Arrangement of c$90m equipment financing & update

18 August 2011

African Minerals Limited ("AML" or "the Company")

Arrangement of c$90m of equipment financing and general project update

Highlights

·; Credit committee approval received from Standard Bank to provide circa $90m of equipment financing.

·; Tonkolili Phase I project capacity expanded from 12Mtpa to 15Mtpa operating capacity.

·; Guidance for 2012 increased from 10Mt to 12Mt of Direct Shipping Ore ("DSO") sales.

·; 15Mtpa Phase IB wet plant to be commissioned end January 2012 and ramp up to full production capacity by end of Q2 2012.

·; Excavation and civil works for the railway and the port stockyard are complete - both are now effectively derisked from any adverse effects of the rainy season.

·; Rail to be fully commissioned by end of September from mine to port, and project remains on track to deliver First Ore On Ship ("FOOS") in Q4 2011.

·; Expansion capital of an additional $132m gives marginal capital intensity of $44 per annual tonne for the increase in capacity from 12Mtpa to 15Mtpa.

·; Capital overruns of $152m, or 14% of original budget.

·; Headroom at completion now forecast to be $20m.

·; Reduced guidance for FY11 DSO sales from 2.5Mt to 1.2Mt.

Equipment Finance Credit Facility

African Minerals Limited (AIM : AMI) is pleased to announce that it has received credit committee approval from Standard Bank Ltd for the provision of circa $90m of equipment finance credit facility.

The principal terms of the dollar denominated facility are:

·; Term of 5 years from drawdown, with quarterly repayment

·; Secured on assets up to $100m, specifically carved out of the existing Secured Loan Facility for the purpose of equipment financing

·; Political Risk Insurance

Project Update

We are also pleased to provide an update as to progress at the Tonkolili Iron Ore Mine project, which remains on schedule to deliver First Ore On Ship ("FOOS") in Q4 2011, as per previous guidance, with an expanded capacity of 15Mtpa.

Phase I Expansion

Following various changes of scope during construction, management has completed a review of the operational capacity of the various elements of the Phase I project, and have confirmed the following:

·; The current Tonkolili mining plan and equipment will sustain a production rate of in excess of 15Mtpa.

·; Phase IB wet process plant, currently under construction, will support a sustained production level of 15Mtpa.

·; Rail Infrastructure will support a peak capacity of 16.2Mtpa.

·; Pepel port infrastructure is capable of supporting inload and outload rates of in excess of 16.2Mtpa;

The expanded scope project will have the combined capacity to achieve sustained production from Tonkolili Phase I of 15Mtpa from 2013 onwards

The increase in production of Phase 1 of the operation to 15Mtpa has also been reviewed by SRK Consulting (UK) Ltd who has reported to AML that it considers these plans to be practical and achievable assuming the work currently underway and planned is completed as currently envisaged.

Guidance for 2012 and 2013 onwards

The Phase IB wet process plant is now due to be commissioned in January 2012 and ramp up to full capacity by the end of Q2 2012. The Company now expects that the project will produce 12Mt in 2012 and will produce of 15Mtpa in 2013 and thereafter.

Schedule to First Ore On Ship

The project remains on track to achieve FOOS on target in Q4 2011 as previously indicated.

Rail and Port

In order to de-risk the construction of the railway from the possible effects of the rainy season, mine earthmoving equipment was redeployed to support the civil works at the railway. Furthermore, the formation and embankments have been further protected by using geomat between the ballast and the formation, and by stone pitching of embankments and cuttings.

As a result of these interventions we are pleased to report that the civil and excavation works for the rail lineament are now complete, and it is expected that the railway will be fully commissioned at the end of September.

All civil and excavation work at the Pepel port is now complete, and the first stockyard is due to be commissioned during September.

Both the rail and the port are now effectively de-risked from the adverse effects of the rainy season.

Mine and Plant

As a result of the redeployment of earthmoving machinery to the railway, as mentioned above, stockpiling of ore at the mine is currently behind the original schedule which anticipated 2.5Mt having been stockpiled for sale in Q4 2011. The Company now plans to ship circa 1.2Mt in Q4 2011.

Project Costs

The estimated project capital to completion of the current Phase I plan has increased by $284m from the originally announced $1.1Bn. Of this escalation, $132m is directly attributable to the change of scope in the capacity of the project from 12Mtpa to 15Mtpa. This gives a marginal capital intensity of $44 per tonne of annual production capacity.

The balance of $152m over-run represents an escalation of 14% against the original budget and is principally due to the increased cost of de-risking the railway construction, additional earthmoving requirement for a portion of the new rail, the transfer of marine engineering costs from export credit to capital, fuel price escalation and additional costs associated with logistics.

Headroom

The previous guidance on headroom was that the Company would achieve a minimum cash balance of $71m, concurrent with FOOS.

As a result of the capital expenditure increase, a slower ramp up in production, and other forecast updates, we are now forecasting a minimum cash balance of $20m, concurrent with the commissioning of the Phase IB wet plant.

Included in the new headroom forecast is the receipt of the c$90m of equipment financing.

Commenting on the ability to expand production to 15Mtpa, Executive Chairman Frank Timis commented,

"Overall the Board of the Company is pleased with the achievement of the increase in Phase I capacity from 12Mtpa to 15Mtpa, with a very low capital intensity of this expansion of just $44 per annual tonne, allowing African Minerals to take advantage of the continued strong markets for iron ore. The overrun costs of the project are in part due to the steps that we have taken to de-risk the construction of the rail and port ahead of the rainy season, to deliver the project on schedule by Q4 2011."

Ends

Contacts:

African Minerals Limited +44 20 3435 7600

Mike Jones

Aura Financial +44 20 7321 0000

Michael Oke / Andy Mills 

Deutsche Bank +44 207 545 8000

Rupert Green

African Minerals is developing its Tonkolili iron ore project in Sierra Leone, with a JORC compliant resource of 12.8Bnt. The project, which currently has a 60+ year mine-life, is being developed in 3 phases. Phase I of the project is fully funded and at full capacity is expected to produce 15 million tonnes of iron ore per annum once it ramps up from initial production in Q4 2011. Phases II and III are expected to boost production incrementally by 23Mtpa and 45Mtpa respectively. African Minerals and its contractors currently employ approximately 6,200 people in Sierra Leone, 77% of whom are Sierra Leonean nationals.

The Company is also developing significant port and rail infrastructure to support the development of the project, via its subsidiary African Rail and Port Services (SL) Limited ("ARPS"), in which the Government of Sierra Leone has the right to acquire a 10% interest. With the exception of this interest, the Tonkolili project companies are currently wholly owned by AML.

The Company has also entered into a definitive agreement with Shandong Iron and Steel Group ("Shandong") whereby Shandong will invest $1.5Bn at the project level to acquire a 25% interest in the project companies, with associated discounted product offtake. The investment is subject to Chinese regulatory approvals, expected by the end of the year.

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