Ore Project

Post year-end highlights at Marampa

Infrastructure

 

Finance

Key Management Appointments (post year end)

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

"I am very pleased with the progress the Company has made in the development of its iron ore assets. With the completion of the resource estimation by SRK in May 2009, the Tonkolili project is the largest currently reported magnetite iron ore deposit in Africa. This together with the agreement over the railway and port infrastructure places us in a strong position to become a significant iron ore producer on the world stage, competing with globally recognised industry players.

We have in place a highly skilled engineering team led by Alan Watling, with a proven track record of developing and operating projects of this magnitude to tight timescales. With the continuing support of the Government of Sierra Leone, our shareholders and staff, we look forward to the future with confidence as a major iron ore supplier to key steel markets."

 Enquiries: 

African Minerals Limited		Tel: +44 (0) 1481 726833
Frank Timis Alan Watling
Canaccord Adams Limited		Tel: +44 (0) 20 7050 6500
Mike Jones
Robert Finlay
Mirabaud Securities Limited		Tel: +44 (0) 20 7878 3360
Rory Scott
Citigate Dewe Rogerson		Tel: +44 (0) 20 7638 9571
Martin Jackson
George Cazenove

Chairman's Statement

Our primary strategy over the past year has been to accelerate the development of the Company's iron ore interests in Sierra Leone, and to establish appropriate infrastructure for eventual production from these projects. The lease agreement over key port and railway infrastructure is a vital part of our strategy in this respect.

African Minerals has invested significantly in Sierra Leone over the past four years and we regard the infrastructure project, which further demonstrates our strong relationship with the Government of Sierra Leone, as proof of the Government's endorsement of the part being played by our Company in the country's development.

Although our focus has been to develop our iron ore assets in Sierra Leone, we also have strategic investments in companies which hold iron ore assets in Australia and Mozambique.

We have also taken the opportunity to strengthen management and the Board. The recruitment of senior executives with significant iron ore experience such as our CEO, Alan Watling, places us in a strong position to become a significant iron ore producer supplying Chinese, European and American steel markets.

Iron ore projects

We have concentrated our financial, management and operational resources on the Company's flagship project, Tonkolili and formed a strategic alliance with Cape Lambert Iron Ore Limited ("Cape Lambert") at the Marampa iron ore project.

At Tonkolili, we have now confirmed a world class magnetite iron ore resource which complies fully with industry-recognised "JORC" standards. We are very excited that Tonkolili is turning out to be one of the largest iron ore discoveries on the African continent. In May 2009, we announced a Mineral Resource estimate of 5.1 billion tonnes for the Numbara, Simbili and Marampon deposits.

The final magnetic concentrate of this world class project is high quality, upgrading to 68% iron with very low impurities and is suitable for blast furnace feed. Interim pre-feasibility studies have indicated that operating costs will be in the lowest quartile of iron ore producers, further reinforcing Tonkolili's position as a world class iron ore project.

Geophysics and reconnaissance drilling over a strike length of 20km at Kasafoni indicates the potential to increase the iron ore magnetite mineral resource to in the order of 10 billion tonnes. 

A significant thickness and strike extent of hematite mineralisation comprised of hematite cap and oxidised transition zone overlies the primary magnetite resources at Tonkolili. Exploration to date suggests that this may comprise of the order of 800 million tonnes of material over Numbara, Simbili and Marampon alone. Additional drilling and geological modelling to enable the preparation of a JORC compliant mineral resource for these zones is also underway.

 

We have a new partner in the Marampa iron ore project, Cape Lambert, with the technical expertise and financial capacity to help us realise the full potential of Marampa, which we believe could develop into a significant iron ore project.

With the development of the key port and rail infrastructure, African Minerals is now well positioned to accelerate both the Tonkolili and Marampa projects towards production. We look forward to completing pre-feasibility studies during the current year, with a view to developing a substantial mining operation.

Infrastructure development

In November 2008 our wholly owned subsidiary, African Railway and Port Services (SL) Limited, finalised a 99 year lease in respect of the Pepel Port and the Pepel - Marampa - Tonkolili Railway, covering the redevelopment of the infrastructure of the port and railway.

Under the terms of the lease, we will undertake an engineering study of an upgrade to the deep water Pepel Port and of the existing railway between Pepel and Marampa. Subject to the results of the studies, the Company will upgrade, operate and maintain the port and railway, making them available at commercial rates to other users including mining companies and general cargo and passenger transporters.

Following receipt of satisfactory engineering and feasibility studies, the Company will also construct and operate an extension of the railway to the Company's iron ore project at Tonkolili, enabling the Company efficiently and cost effectively to transport its iron ore production for export to international markets.

Strategic investments and acquisition

During the year we made a number of important strategic investments which both diversify our minerals portfolio and present shareholders with significant development potential.

On 13 May 2008, the Company acquired 11,425,000 fully paid ordinary shares in Baobab Resources plc, which has a balanced portfolio of projects in Mozambique at various stages of development and principal asset being the Iron-Titanium-Vanadium Tete project.

On 1 October 2008, the Company completed an agreement with Cape Lambert Iron Ore Limited ("CLIO") in respect of the Company's iron ore project at Marampa, Sierra Leone (the "Marampa Project") whereby CLIO acquired a 30% interest in Marampa Iron Ore Limited ("Marampa"). In return, the Company acquired 44,000,000 fully-paid ordinary shares in CLIO and CLIO agreed to contribute US$25 million towards a feasibility study at the Marampa Project. Subsequent to the year end, the Company acquired a further 17,000,000 fully-paid ordinary shares in CLIO in return for CLIO's increasing its stake in Marampa to 35%.

On 23 October 2008, the Company acquired 8,700,000 ordinary shares in West African Diamonds plc ("WAD"). WAD is a diamond focused explorer with operations in Guinea and Sierra Leone and holds a portfolio of development and advanced exploration assets across West Africa. 

On 14 April 2008, the Company acquired 100% of the share capital of White River Resources Inc, a Canadian exploration company with mineral claims on the largely under-explored Kluane ultramafic belt in the Yukon province.

Board

This has been an important year in the development of the Board. I am pleased to report that the Board has been materially strengthened, both in terms of the skills of its members and to reflect accepted codes of good corporate governance.

A number of colleagues have moved on to pursue other interests. David Gadd-Claxton, formerly President of Diamond Exploration and Production, left the Company in January 2008. Mike Wittet stepped down as a Non-Executive Director in April 2008. I thank them for their contribution and support. In November 2008 Bruce Kirk, formerly President, Iron Ore and Base Metals, resigned for personal reasons. Bruce was instrumental in advancing the Tonkolili project over the previous twelve months towards resource status. In the circumstances, I greatly appreciated his offer to continue his support for the Company in a consultancy capacity. Roy Pitchford stepped down from his role as CEO in November 2008, becoming a Non-Executive Director, to focus on his external business interests before leaving the Company in February 2009. I thank him for his contribution to the Company.

I am pleased to welcome three new Non-Executive Directors to the Board. Mark Ashurst joined in January 2008. Mark is a senior investment banker with a broad range of corporate finance skills gained from over 20 years' experience in the City of London. Peter Truscott (Lord Truscott of St. James's), formerly a Labour MEP, Government Minister and spokesman joined in April 2008. Peter has brought to the Board a wealth of political experience, particularly in foreign affairs and international trade. Christopher Duffy joined us in February 2009. Chris has been a partner of Clyde & Co, an international firm of lawyers based in the City of London, since 1989. He is a highly experienced corporate lawyer who has advised numerous companies in relation to their activities in the UK and many other jurisdictions including, in particular, Africa. 

I was delighted to announce in December 2008 that Alan Watling had agreed to join African Minerals as CEO with effect from 1 February 2009. Alan's appointment has added a wealth of engineering and project management experience to the Board and executive team. He is leading the development of the Tonkolili project and the port and railway infrastructure project. Alan has proven expertise in major port and railway construction projects, substantial mining related experience and a successful track record in completing projects against tight deadlines. He has the background and credentials to build and lead the team that will drive African Minerals forward to the completion of definitive feasibility studies over our iron ore projects and then onward into production.

Financial review

The financial performance of the Company throughout the year ended 31 December 2008 reflects continued increasing expenditure on the development of the Company's iron ore assets.

Loss after taxation for the 12 month period ended 31 December 2008 was US$23.6 million (2007: US$42.3 million). Loss per share was 14.33 cents (2007: 30.05 cents). 

The total assets of the Group amounted to approximately US$152.8 million as at the period end, which includes intangible assets amounting to approximately US$76.8 million. 

In October 2008, the Company successfully raised £20 million by way of a placing of 26,666,700 new common shares at a price of 75 pence per share with institutional investors. We were delighted with the endorsement that our premier institutional shareholders gave the Company in subscribing to the placing, especially given the extremely difficult market conditions at the time. The proceeds of the placing will allow us to progress the development of our flagship Tonkolili project into the feasibility study stage and will allow us to undertake extensive engineering and construction work on key infrastructure in Sierra Leone to support our iron ore projects. 

During the year, the Company completed one sale of rough diamonds, its fourth such sale, sourced wholly from its alluvial bulk sampling activities in the Kono district of Sierra Leone, realising gross sale proceeds of US$2.5 million (2007: US$7.5 million).

As at 31 December 2008, the Company had cash at bank and short term deposits of US$28.9 million (2007: US$44.2 million).

Employees

Our people are our key resource. On behalf of our shareholders I would like to thank them all for their contribution over the past year during which the Company has successfully progressed its flagship iron ore projects. 

Outlook

African Minerals, like so many other mining companies, has been adversely affected by the world economic down-turn. Steel and iron ore related equities have recently experienced one of the worst periods on record as has been the case for most mining sector companies. 

We strongly believe that the Asian region, most notably China and India, will continue to focus on securing quality iron ore deposits of magnitude as supply deficits are realised given the subdued levels of supply activity resulting from the global crisis. The Tonkolili project is world class due to the size of the JORC compliant resource, quality of product and proximity to a deep water port as well as being located in a region with shipping costs and voyage times to steel markets located in both Europe and China that are comparable to those from Brazil. 

The Company has strengthened its senior management team with the appropriate engineering skill base required to expedite the Tonkolili project towards development and production. We are targeting the completion of a definitive feasibility study by mid 2010 in order to have first product on ship in 2012. The team that has been assembled already has a proven track record of fast tracking the development and construction of iron ore operations of a similar scale. 

I am confident that the Tonkolili and Marampa projects have the potential to add significant shareholder value even in this time of economic instability. I am very pleased that we have discovered such a large valuable resource at Tonkolili and now have the team in place to realise its full potential.

We will continue to pursue value adding strategies with regards to our other exploration activities. I would also like to thank the Government of Sierra Leone for their continued strong working relationship with the Company. We are committed to improving that country's infrastructure and in doing so helping to raise the standard of living in Sierra Leone.

Frank Timis

Executive Chairman

22 May 2009 

 

 

 

 

 

AFRICAN MINERALS LIMITED

CONSOLIDATED INCOME STATEMENT

For the year ended 31 December 2008

		Year ended		Year ended
		31 December		31 December
		2008		2007
	Note	US$		US$
Revenue	1	2,213,905		7,492,811
Cost of sales		(5,997,029)		(16,535,455)
Gross loss		(3,783,124)		(9,042,644)
Impairment of intangible fixed assets	12	(12,735,143)		(15,969,396)
Net operating expenses	3	(36,945,937)		(17,331,654)
Profit on investment in subsidiary	4	28,763,034		-
Operating loss		(24,701,170)		(42,343,694)
Interest receivable	8	1,084,478		1,608,884
Loss before tax		(23,616,692)		(40,734,810)
Tax	9	-		(1,520,562)
Loss for the year		(23,616,692)		(42,255,372)
Basic and diluted loss per share - cents	10	14.33		30.05

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 2008

		Group		Company		Group		Company
		2008		2008		2007		2007
	Note	US$		US$		US$		US$
Non-current assets
Intangible fixed assets	12	76,760,367		22,919,401		42,463,439		-
Tangible fixed assets	13	14,655,954		816,449		22,830,262		-
Investments	14	-		1,002		-		502
Debtors	15	-		147,146,491				113,497,812
Total non-current assets		91,416,321		170,883,343		65,293,701		113,498,314
Current assets
Inventories	17	1,720,186		-		2,607,033		-
Trade and other receivables	15	22,492,416		903,892		3,582,248		2,451,899
Financial assets at fair value
through profit or loss	18	8,328,411		8,328,411		-		-
Short term investments	19	-		-		41,158,671		41,158,671
Cash and cash equivalents	20	28,859,165		24,044,166		3,002,816		1,945,210
Total current assets		61,400,178		33,276,469		50,350,768		45,555,780
Total assets		152,816,499		204,159,812		115,644,469		159,054,094
Equity
Share capital	21	1,875,174		1,875,174		1,552,582		1,552,582
Share premium account		209,136,256		209,136,256		161,811,643		161,811,643
Equity reserves		9,942,383		9,942,383		5,999,876		5,999,876
Profit and loss account		(82,302,856)		(19,843,060)		(58,968,839)		(11,816,059)
Attributable to equity holders of the parent company		138,650,957		201,110,753		110,395,262		157,548,042
Minority interest		7,300,022		-		-		-
Total equity		145,950,979		201,110,753		110,395,262		157,548,042
Non-current liabilities
Provisions	23	1,165,364		-		669,587		-
Total non-current liabilities		1,165,364		-		669,587		-
Current liabilities
Trade and other payables	24	5,700,156		3,049,059		4,579,620		1,506,052
Total liabilities		6,865,520		3,049,059		5,249,207		1,506,052
Total equity and liabilities		152,816,499		204,159,812		115,644,469		159,054,094

The financial statements were approved by the Board on 22 May 2009 and were signed on its behalf by:

FRANK TIMIS

Director and Executive Chairman

JAMIE ALPEN

Director and Chief Financial Officer

 

 

AFRICAN MINERALS LIMITED

CONSOLIDATED CASH FLOW STATEMENT

For the year ended 31 December 2008

		Year ended		Year ended
		31 December		31 December
		2008		2007
		US$		US$
Loss for the period		(23,616,692)		(40,734,810)
Share-based payments		4,868,504		4,209,991
Depreciation of tangible fixed assets		5,982,436		5,124,775
Amortisation of intangible fixed assets		2,808,571		2,768,000
Impairment of intangible fixed assets		12,735,143		15,969,396
Loss on disposal of tangible fixed assets		3,445,398		20,121
Loss on disposal of intangible fixed assets		-		209,267
Profit on investment in subsidiary		(28,763,034)		-
Increase in provisions		495,777		230,625
Unrealised foreign exchange loss		2,092,414		-
Interest received		(1,084,478)		(1,608,884)
Operating loss before working capital changes		(21,035,961)		(13,811,519)
Decrease/(increase) in inventories		886,847		(630,924)
Decrease/(Increase) in trade and other receivables		1,089,875		(3,322,331)
Decrease in financial assets at fair value
through profit or loss		6,671,993		-
Increase in trade and other payables		1,120,536		3,373,951
Net cash flow from operating activities		(11,266,710)		(14,390,823)
Cash flows from investing activities
Interest received		1,084,478		1,608,884
Proceeds of sales of tangible assets		434,000		12,485
Payments to acquire tangible assets		(1,687,526)		(9,153,970)
Payments to acquire intangible assets		(42,639,158)		(18,461,011)
Payments to acquire financial assets		(1,443,850)		-
Investment in subsidiary		4,667,288		-
Decrease/(increase) in short term deposits with banks		41,158,671		(19,620,236)
Net cash inflow/(outflow) from investing activities		1,573,903		(45,613,848)
Cash flows from financing activities
Proceeds of ordinary share issue		32,988,447		60,604,336
Proceeds of exercise of options		1,111,612		307,395
Proceeds of exercise of warrants		1,449,097		-
Net cash inflow from financing activities		35,549,156		60,911,731
Net increase/(decrease) in cash and cash equivalents		25,856,349		907,060
Cash and cash equivalents at beginning of period		3,002,816		2,095,756
Cash and cash equivalents at end of period		28,859,165		3,002,816

 

AFRICAN MINERALS LIMITED

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the year ended 31 December 2008

			Share		Profit and
		Share	premium	Equity	loss
		capital	account	reserves	account	Total
	Note	US$	US$	US$	US$	US$
As at 1 January 2007		1,300,032	101,056,581	1,940,026	(16,767,727)	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		1,552,582	161,811,643	5,999,876	(58,968,839)	110,395,262
As at 1 January 2008		1,552,582	161,811,643	5,999,876	(58,968,839)	110,395,262
Allotments during the year		322,592	48,290,887	-	-	48,613,479
Issue expenses - shares		-	(1,609,596)	-	-	(1,609,596)
Issue expenses - warrants		-	(107,760)	107,760	-	-
Share-based payments		-	-	4,868,504	-	4,868,504
Reserves transfer - options		-	-	(241,725)	241,725	-
Reserves transfer - warrants		-	751,082	(792,032)	40,950	-
Loss for the period		-	-	-	(23,616,692)	(23,616,692)
As at 31 December 2008	21/22	1,875,174	209,136,256	9,942,383	(82,302,856)	138,650,957

 

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 (CONTINUED)

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 

1. ACCOUNTING POLICIES (CONTINUED)

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 2008, 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	Infrastructure	Corporate	Total
2008	US$	US$	US$	US$	US$	US$
Revenue	-	-	2,213,905	-	-	2,213,905
Operating loss	(1,587,511)	(23,203)	(12,782,141)	(15,981)	(10,292,334)	(24,701,170)
Interest receivable	-	-	-	-	1,084,478	1,084,478
Tax	-	-	-	-	-	-
Loss for the period	(1,587,511)	(23,203)	(12,782,141)	(15,981)	(9,207,856)	(23,616,692)
Segment assets	71,385,782	6,210,196	40,552,160	(50,582)	34,718,943	152,816,499
Segment liabilities	1,025,143	815,113	785,268	150,311	4,089,685	6,865,520
Cash utilised in operations	1,094,073	10,165,096	(469,709)	130,997	(22,187,167)	(11,266,710)
Cash flows from investing	(18,339,647)	(15,137,751)	(2,326,088)	(3,022,931)	40,400,320	1,573,903
Cash flows from financing	-	-	-	-	35,549,156	35,549,156
Net movement in cash and cash equivalents	(17,245,574)	(4,972,655)	(2,795,797)	(2,891,934)	53,762,309	25,856,349
Capital expenditure on tangible assets	661,683	103,492	89,372	-	832,979	1,687,526
Capital expenditure on intangible assets	29,546,736	7,832,775	2,236,716	3,022,931	-	42,639,158
Depreciation of tangible fixed assets	1,387,887	5,171	4,495,651	-	93,727	5,982,436
Amortisation of intangible fixed assets	-	-	2,808,571	-	-	2,808,571
Impairment of tangible fixed assets	-	9,743,953	2,991,190	-	-	12,735,143

Geographical segments	Sierra Leone	Canada	Bermuda	UK	Guernsey	Total
2008	US$	US$	US$	US$	US$	US$
Revenue	1,884,187	-	329,718	-	-	2,213,905
Segment assets	116,070,206	2,103,091	34,093,921	524,552	24,729	152,816,499
Segment liabilities	3,071,560	488,704	3,049,059	254,752	1,445	6,865,520
Cash utilised in operations	(672,146)	8,214,521	(15,532,915)	(3,239,188)	(36,982)	(11,266,710)
Cash flows from investing	(28,997,728)	(9,828,689)	40,409,991	860	(10,531)	1,573,903
Cash flows from financing	-	-	35,549,156	-	-	35,549,156
Net movement in cash and cash equivalents	(29,669,874)	(1,614,168)	60,426,232	(3,238,328)	(47,513)	25,856,349
Capital expenditure on tangible assets	854,547	-	816,448	6,000	10,531	1,687,526
Capital expenditure on intangible assets	40,011,953	2,627,205	-	-		42,639,158
Depreciation of tangible fixed assets	5,951,723	-	-	30,073	640	5,982,436
Amortisation of intangible fixed assets	2,808,571	-	-	-	-	2,808,571
Impairment of tangible fixed assets	4,906,454	7,828,689	-	-	-	12,735,143

		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	3,562,955	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)	(2,475,554)	(20,179,114)	39,350,318	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 2008	Sierra Leone	Bermuda	UK	Guernsey	Total
	US$	US$	US$	US$	US$
Depreciation of tangible fixed assets	5,951,723	-	30,073	640	5,982,436
Amortisation of intangible fixed assets	2,808,571	-	-	-	2,808,571
Loss on disposal of tangible fixed assets	3,017,912	416,000	11,486	-	3,445,398
Employee costs	380,436	499,811	1,816,664	-	2,696,911
Foreign exchange differences	29,517	4,341,158	70,326	3,045	4,444,046
Other operating charges	1,188,052	3,480,471	1,332,530	27,025	6,028,078
Financial assets at fair value
through profit or loss - fair value losses	-	6,671,993	-	-	6,671,993
Share-based payments	-	4,868,504	-	-	4,868,504
	13,376,211	20,277,937	3,261,079	30,710	36,945,937

Year ended 31 December 2007	Sierra Leone	Bermuda	UK	Guernsey	Total
	US$	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

3. NET OPERATING EXPENSES

	2008		2007
	US$		US$
Depreciation of tangible fixed assets	5,982,436		5,124,775
Amortisation of intangible fixed assets	2,808,571		2,768,000
Loss on disposal of tangible fixed assets	3,445,398		20,121
Loss on disposal of intangible fixed assets	-		209,267
Employee costs	2,696,911		1,529,975
Foreign exchange differences	4,444,046		(565,099)
Other operating charges	6,028,078		4,034,624
Financial assets at fair value
through profit or loss - fair value losses	6,671,993		-
	32,077,433		13,121,663
Share-based payments:
Options (See Note 22)	4,868,504		2,414,055
Fully-paid shares	-		1,795,936
	4,868,504		4,209,991
	36,945,937		17,331,654

Net operating expenses include:
		2008		2007
		US$		US$
Auditors' remuneration:
-audit services		125,713		150,000
-other services		18,175		24,549
Operating leases payments		525,442		391,107

 

4. PROFIT ON INVESTMENT IN SUBSIDIARY

During the year, Cape Lambert Iron Ore Limited ("CLIO") made an investment in the company's subsidiary, Marampa Iron Ore Limited of US$36,063,056 (comprising shares in CLIO of US$11,395,725 and funding for a feasibility study of the Marampa project of US$24,667,331 in cash (US$20,000,000 deferred)) in return for receiving new shares in Marampa Iron Ore Limited representing 30% of the total share capital of Marampa Iron Ore Limited. The profit made by African Minerals Limited on the investment by CLIO amounted to US$28,763,034

5. DIRECTORS' EMOLUMENTS

	2008		2007
	US$		US$
Aggregate emoluments	1,846,055		2,915,469

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.

6. 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 period was 870 (2007: 748) 

7. EMPLOYEE COSTS

	2008		2007
	US$		US$
Wages and salaries	6,800,869		8,779,354
Social security costs	406,312		315,047
	7,207,181		9,094,401

Staff costs include an amount of US$3,313,562 capitalised to intangible assets. (2007: US$3,170,576)

8. INTEREST RECEIVABLE

	2008		2007
	US$		US$
Interest receivable on short term investments	1,084,478		1,608,884

9. TAXATION

	2008		2007
	US$		US$
Deferred tax charge / (credit)	-		1,520,562

10. LOSS PER SHARE

	2008		2007
	US$		US$
Loss for the year	(23,616,692)		(42,255,372)
	Shares		Shares
Basic weighted average number of common shares in issue	164,695,368		140,590,557
Basic loss per share - cents	14.33		30.05

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

11. PARENT COMPANY RESULT FOR THE FINANCIAL YEAR

The result for the year for African Minerals Limited was a loss of US$8,309,676 (2007: loss US$3,687,270).

 

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
At 1 January 2008				61,200,835
Additions				49,840,642
As at 31 December 2008				111,041,477
Amortisation
At 1 January 2007				-
Charge for the period				2,768,000
Impairment				15,969,396
As at 31 December 2007				18,737,396
At 1 January 2008				18,737,396
Charge for the period				2,808,571
Impairment				12,735,143
As at 31 December 2008				34,281,110
Net book value
At 1 January 2007				30,747,662
At 31 December 2007				42,463,439
At 1 January 2008				42,463,439
At 31 December 2008				76,760,367

Intangible fixed assets comprise the cost of purchasing mineral exploration licences and certain deferred exploration expenditure on the Company's mineral licences. The Board of Directors regularly assesses the potential of each mineral licence and writes off any deferred exploration expenditure that it believes to be unrecoverable. The Board of Directors undertook an impairment review of the Group's intangible assets as at 31 December 2008. The resultant impairment charges and rationales are as follows:

Project	Net book value as at 31 December 2008 before impairment charge	Impairment charge	Net book value as at 31 December 2008 after impairment charge
	US$	US$	US$
White River Resources1	9,828,689	7,828,689	2,000,000
Konama Alluvial2	22,991,190	2,991,190	20,000,000
Gori Hills3	5,915,264	1,915,264	4,000,000
Total costs	38,735,143	12,735,143	26,000,000

1. Steep decline in nickel prices during 2008, early stage exploration, no further exploration programme currently scheduled and company focus presently on iron ore assets in Sierra Leone.

2. Steep decline in rough diamond prices during 2008, exploration activities currently on hold due to iron ore focus and reducing carrying value to recent external valuation. 

3. Steep decline in nickel prices during 2008 and further exploration activities currently on hold due to iron ore focus. However, prospectivity for lateritic nickel at the project remains high and exploration work has been carried out on only a relatively small area within the relevant exploration licence. 

A significant part of this year's impairment charge to intangible assets relates to the purchase of White River Resources Inc. ("WRR"), for which the Company issued its own shares, as opposed to cash, as consideration for the net assets (mainly intangible fixed assets) of WRR.

The Directors are of the opinion that, after these impairment reviews and associated write-downs, the carrying value of the tangible and intangible assets in relation to the Company's projects are stated at a fair value. The carrying values will be subject to an ongoing review, as the Company forms future strategic alliances and partnerships and market conditions that impact the Company's operations and activities change.

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
At 1 January 2008		-		31,263,343		1,312,655			32,575,998
Additions		-		1,568,166		119,360			1,687,526
Disposals		-		(5,160,281)		(861,502)			(6,021,783)
As at 31 December 2008		-		27,671,228		570,513			28,241,741
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
At 1 January 2008		-		9,153,785		591,951			9,745,736
Charge for the year		-		5,740,058		242,378			5,982,436
Disposals		-		(1,818,896)		(323,489)			(2,142,385)
As at 31 December 2008		-		13,074,947		510,840			13,585,787
Net book value
At 1 January 2007		12,201,429		18,183,977		649,696			31,035,102
At 31 December 2007		-		22,109,558		720,704			22,830,262
At 1 January 2008		-		22,109,558		720,704			22,830,262
At 31 December 2008		-		14,596,281		59,673			14,655,954

14. INVESTMENTS

	Company		Company
	2008		2007
	US$		US$
Cost and net book value
At 1 January	502		2
Additions	500		500
At 31 December	1,002		502

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 held	Percentage held
Subsidiary undertaking		incorporation	capital held	Principal activity	2008	2007
African Minerals (UK) Ltd		England	Ordinary	Service and holding company	100%	100%
SLDC Management Ltd		Sierra Leone	Ordinary	Holding company	100%	100%
African Minerals (SL) Ltd	*	Sierra Leone	Ordinary	Diamond exploration and service company	100%	100%
Tonkolili Iron Ore Ltd		Bermuda	Ordinary	Holding company	100%	100%
Marampa Iron Ore Ltd		Bermuda	Ordinary	Holding company	70%	100%
Sierra Leone Gold Ltd		Bermuda	Ordinary	Holding company	100%	100%
Sierra Leone Hard Rock Ltd		Bermuda	Ordinary	Holding company	100%	100%
Gori Hills Nickel Ltd		Bermuda	Ordinary	Holding company	100%	100%
Tonkolili Iron Ore (SL) Ltd		Sierra Leone	Ordinary	Iron ore exploration	100%	100%
Marampa Iron Ore (SL) Ltd		Sierra Leone	Ordinary	Iron ore exploration	70%	100%
Sierra Leone Gold (SL) Ltd		Sierra Leone	Ordinary	Gold and base metals exploration	100%	100%
Sierra Leone Hard Rock (SL) Ltd		Sierra Leone	Ordinary	Diamond exploration	100%	100%
Gori Hills Nickel (SL) Ltd		Sierra Leone	Ordinary	Nickel exploration	100%
Nimini Hills Nickel Ltd		Bermuda	Ordinary	Holding company	100%
Nimini Hills Nickel (SL) Ltd		Sierra Leone	Ordinary	Nickel exploration	100%
Lovetta Uranium Ltd		Bermuda	Ordinary	Holding company	100%
Lovetta Uranium (SL) Ltd		Sierra Leone	Ordinary	Uranium exploration	100%
African Minerals (Guernsey) Ltd		Guernsey	Ordinary	Service company	100%
White River Resources Ltd		Bermuda	Ordinary	Holding company	100%
White River Resources Inc		Canada	Ordinary	Nickel exploration	100%
African Railway & Port Services Ltd		Bermuda	Ordinary	Holding company	100%
African Railway & Port Services (SL) Ltd		Sierra Leone	Ordinary	Infrastructure company	100%
African Power Ltd		Bermuda	Ordinary	Holding company	100%
African Power (SL) Ltd		Sierra Leone	Ordinary	Power company	100%

The company changed its name from SLDC Exploration Limited on 28 April 2008.

15. TRADE AND OTHER RECEIVABLES

	Group		Company		Group		Company
	31 December		31 December		31 December		31 December
	2008		2007		2007		2007
	US$		US$		US$		US$
Non-current
Amounts owed by Group companies	-		147,146,491		-		113,497,812
	-		147,146,491		-		113,497,812
Current
Trade receivables	10,239		-		2,317		-
VAT Recoverable	185,522		-		68,261		-
Other debtors	20,323,700		307,395		307,403		307,395
Prepayments and accrued income	1,972,955		596,497		3,204,267		2,144,504
	22,492,416		903,892		3,582,248		2,451,899

As at 31 December 2008, other debtors of the Group included US$20,000,000 deferred funding for a feasibility study of the Marampa project (see note 4).

16. DEFERRED TAXATION

		Asset	Liability	Net
Recognised deferred tax asset and liabilities 2008		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 2008		US$	US$	US$	US$
Property plant and equipment		-	-	-	-
Employee benefit plan		-	-	-	-
Site restoration provision		-	-	-	-
Tax loss carry forward		-	-	-	-
		-	-	-	-
		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	-	-
		2008	2007
Deferred Tax Account		US$	US$
Balance brought forward		-	(1,520,562)
Charge / (credit) for the year		-	1,520,562
		-	-

17. INVENTORIES

	31 December		31 December
	2008		2007
	US$		US$
Diamonds held for resale	237,448		1,884,187
Gold	414,899		285,092
Consumables and stores	1,067,839		437,754
	1,720,186		2,607,033

18. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS

	Group		Company		Group		Company
	31 December		31 December		31 December		31 December
	2008		2008		2007		2007
	US$		US$		US$		US$
Listed securities:
Equity securities - UK	1,002,037		1,002,037		-		-
Equity securities - Australia	7,236,374		7,236,374		-		-
	8,238,411		8,238,411		-		-

Financial asset at fair value through profit or loss are presented within 'operating activities' as part of changes in working capital in the cash flow statement.

Changes in fair values of financial assets at fair value through profit or loss are recorded in 'Net operating expenses' in the Income Statement.

 

19. SHORT TERM INVESTMENTS

	Group		Company		Group		Company
	31 December		31 December		31 December		31 December
	2008		2008		2007		2007
	US$		US$		US$		US$
Short term deposits with banks	-		-		41,158,671		41,158,671
	-		-		41,158,671		41,158,671

20. 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 2008 is shown below:

	Group		Company		Group		Company
	31 December		31 December		31 December		31 December
	2008		2008		2007		2007
	US$		US$		US$		US$
Cash and bank balances	28,859,165		24,044,166		3,002,816		1,945,210
Short term investments:
Short term deposits with banks	-		-		41,158,671		41,158,671
	28,859,165		24,044,166		44,161,487		43,103,881

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.

 

21. SHARE CAPITAL

	2008			2007
	Number of	2008		Number of	2006
	shares	US$		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
At 1 January	155,258,241	1,552,582		130,003,241	1,300,032
Allotments during the period	32,259,200	322,592		25,255,000	252,550
At 31 December	187,517,441	1,875,174		155,258,241	1,552,582

On 11 April 2008, 150,000 new common shares were issued for consideration of US$341,895 on the exercise of share purchase warrants.

On 14 April 2008, 1,500,000 new common shares a value of US$4,741,812 were issued to Umbono Capital Partners LLC on the completion of the acquisition of 100% of the issued share capital of White River Resources Inc. A further 500,000 new common shares with a value of US$1,580,604 were issued to Umbono on the same day as part of a Management Agreement for Umbono to manage White River Resources on behalf of the Group. An additional 750,000 new common shares with a value of US$879,068 were issued on 13 October 2008 to Umbono as deferred purchase consideration on the purchase of certain mineral rights interests.

On 29 April 2008, 50,000 new common shares were issued for consideration of US$128,830 on the exercise of share purchase warrants.

On 8 May 2008, 150,000 new common shares were issued for consideration of US$340,895 on the exercise of share purchase warrants.

On 13 May 2008, 1,142,500 new common shares were issued with a value of US$4,253,243 on the completion of the acquisition of 10% of the issued share capital of Baobab Resources plc.

On 15 May 2008, 500,000 new common shares were issued for consideration of US$378,075 on the exercise of share purchase warrants.

On 23 May 2008, 750,000 new common shares were issued for consideration of US$1,111,612 on the exercise of share options.

On 16 June 2008, 100,000 new common shares were issued for consideration of US$259,402 on the exercise of share purchase warrants.

On 10 October 2008, 26,666,700 new common shares were issued by way of a placing for gross proceeds of US$34,598,043 before issue expenses of US$1,609,596.

22. 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:

		2008		2007
		Weighted	2008	Weighted	2007
		average price	Number	average price	Number
Outstanding at beginning of year		103.8p	10,601,154	63.5p	5,825,000
Lapsed during year		82.8p	(2,380,000)	74.1p	(605,000)
Exercised during year		75.0p	(750,000)	75.0p	(200,000)
Granted during year		164.1p	2,450,000	141.7p	5,581,154
Outstanding at the end of the year		126.1p	9,921,154	103.8p	10,601,154
Exercisable at the end of the year			4,115,387		3,841,667

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	4.59%
Volatility	59%
Weighted average fair value per option	$1.75

The stock-based compensation recognised as an expense in the year to 31 December 2008 was US$4,868,504 (2007: US$2,414,055). A transfer of US$241,725 (2007: US$54,260) was made from the equity reserves to the profit and loss reserves during the year. This represented the reversal of the charge made through the Income Statement in prior years for options exercised during the current year.

Total options existing at 31 December 2008 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	2008		2007
21 November 2004	50.0p	21 November 2009	1	1,000,000		1,000,000
21 November 2004	50.0p	21 November 2009	2	600,000		800,000
31 March 2005	75.0p	31 March 2010	2	-		1,000,000
19 July 2005	75.0p	19 July 2010	2	100,000		100,000
7 September 2005	75.0p	7 September 2010	2	400,000		400,000
1 November 2005	50.0p	1 November 2010	2	-		1,000,000
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	3	-		250,000
29 January 2007	115.0p	28 January 2012	2	1,300,000		1,300,000
1 May 2007	129.0p	30 April 2012	2	175,000		755,000
6 September 2007	165.5p	5 September 2012	2	500,000		500,000
9 November 2007	156.0p	8 November 2012	2	1,721,154		1,721,154
4 December 2007	149.5p	3 December 2012	2	1,200,000		1,200,000
8 January 2008	136.5p	7 January 2013	2	125,000		-
28 January 2008	117.0p	27 January 2013	2	500,000		-
19 February 2008	129.5p	18 February 2013	2	50,000		-
4 March 2008	163.5p	3 March 2013	2	400,000		-
18 March 2008	140.0p	17 March 2013	2	25,000		-
15 May 2008	194.5p	15 May 2013	2	1,000,000		-
24 June 2008	172.5p	23 June 2013	2	250,000		-
				9,921,154		10,601,154

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:

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	30 March 2005	23 May 2008	750,000
	50.0p	22 November 2004	Lapsed	200,000
	75.0p	30 March 2005	Lapsed	250,000
	50.0p	1 November 2005	Lapsed	1,000,000
	120.0p	16 October 2008	Lapsed	250,000
	129.0p	1 May 2007	Lapsed	580,000
	134.5p	17 January 2008	Lapsed	100,000

b.) WARRANTS

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

		2008	2007
		Number	Number
As at 1 January		2,325,000	1,100,000
Warrants granted in the year		266,667	1,225,000
Warrants lapsed in the year		(300,000)	-
Warrants exercised in the year		(950,000)	-
As at 31 December		1,341,667	2,325,000

The fair value of warrants included as a share issue cost and charged to the Share Premium Account was US$107,760 (2007: US$1,700,055). During the year, a transfer of US$751,082 (2007: US$nil) was made from the equity reserve to the share premium account representing the reversal of the charge made against the share premium account for warrants exercised and lapsed in 2008. Also in the year a transfer of US$40,950 (2007: US$nil) 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 2008.

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	4.13
Volatility	62%
Weighted average fair value per warrant	$0.41

Total warrants existing at 31 December 2008 over US$ 0.01 ordinary shares in the Company are summarised below:

Date of grant	Number of warrants	Exercise price US$	Expiry date
July 2007	1,075,000	1.88	January 2009
October 2008	266,667	1.09	January 2009
	1,341,667

23. PROVISIONS

	Group		Company		Group		Company
	31 December		31 December		31 December		31 December
	2008		2008		2007		2007
	US$		US$		US$		US$
Employee benefit provision	690,210		-		419,587		-
Alluvial mine restoration	475,154		-		250,000		-
	1,165,364		-		669,587		-

24. TRADE AND OTHER PAYABLES

	Group		Company		Group		Company
	31 December		31 December		31 December		31 December
	2008		2008		2007		2007
	US$		US$		US$		US$
Trade creditors	5,228,930		2,933,227		3,100,605		1,283,075
Other taxes and social security	295,516		-		409,745		-
Accruals	175,710		115,832		1,069,270		222,977
	5,700,156		3,049,059		4,579,620		1,506,052

25.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
	2008		2008		2008		2008
	US$		US$		US$		US$
Within one year	120,465		-		-		-
Between two and five years	-		-		491,891		-

 

26. POST BALANCE SHEET EVENTS

On 22 January 2009, the Company announced that it had entered into a further agreement with Cape Lambert Iron Ore Limited ("CLIO") (ASX: CFE) to increase CLIO's investment in the Company's iron ore project at Marampa, Sierra Leone (the "Marampa Project"). The Company acquired 17,000,000 fully-paid ordinary shares in Cape Lambert Iron Ore Limited CLIO (the "CLIO Shares"), representing approximately 3.25% of the enlarged issued share capital of CLIO. The acquisition was in consideration of the issue to CLIO of new shares (the "Marampa Shares") in Marampa Iron Ore Limited ("Marampa"), AML's Bermuda registered subsidiary which holds AML's mineral interests in the Marampa Project. The issue of the CLIO Shares took the Company's interest in CLIO to approximately 11.6%. Following the issue of the Marampa Shares to CLIO, which represented 7.14% of the enlarged Marampa share capital, CLIO holds approximately 35% of the issued share capital of Marampa.

On 20 February 2009, the Company announced a restructuring of its Share Option Scheme and the grant of share options to Company Directors under the Company's share option plan. The Board of the Company recognised that the exercise price of all share options previously in issue were well above the Company's then share price. In order to provide more effective incentives to Directors and senior management, the Company offered certain option holders a choice of either retaining their existing share options (with higher exercise prices but a shorter term to expiry) or cancelling their existing options and accepting the grant of new share options with an exercise price of 50p and an expiry date five years after the date of grant. The exercise price of 50p represented an 82% premium over 27.5p, being the closing market price of the shares at 19 February 2009. 

27. ACQUISITION OF WHITE RIVER RESOURCES

On 14 April 2008, the Company finalised its acquisition of 100% of the issued share capital of White River Resources Inc. The following table sets out the book values of the identifiable assets and liabilities acquired and their fair value to the Group:

		Book		Fair
		value at	Fair value	value to
		acquisition	adjustments	Group
		US$	US$	US$
Intangible assets		858,381	4,746,909	5,605,290
Current assets		30,531		30,531
Total assets		888,912	4,746,909	5,635,821
Current liabilities		(14,941)	-	(14,941)
Total liabilities		(14,941)	-	(14,941)
Net assets		873,971	4,746,909	5,620,880
Consideration satisfied by:
Shares issued				5,620,880

28. REPORTING JURISDICTIONS

ENDFR ATMJTMMATBIL

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Related Shares:

AMI.L