Expansion Update

18 December 2012

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

Expansion Update

African Minerals Limited today provides an update on various project matters as the Company continues to ramp up production at the Tonkolili iron ore mine in Sierra Leone.

SUMMARY

·; Following a recent scoping level review of expansion options, the Company now intends to expand the existing rail and port infrastructure at Pepel rather than develop a new port at Tagrin Point.

·; Targeting saprolite hematite concentrate production of up to circa 35Mtpa, with production commencing in 2016.

·; Total capital expenditure on the revised expansion plan estimated to be circa $2Bn, with cash costs similar or lower than the current direct shipping ore phase.

·; Substantial capital savings of circa $1Bn over previous expansion plan, with reduced risk, and lower social and environmental impact.

CEO, Keith Calder, commented:

"We have made good progress with value engineering and optimisation in our Tonkolili mine expansion strategy. While our strategy regarding the mine and plant is mostly unchanged, we have now decided to leverage our existing rail and port infrastructure at Pepel to achieve the expanded export tonnage. This will significantly reduce capital costs, and de-risk the project's delivery, whilst at the same time reducing social and environmental impacts. This approach will provide a significantly better value, capital efficiency and risk proposition for all of our stakeholders."

EXPANSION UPDATE

The 12.8Bnt Tonkolili deposit is in the early stages of its growth, and the Company is currently exploiting the direct shipping ore ('DSO') portion of the resource.

The Company has previously described the various stages of expansion of the deposit in "Phases", however the Company now considers it appropriate to consider the overall growth of the deposit as it moves into the saprolite hematite stage.

The production of saprolite hematite material is expected to begin in 2016, with saprolite capacity being ramped up as the DSO resource enters the end of its life, to a currently envisaged 35Mtpa concentrate production rate. Subsequently the project is expected to grow into the multi-generational magnetite resource.

The Company's scoping level assessment of Pepel shows that the current port can be expanded to handle the additional export tonnage that is expected, with substantial capital savings in not having to build a new port at Tagrin Point, as was previously envisaged, and associated rail spur. Notwithstanding an increased operating cost (as compared to our previous projections, with the need for transhipping being removed), there are expected to be significant net financial benefits in the net present value ('NPV') due to a lower upfront capital requirement.

There are also substantial risk benefits to not embarking on major greenfield construction that would require relocation of communities and the development of a new Environmental Impact Assessment, and which could have resulted in unforeseen project delays.

Thus, the Company has determined that, subject to formal Board approval, the plan for expansion into the saprolite will now encompass:

·; Production of up to circa 35Mtpa of 64% hematite concentrate;

·; Modular, sequentially constructed process plants, with the first expected to enter production in 2016;

·; Modification to the existing narrow gauge rail, including double tracks where necessary, and additional rolling stock;

·; Additional dredging and the construction of a second major ship-loading facility and wagon dumper at Pepel; and

·; Total capital expenditure on the revised expansion plan estimated to be circa $2Bn, with cash costs similar or lower than the current DSO phase.

Early works on this revised expansion plan have already begun to further refine project engineering design, and the Company expects to be in a position to provide more detail on capital cost and scheduling in H2 2013.

Contacts:

African Minerals Limited

+44 20 3435 7600

Mike Jones

FTI Consulting

+44 20 7831 3113

Billy Clegg / Ben Brewerton

Deutsche Bank

+44 207 545 8000

Brent Nabbs

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 a number of staged expansions. The current operations are expected to produce 20 million tonnes of iron ore per annum at full capacity, expected to be achieved in Q2 2013.

The next stage of expansion now contemplates the production of up to 35Mtpa of 64% high grade hematite concentrate and the expansion of the current port facilities at Pepel, expected to enter production in 2016.

The Company has also developed significant port and rail infrastructure to support the operation of the project, via its subsidiary African Rail and Port Services (SL) Limited ("ARPS"), in which the Government of Sierra Leone ("GoSL") has a 10% free carried interest.

The Tonkolili project companies are currently owned 75% by AML, and 25% by Shandong Iron and Steel Group ("SISG"), except for ARPS, which is currently owned 75% by AML and 25% by SISG, with the GoSL having a 10% free carried interest.

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