Half Yearly Report

14th Aug 2009 07:00



14 August 2009

African Minerals Limited

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

2009 INTERIM RESULTS 

Progress well on track at Tonkolili - the world's third largest reported Magnetite Iron Ore Resource

African Minerals Limited (AIM:AMI), the mineral exploration and development company with significant interests in Sierra Leone, West Africa, is pleased to announce its interim financial results for the six months ended 30 June 2009, including a review of the Company's operations.

HIGHLIGHTS

Frank Timis, Executive Chairman commented:

"We are now well placed and have the funding, access to infrastructure and technical personnel to progress the Tonkolili project to the construction phase and more fully realise the potential of one of the largest iron ore magnetite projects globally.  We believe that the Company will benefit significantly as the project is de-risked further by the completion of a Definitive Feasibility Study at Tonkolili."

"We expect the results from the current hematite testwork, due by year end, will demonstrate that a saleable product can be produced at Tonkolili which could potentially see the Company move into initial production over the next 12 months, realising early cashflow."

"We thank the Government of Sierra Leone for its continued support of our considerable endeavours, providing us with the ability to expedite mine and infrastructure development plans."

Enquiries:

 

African Minerals Limited	Tel: +44 (0) 1481 726833
Frank Timis Alan Watling
Canaccord Adams Limited	Tel: +44 (0) 20 7050 6500
Mike Jones
Guy Blakeney
Mirabaud Securities Limited	Tel: +44 (0) 20 7878 3360
Rory Scott
Pav Sanghara
Pelham	Tel: +44 (0) 20 7337 1500
Charles Vivian
Klara Kaczmarek  James Macfarlane

Notes:

The information in this report relating to exploration results is based on information reviewed by Marcus Reston, who is a Member of the Australian Institute of Geoscientists. Mr. Reston, Project Manager Tonkolili, is a full-time employee of the Company and meets the requirements of a "Qualified Person" under the AIM Guidance Note on Mining, Oil and Gas dated June 2009 and in accordance with this has reviewed the information included in this announcement.

 

Some statements in this news release are forward looking and consequently involve uncertainties and risks that could cause actual results to differ materially from those anticipated from initial indications. Such forward looking statements include comments regarding exploration work.

 

It should be noted that the potential quantities in this report relating to the hematite mineralisation and Kasafoni strike extension 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.

CHAIRMAN'S STATEMENT

During the Interim Period the Company has continued to deliver on its strategy to accelerate the development of our Tonkolili iron ore project in Sierra Leone. It has been an exciting period for the Company, in which a number of critical milestones have been reached. Very importantly the Company now comprises a highly experienced management team, with strong expertise within the iron ore sector. The newly assembled management team has already started to oversee the design and development phase of one of the world's most significant iron ore projects and the Company is very fortunate to have the in-house capabilities required to realise the full potential of such a large scale operation. The Company's technical team has a track record which demonstrates significant experience and skills in bringing major iron ore projects into production. This, along with the fact that we successfully raised in excess of US$100 million in July 2009 with institutional investors, should provide comfort to our shareholders that we are in a very strong position to accelerate the project into the construction phase. Whilst the Company continues to pursue a standalone development plan for the Tonkolili and associated infrastructure projects, management may also consider options to develop these projects in conjunction with international third parties. 

A highly successful exploration programme at Tonkolili during 2008 led to the completion of a JORC compliant Mineral Resource estimate by SRK Consulting (UK) Limited ("SRK"). In May 2009, the Company was pleased to announce a 5.1 Billion tonne (Bt) JORC compliant iron ore magnetite resource at Tonkolili, and believes this to be the third largest magnetite iron ore resource globally and the largest in Africa. Geophysical work and reconnaissance drilling over a 20km strike length at Kasafoni, on the northern extent of the Tonkolili licence area, indicates the potential to increase the iron ore magnetite resource to in the order of 10 Bt. This would establish Tonkolili as one of the most significant iron ore projects globally. An accelerated drilling programme has commenced at Kasafoni targeting the realisation of such a significant resource. 

The proceeds from the placing allow us to expedite the Tonkolili Definitive Feasibility Study ("DFS"), which is targeted for completion during the second quarter of 2010. The Company is also set to complete by year end an exploration and analysis programme on the hematite iron ore cap and oxidised transition zone which overlies the primary magnetite resource at Tonkolili. 

REVIEW OF OPERATIONS

Tonkolili - A World Class Iron Ore Project

Tonkolili remains our flagship project and, alongside our infrastructure projects, is our area of focus as we look to develop Africa's most significant iron ore deposit. Tonkolili is located in the Sula Mountains Greenstone Belt of Sierra Leone, approximately 190km from Tagrin Point, which itself is located adjacent to one of the largest natural harbours in the world. 

This world class iron ore magnetite deposit is not only currently believed to be the third largest in the world at 5.1 Bt but independent metallurgical testwork by Amdel Limited of Australia has demonstrated that Tonkolili iron ore is upgradeable to a high quality concentrate grading in excess of 68% Fe at a mass recovery of over 30%. Any concentrate impurities are low at levels less than 4.5% SiO2, 0.6% Al2O3 and 0.01% P. 

A significant thickness and strike extent of hematite iron ore mineralisation comprising a hematite cap and an oxidised transition zone overlies the primary magnetite resource at Tonkolili. AML exploration work to date suggests that this may comprise in the order of one billion tonnes of material over the four deposit areas: Numbara, Simbili, Marampon and Kasafoni. Depending on the outcome of the comprehensive metallurgical testwork programme currently underway, the hematite iron ore mineralisation has the potential to be upgraded to a saleable product therefore providing the Company with early project cash flow at Tonkolili. 

Key Infrastructure Projects

The Tonkolili iron ore project will be facilitated by the construction of world class iron ore transport, ore handling and shiploading infrastructure. Significant progress in relation to the key infrastructure projects was made during the period. Tagrin Point, an area incorporated within the infrastructure lease, offers a rare opportunity to construct a deep water port facility. Located within a natural harbour with deep water close to the peninsula tip, Tagrin Point is the optimal place to establish a 'state of the art' stockyard and bulk material handling facility. The port facility is being designed to create available capacity to service the West Africa sub-region, enabling both Sierra Leone and neighbouring countries to export products to international markets.

Work is well advanced on the geotechnical investigation and geological mapping of Tagrin Point to establish the location of the stockyard and provide early guidance for the design and placement of the infrastructure. Environmental and hydrological baseline studies are also underway to gather wet season data as a prelude to the design of the water management systems and as an essential input to the Environmental Impact Assessment. Planning is also well advanced for the commencement of marine and terrestrial biodiversity studies, social and environmental impact, wave and siltation studies, tidal movement modelling, departure channel optimisation and other essential inputs to the DFS.

Engineering studies continue in respect of the heavy haul rail system to service Tonkolili. A preliminary rail alignment has been established and the concepts regarding rolling stock, support facilities, loading and unloading infrastructure and supporting infrastructure are well advanced. Work completed to date indicates that the construction and commissioning of a heavy haul rail system from Tonkolili to Tagrin Point is a project which is not expected to provide the Company with any material engineering hurdles.

The Pepel Port and the Pepel-Marampa railway have seen increased activity. The prospect of an early cash flow option from the sale of Tonkolili hematite combined with the opportunity to export Marampa hematite is driving the refurbishment and renewal project for this long established iron ore transport system. Considerable effort is being directed towards developing the lowest capital cost reinstatement of this system and the restoration of exports from the port of Pepel. 

Early work has commenced on the development of power options to support the Tonkolili project. The prospects for further development of Sierra Leone's hydro-power potential remains very encouraging, however a number of options are being considered to identify viable alternatives should this low cost, renewable resource require augmentation.

Highly Experienced Team with a Production Track Record 

The Company has focused on ensuring that the best people in the industry are on board to manage the next phase of the Company's growth as we look to 'fast track' development through to production. We are delighted to have successfully recruited key individuals, with specialised experience, to guide the Company from iron ore explorer to major iron ore producer.

In February 2009, Alan Watling joined the Board as Chief Executive Officer of African Minerals. Alan was previously Chief Operating Officer for the world's fourth largest iron ore producer, Fortescue Metals Group ("FMG"). Alan played a critical role in establishing FMG as a leading iron ore producer and brings with him a wealth of engineering and project management expertise in developing world class iron ore deposits. Alan will be overseeing all the key aspects of the Company's activities and operations and has already added significant value to African Minerals.

The Company has also made key technical appointments that will ensure that African Minerals is well positioned to manage its mining and infrastructure projects. Steve Allard has been appointed Vice President - Infrastructure. Steve joined African Minerals from FMG where he held the position of Head of Port overseeing the design, construction and operational stages of the Port facilities. John Blanning has been appointed Vice President - Mine Engineering. John also joins African Minerals from FMG where he was Head of Mining and was responsible for the development and operation of all mining activities. The development of both the mine and associated infrastructure at the Tonkolili iron ore project will be critical to the success of African Minerals. 

In addition, we also announced the appointment of Mr Chris Duffy to the Board of African Minerals as a Non-Executive Director. Chris, a partner at international law firm Clyde & Co, brings with him significant expertise in advising a number of companies in the UK as well as other jurisdictions, in particular Africa.

Marampa - Additional Iron Ore Upside

We have also been pleased with progress made at the Marampa project. Cape Lambert Iron Ore Limited ("CLIO") which is listed on the ASX and which is managing the project, increased its investment in the Marampa project to 35% in January 2009. The Company received 17 million fully paid ordinary shares in CLIO as consideration and now holds a total of 61 million fully paid shares in CLIO or an overall interest in CLIO of 11.65%. 

CLIO's strong management team, which has a proven iron ore industry track record, has undertaken a comprehensive technical work programme to explore this brownfields level opportunity representing extensions of specular iron ore hematite mineralisation to the north-east and west of the former Marampa mining operations, and regional targets. The work programme over the near term at the Marampa project is to evaluate the development of a tailings retreatment operation and to explore the extensions to the hematite iron ore mineralisation and regional targets.

During the period an air core drilling programme commenced at historical tailings dumps located at the Marampa project and the results will enable the preparation of a JORC compliant mineral resource estimate for the tailings, which is scheduled to be completed during the third quarter in 2009. Encouraging metallurgical test results were also reported by CLIO for a bulk composite sample of historical hematite tailings located at the Marampa project. The hematite concentrate produced from the tailings graded 65% iron and 3.9% silica for a mass and iron recovery of 46% and 91.6% respectively and was undertaken by AMMTEC Limited, an Australian independent metallurgical testing group. It is expected that further cleaning of the concentrate will enhance its quality, with a small reduction in mass and iron recovery, thereby enabling it to be used for direct reduction pellet production.

 

Coal Exploration

The Company entered into an option agreement in December 2008 with Pinnacle Group Assets (SL) Limited, a privately-held company registered in Sierra Leone, which holds the rights to certain coal and other mineral exploration licences in Sierra Leone. 

The Company has commenced early stage coal exploration activities on these licences, which cover a 150km strike length north and south of Pepel Port. The purpose of the exploration drilling is to identify potential large sources of coal for power generation for the Company's iron ore projects in Sierra Leone, for export to international markets and for distribution generally to the national grid of Sierra Leone. 

Other Projects

The Company has focused its funding and resources on its flagship Tonkolili iron ore project, the Marampa iron ore project (in conjunction with Cape Lambert Iron Ore Limited) and the Ports and Railway infrastructure project. The Company has therefore scaled back activities at its diamond, base metals and uranium exploration projects and continues to pursue value adding strategic alliances with third parties.

A summary of these projects is as follows:

Nickel

The Gori Hills prospect is a 20km2 target where a nickel-cobalt anomaly was identified by reconnaissance stream sediment sampling. Initial surface trench results from this anomaly returned an average grade of 0.73% nickel and 0.061% cobalt over an interval of 56m between depths of 1m and 3.2m. 

Through its wholly owned subsidiary, White River Resources Inc., the Company holds mineral claims and rights to earn-in mineral claims in the Canadian Yukon province on the Kluane ultramafic belt, an area that the Company believes has significant nickel potential. The scale of the exploration programme to date has not been sufficient to conclusively ascertain the prospectivity of the mineral claims. 

Uranium

The Lovetta uranium anomaly, located in eastern Sierra Leone near the Liberian border, comprises 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 4km strike length. A trenching programme has delineated up to a 150m strike length and widths of 66m of anomalous uranium and thorium and is open in both directions.

Gold

The Laminaia gold project has been defined by a 14km by 1.5km north-south gold trend. Within this broad trend three discrete anomalies have been identified over 100 ppb gold (peak grade of 680 ppb gold) with an overall strike length of approximately 2km. Rock chip samples of quartz float returned an average grade of 117 g/t gold. 

Diamonds

The results of follow-up kimberlite exploration sampling activities along with aeromagnetic survey data have been used to refine potential drilling targets. 13 high priority aeromagnetic targets, with coincident positive kimberlite grains, and 10 high priority drainage targets have been defined to form the basis of future kimberlite drilling programmes.

During the period the Company completed a sale of diamonds recovered from the Konama alluvial bulk sampling programme realising gross sales proceeds of approximately US$0.5 million.

FINANCIAL REVIEW

The financial performance of the Company for the six month period to 30 June 2009 mainly reflects expenditure on the development of the Company's iron ore assets in Sierra Leone. 

Loss after taxation for the six month period ended 30 June 2009 was US$5.1 million (2008: US$11.4 million). Loss per share was 2.73 US cents (2008: 7.24 US cents).

The total assets of the Group amounted to approximately US$157 million (2008: US$126 million) as at the period end, which includes intangible assets amounting to approximately US$87 million (2008: US$70 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 2 July 2009, the Company successfully raised £63.8 million by way of a placing of 25,538,880 new common shares at a price of 250 pence per share with institutional investors. We believe the support from institutional investors fully endorses the quality of the Company's world class iron ore assets and our experienced executive and operational teams. The proceeds will allow us to expedite our on-going work programmes. 

As at 30 June 2009 the Company had cash at bank and short-term deposits of US$9.6 million (2008: US$24.4 million). 

ON-GOING WORK PROGRAMMES 

Our on-going work programmes and related project targets in the near term are as follows:

Expediting a drilling programme targeting the definition of a 10 Bt JORC compliant iron ore magnetite resource and one billion tonne JORC compliant iron ore hematite resource by the end of 2009;

Complete independent sampling, assaying and metallurgical testwork to ascertain product qualities; 

Expedite the DFS on rail, port and Tonkolili mine with a completion target date of second quarter 2010;

Build up skilled technical manning levels in support of the DFS and subsequent construction phase of the Tonkolili project; and

Undertake a coal exploration programme to delineate coal furnace potential for future power requirements.

OUTLOOK

Over the past six months the Company has achieved a number of important goals in preparation to accelerate the project from development into the construction phase.

  

The project, already one of the largest magnetite deposits globally, has the potential to double in size before the end of the year.

One of the most skilled iron ore teams has been assembled to manage the development of the project. 

Testwork has demonstrated that a high quality concentrate product can be produced from the magnetite iron ore. 

The project is well located only 190km from one of the world's largest natural harbours. 

The Company has a 99 year lease with the Government of Sierra Leone over key rail and port infrastructure. 

Sierra Leone is well located to supply global steel markets in Europe and the Far East. 

Internal pre-feasibility level economic studies suggest that the Tonkolili Iron Ore project should produce within the lowest cost quartile. 

The hematite iron ore mineralisation overlying the magnetite creates the potential for an early cashflow option depending on metallurgical testwork results.

These important facets to Tonkolili differentiate the project from the majority of other new and existing iron ore projects. The Company is well positioned to continue the rapid development of this world class asset over the next 12 months, and ultimately to full production. 

Additionally, CLIO has already demonstrated that a good quality concentrate can be produced from the existing tailings at the Marampa iron ore project. The Company looks forward to the release of the JORC compliant tailings resource estimate later this year following on from the current drilling programme, assaying and bench scale metallurgical test work. 

I would like to thank the Government of Sierra Leone for their continued strong working relationship with the Company. We are targeting the magnetite construction phase of the Tonkolili project to commence in 12 months time and look forward to being able to visually validate our commitment to improving Sierra Leone's infrastructure and by doing so helping to raise the country's standard of living.

AFRICAN MINERALS LIMITED

 

 

INDEPENDENT REVIEW REPORT TO AFRICAN MINERALS LIMITED

 

Introduction

We have been engaged by the company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2009 which comprises the consolidated income statement, the consolidated balance sheet, the consolidated cash flow statement, the consolidated statement of changes in equity and the related notes. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

 

This report is made solely to the company in accordance with International Standard on Review Engagements 2410 issued by the Auditing Practices Board. Our work has been undertaken so that we might state to the company those matters we are required to state to it in an independent review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company, for our review work, for this report, or for the conclusions we have formed.

 

Directors' responsibilities

The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the AIM Rules for Companies.

 

As disclosed in note 1, the annual financial statements of the group are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34, "Interim Financial Reporting", as adopted by the European Union.

 

Our responsibility

Our responsibility is to express to the company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.

 

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly we do not express an audit opinion.

 

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2009 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the AIM Rules for Companies.

 

SHIPLEYS LLP

AFRICAN MINERALS LIMITED

CONSOLIDATED INCOME STATEMENT

For the six month period ended 30 June 2009

		Period ended		Period ended		Year ended
		30 June		30 June		31 December
		2009		2008		2008
	Note	US$		US$		US$
Revenue		383,929		2,213,904		2,213,905
Cost of sales		(775,934)		(3,309,495)		(5,997,029)
Gross loss		(392,005)		(1,095,591)		(3,783,124)
Impairment of intangible fixed assets		-		-		(12,735,143)
Net operating expenses	3/4	(7,037,177)		(11,112,698)		(36,945,937)
Profit on investment in subsidiary		2,193,116		-		28,763,034
Operating loss		(5,236,066)		(12,208,289)		(24,701,170)
Interest receivable		116,708		849,765		1,084,478
Loss before tax		(5,119,358)		(11,358,524)		(23,616,692)
Tax		-		-		-
Loss for the period		(5,119,358)		(11,358,524)		(23,616,692)
Loss per share
Basic and diluted loss per share - cents	5	2.73		7.24		14.33

All activities are continuing operations.

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

AFRICAN MINERALS LIMITED

CONSOLIDATED BALANCE SHEET

At 30 June 2009

		30 June		30 June		31 December
		2009		2008		2008
	Note	US$		US$		US$
Non-current assets
Intangible fixed assets	6	86,822,911		69,687,833		76,760,367
Tangible fixed assets		12,656,707		20,566,765		14,655,954
Total non-current assets		99,479,618		90,254,598		91,416,321
Current assets
Inventories		2,748,812		1,175,734		1,720,186
Trade and other receivables		28,877,727		5,387,891		22,492,416
Financial assets at fair value
through profit or loss		16,731,768		4,253,243		8,328,411
Short term investments		-		17,299,317		-
Cash and cash equivalents		9,629,563		7,134,150		28,859,165
Total current assets		57,987,870		35,250,335		61,400,178
Total assets		157,467,488		125,504,933		152,816,499
Equity
Share capital	7	1,876,924		1,601,007		1,875,174
Share premium account		210,810,325		175,386,578		209,136,256
Shares to be issued		-		2,370,906		-
Equity reserves		10,827,950		8,546,252		9,942,383
Profit and loss account		(87,276,557)		(70,044,688)		(82,302,856)
Attributable to equity holders		136,238,642		117,860,055		138,650,957
Minority interest		8,516,692		-		7,300,022
Total equity		144,755,334		117,860,055		145,950,979
Non-current liabilities
Provisions		1,165,364		669,587		1,165,364
Total non-current liabilities		1,165,364		669,587		1,165,364
Current liabilities
Trade and other payables		11,546,790		6,975,291		5,700,156
Total liabilities		12,712,154		7,644,878		6,865,520
Total equity and liabilities		157,467,488		125,504,933		152,816,499

AFRICAN MINERALS LIMITED

CONSOLIDATED CASH FLOW STATEMENT

For the six month period ended 30 June 2009

		Period ended		Period ended		Year ended
		30 June		30 June		31 December
		2009		2008		2008
		US$		US$		US$
Loss for the period		(5,119,358)		(11,358,524)		(23,616,692)
Share-based payments		2,523,109		3,316,043		4,868,504
Depreciation of tangible fixed assets		2,464,080		3,074,819		5,982,436
Amortisation of intangible fixed assets		1,404,285		1,384,000		2,808,571
Impairment of intangible fixed assets		-		-		12,735,143
Loss on disposal of tangible fixed assets		-		-		3,445,398
Profit on investment in subsidiary		(2,193,116)		-		(28,763,034)
Increase in provisions		-		-		495,777
Unrealised foreign exchange (gain)/loss		(1,752,149)		-		2,092,414
Interest received		(116,708)		(849,765)		(1,084,478)
Operating loss before working capital changes		(2,789,857)		(4,433,427)		(21,035,961)
Decrease/(increase) in inventories		(1,028,626)		1,431,299		886,847
Increase in trade and other receivables		(6,385,311)		(1,805,643)		1,089,875
(Increase)/decrease in financial assets at fair value
through profit or loss		(3,241,433)		-		6,671,993
Increase in trade and other payables		5,846,634		2,395,671		1,120,536
Net cash flow from operating activities		(7,598,593)		(2,412,100)		(11,266,710)
Cash flows from investing activities
Interest received		116,708		849,765		1,084,478
Proceeds of sales of tangible assets		-		-		434,000
Payments to acquire tangible assets		(464,833)		(811,322)		(1,687,526)
Payments to acquire intangible assets		(11,466,829)		(19,915,072)		(42,639,158)
Payments to acquire financial assets		-		-		(1,443,850)
Investment in subsidiary		11		-		4,667,288
Decrease/(increase) in short term deposits with banks		-		23,859,354		41,158,671
Net cash inflow/(outflow) from investing activities		(11,814,943)		3,982,725		1,573,903
Cash flows from financing activities
Proceeds of ordinary share issue		-		-		32,988,447
Proceeds of exercise of options		183,934		1,111,612		1,111,612
Proceeds of exercise of warrants		-		1,449,097		1,449,097
Net cash inflow from financing activities		183,934		2,560,709		35,549,156
Net increase/(decrease) in cash and cash equivalents		(19,229,602)		4,131,334		25,856,349
Cash and cash equivalents at beginning of period		28,859,165		3,002,816		3,002,816
Cash and cash equivalents at end of period		9,629,563		7,134,150		28,859,165

AFRICAN MINERALS LIMITED

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the six month period ended 30 June 2009

		Share			Profit and
	Share	premium	Shares to	Equity	loss
	capital	account	be issued	reserves	account	Total
	US$	US$	US$	US$	US$	US$
As at 1 January 2009	1,875,174	209,136,256	-	9,942,383	(82,302,856)	138,650,957
Allotments during the period	1,750	182,184	-	-	-	183,934
Share-based payments	-	-	-	2,523,109	-	2,523,109
Reserves transfer - options	-	-	-	(145,657)	145,657	-
Reserves transfer - warrants	-	1,491,885	-	(1,491,885)	-	-
Loss for the period	-	-	-	-	(5,119,358)	(5,119,358)
As at 30 June 2009	1,876,924	210,810,325	-	10,827,950	(87,276,557)	136,238,642
As at 1 January 2008	1,552,582	161,811,643	-	5,999,876	(58,968,839)	110,395,262
Allotments during the period	48,425	13,087,943	2,370,906	-	-	15,507,274
Share-based payments	-	-	-	3,316,043	-	3,316,043
Reserves transfer - options	-	-	-	(241,725)	241,725	-
Reserves transfer - warrants	-	486,992	-	(527,942)	40,950	-
Loss for the period	-	-	-	-	(11,358,524)	(11,358,524)
As at 30 June 2008	1,601,007	175,386,578	2,370,906	8,546,252	(70,044,688)	117,860,055

AFRICAN MINERALS LIMITED

NOTES TO THE INTERIM FINANCIAL STATEMENTS

For the six month period ended 30 June 2009

1. ACCOUNTING POLICIES

The interim financial statements, which are unaudited, have been prepared in accordance with International Accounting Standard 34, "Interim Financial Reporting" adopted by the International Accounting Standards Board (IASB). This interim report does not include all the notes of the type normally included in an annual financial report. Accordingly, this report is to be read in conjunction with the Annual Report for the year ended 31 December 2008 and any public announcements made by the Company during the interim reporting period.

The unaudited interim financial statements for the six months ended 30 June 2009 do not constitute statutory accounts and have been drawn up using accounting policies and presentation consistent with those applied in the audited accounts for the year ended 31 December 2008.

The financial information for the year ended 31 December 2008 has been extracted from the statutory accounts for that period. The auditors report for the year ended 31 December 2008 was unqualified.

The financial information for the six months ended 30 June 2008 has been extracted from the interim results released to 30 June 2008.

2. DIVIDENDS

No dividends were paid or proposed during the period.

3. SEGMENT REPORTING

		Gold and
Business Segments	Iron Ore	base metals	Diamonds	Infrastructure	Corporate	Total
Period ended 30 June 2009	US$	US$	US$	US$	US$	US$
Revenue	-	-	383,929	-	-	383,929
Operating loss	(873,212)	(16,347)	(3,261,996)	(1,207)	(1,083,304)	(5,236,066)
Interest receivable	-	-	-	-	116,708	116,708
Loss for the period	(873,212)	(16,347)	(3,261,996)	(1,207)	(966,596)	(5,119,358)
Segment assets	76,524,782	11,713,497	27,660,387	4,985,333	36,583,489	157,467,488
Segment liabilities	1,020,795	531,370	497,993	153,452	10,508,544	12,712,154
Cash utilised in operations	(1,108,989)	(313,386)	(326,196)	2,707	(5,852,729)	(7,598,593)
Cash flows from investing	(9,076,765)	(816,096)	(50,073)	(1,941,852)	69,843	(11,814,943)
Cash flows from financing	-	-	-	-	183,934	183,934
Net movement in cash and cash equivalents	(10,185,754)	(1,129,482)	(376,269)	(1,939,145)	(5,598,952)	(19,229,602)
Capital expenditure on tangible assets	326,642	-	11,252	80,074	46,865	464,833
Capital expenditure on intangible assets	8,750,134	816,096	38,821	1,861,778	-	11,466,829
Depreciation of tangible fixed assets	917,462	3,397	1,496,499	12,010	34,712	2,464,080
Amortisation of intangible fixed assets	-	-	1,404,285	-	-	1,404,285

Geographical segments	Sierra Leone	Canada	Bermuda	UK	Guernsey	Total
Period ended 30 June 2009	US$	US$	US$	US$	US$	US$
Revenue	189,960	-	193,969	-	-	383,929
Segment assets	121,915,717	3,035,295	31,807,235	387,559	321,682	157,467,488
Segment liabilities	2,164,105	488,704	9,639,308	97,238	322,799	12,712,154
Cash utilised in operations	(3,079,089)	-	(2,245,105)	(869,411)	(1,404,988)	(7,598,593)
Cash flows from investing	(10,952,582)	(932,204)	116,621	(14,752)	(32,026)	(11,814,943)
Cash flows from financing	-	-	183,934	-	-	183,934
Net movement in cash and cash equivalents	(14,031,671)	(932,204)	(1,944,550)	(884,163)	(1,437,014)	(19,229,602)
Capital expenditure on tangible assets	417,968	-	-	14,819	32,046	464,833
Capital expenditure on intangible assets	10,534,625	932,204	-	-	-	11,466,829
Depreciation of tangible fixed assets	2,464,080	-	-	-	-	2,464,080
Amortisation of intangible fixed assets	1,404,285	-	-	-	-	1,404,285

		Gold and
Business Segments	Iron Ore	base metals	Diamonds	Corporate	Total
Six month period ended 30 June 2008	US$	US$	US$	US$	US$
Revenue	-	-	2,213,904	-	2,213,904
Operating loss	(595,123)	(19,503)	(5,599,623)	(5,994,040)	(12,208,289)
Interest receivable	-	-	-	849,765	849,765
Loss for the period	(595,123)	(19,503)	(5,599,623)	(5,144,275)	(11,358,524)
Segment assets	30,718,239	16,236,693	44,993,794	33,556,207	125,504,933
Segment liabilities	279,433	1,409,526	610,602	5,345,317	7,644,878
Cash utilised in operations	(704,935)	1,046,486	161,120	(2,914,771)	(2,412,100)
Cash flows from investing	(12,753,435)	(6,794,737)	(1,119,466)	24,650,363	3,982,725
Cash flows from financing	-	-	-	2,560,709	2,560,709
Net movement in cash and cash equivalents	(13,458,370)	(5,748,251)	(958,346)	24,296,301	4,131,334
Capital expenditure on tangible assets	532,490	217,154	2,922	58,756	811,322
Capital expenditure on intangible assets	12,220,945	6,577,583	1,116,544	-	19,915,072
Depreciation of tangible fixed assets	579,518	20,851	2,431,065	43,385	3,074,819
Amortisation of intangible fixed assets	-	-	1,384,000	-	1,384,000

Geographical segments	Sierra Leone	Canada	Bermuda	UK	Total
Six month period ended 30 June 2008	US$	US$	US$	US$	US$
Revenue	1,884,186	-	329,718	-	2,213,904
Segment assets	83,040,492	9,044,856	32,931,342	488,243	125,504,933
Segment liabilities	2,251,615	924,757	4,250,923	217,583	7,644,878
Cash utilised in operations	(1,292,416)	855,467	(422,203)	(1,552,948)	(2,412,100)
Cash flows from investing	(20,445,567)	(280,224)	24,703,866	4,650	3,982,725
Cash flows from financing	-	-	2,560,709	-	2,560,709
Net movement in cash and cash equivalents	(21,737,983)	575,243	26,842,372	(1,548,298)	4,131,334
Capital expenditure on tangible assets	810,719	-	-	603	811,322
Capital expenditure on intangible assets	19,634,848	280,224	-	-	19,915,072
Depreciation of tangible fixed assets	3,057,819	-	-	17,000	3,074,819
Amortisation of intangible fixed assets	1,384,000	-	-	-	1,384,000

4. NET OPERATING EXPENSES

	Period ended		Period ended		Year ended
	30 June		30 June		31 December
	2009		2008		2008
	US$		US$		US$
Depreciation of tangible fixed assets	2,464,080		3,074,819		5,982,436
Amortisation of intangible fixed assets	1,404,285		1,384,000		2,808,571
Loss on disposal of tangible fixed assets	-		-		3,445,398
Employee costs	1,693,648		1,197,059		2,696,911
Foreign exchange differences	(1,378,574)		54,525		4,444,046
Other operating charges	3,572,062		2,086,252		6,028,078
Financial assets at fair value
through profit or loss - fair value (gains) / losses	(3,241,433)		-		6,671,993
	4,514,068		7,796,655		32,077,433
Share-based payments:
Options	2,523,109		3,283,433		4,868,504
Warrants	-		32,610		-
	2,523,109		3,316,043		4,868,504
	7,037,177		11,112,698		36,945,937

5. LOSS PER SHARE

The calculation of loss per share is based on the loss for the six month period ended 30 June 2009 of US$5,119,358 (six month period ended 30 June 2008: US$11,358,524) and on a weighted average, during the six month period ended 30 June 2009, of 187,528,629 (six month period ended 30 June 2008: 156,849,630) common shares of $0.01 each in issue during the period. The diluted loss per share is the same as the basic loss per share.

	Period ended		Period ended		Year ended
	30 June		30 June		31 December
	2009		2008		2008
	US$		US$		US$
Loss for the period	(5,119,358)		(11,358,524)		(23,616,692)
Basic weighted average number of common shares in issue	187,527,662		156,849,630		164,695,368
Basic loss per share - cents	2.73		7.24		14.33

6. INTANGIBLE FIXED ASSETS

					US$
Cost
At 1 January 2009					111,041,477
Additions					11,466,829
As at 30 June 2009					122,508,306
Amortisation
At 1 January 2009					34,281,110
Charge for the period					1,404,285
As at 30 June 2009					35,685,395
Net book value
At 30 June 2009					86,822,911
At 31 December 2008					76,760,367

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 and Canada. The directors regularly assess the potential of each mineral licence and write off any deferred exploration expenditure that they believe to be unrecoverable.

7. CALLED UP SHARE CAPITAL

		Period ended			Period ended
		30 June			30 June
	Number of	2009		Number of	2008
	shares	US$		shares	US$
Authorised
Common shares of US$ 0.01 each	350,000,000	3,500,000		250,000,000	2,500,000
Preference shares of US$ 0.001 each	100,000,000	100,000		100,000,000	100,000
Issued and fully paid
At 1 January	187,517,441	1,875,174		155,258,241	1,552,582
Allotments during the period	175,000	1,750		4,842,500	48,425
At 30 June	187,692,441	1,876,924		160,100,741	1,601,007

On 16 June 2009, 100,000 new common shares were issued for consideration of US$122,670 on the exercise of share options.

On 24 June 2009, 75,000 new common shares were issued for consideration of US$61,264 on the exercise of share options.

8. 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 in the period were as follows:

				Number of options
As at 1 January 2009				9,921,154
Options granted in the period				14,098,455
Options lapsed in the period				(500,000)
Options cancelled in the period				(7,221,154)
Options exercised in the period				(175,000)
As at 30 June 2009				16,123,455

The stock-based compensation recognised as an expense in the period to 30 June 2009 was US$2,523,109  (2008: US$3,283,433). A transfer of US$145,657 was made from the equity reserve to the profit and loss reserve during the period (2008: US$241,725). This represented the reversal of the charge previously made through the Income Statement for options exercised during the period.

b.) WARRANTS

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

				Number of warrants
As at 1 January 2009				1,341,667
Warrants lapsed in the period				(1,075,000)
As at 30 June 2009				266,667

The stock-based compensation recognised as an expense in the period to 30 June 2009 was US$nil (2008: US$32,610). In the period, a transfer of US$1,491,885 (2008: US$486,992) was made from the equity reserve to the share premium account representing the reversal of the charge made against the share premium account prior to 2009 for warrants lapsed in the period. Also in the period a transfer of US$nil (2008: US$40,950) 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 the period.

9. POST BALANCE SHEET EVENTS

On 2 July 2009, the Company announced that it had raised £63.8 million by way of a cash placing with institutional investors. A total of 25,538,880 new common shares of the Company were placed at a price of 250 pence per share.

 

10. RELATED PARTY TRANSACTIONS

During the six month period ended 30 June 2009, the following related party transactions occurred:

Rent and administration services amounting to US$57,473 (2008: US$nil) and a security deposit amounting to US$30,057 (2008: US$nil) were charged by Eastern Petroleum Corporation Limited, a company of which Frank Timis is a director and has an ownership interest.  Trade and other receivables in the balance sheet as at 30 June 2009 includes prepaid rent of US$17,346 (2008: US$nil) and a security deposit of US$34,692 (2008: US$nil) owed by Eastern Petroleum Corporation Limited.

b. Legal fees amounting to US$109,622 (2008: US$167,370) were charged by Clyde & Co LLP, a firm of which Christopher Duffy is a partner. Trade and other payables in the balance sheet as at 30 June 2009 includes US$62,314 (2008: US$nil) owed to Clyde & Co LLP.

11. 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.

12. INTERIM REPORT

The Interim Report is being sent to shareholders. In addition, copies will be available from the offices of African Minerals (Guernsey) Limited at Block F, Hirzel Court, Hirzel Street, St Peter Port, Guernsey, Channel Islands, GY1 2NW and available for download from the Company's website at http://www.african-minerals.com.

ENDIR GUUBARUPBGQW

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Related Shares:

AMI.L