Interim Results 2013

11th September 2013

African Minerals Limited

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

Interim Results 2013

African Mineral, the developer and operator of the Tonkolili iron ore mine in Sierra Leone, today announces its results for the six months ended 30 June 2013.

Operational Highlights H1 2013

· 20Mtpa export rate achieved during Q2 2013

· Total production of 6.1Mt

· Total Exports of 5.5Mt

· Average FOB received price of $77/t (dry)

· Average C1 cash costs of $43/t ($36/t in June)

· End of period stockpiles at the mine of 2.4Mt of product

Financial Highlights H1 2013

· Revenue of $405m, EBITDA before operating exceptional items of $99m

· Total comprehensive loss $18m (2013: loss $107m)

· Group cash (at 30 June 2013) of $502m ($461m restricted)

Post Period End

· Appointment of new CEO, Bernie Pryor, from 14 August 2013 and new CFO, Matthew Hird, from 1 October 2013.

· Appointment of Ian Cockerill as Vice Chairman and Independent Non-Executive Director.

· Settlement of outstanding warranty breaches and guarantees with SISG, as disclosed in these accounts.

· Release of $156m from restricted cash.

· Temporary maintenance and operational issues with contracted trans-shippers have reduced exports in Q3. Additional trans-shipper in the process of being procured, and all four trans-shippers to be retained going forwards, to maximise sales in the remainder of the year.

· 2013 sales guidance reduced to 11- 13Mt (previously 13-15Mt)

 Bernie Pryor, Chief Executive Officer, said:

"African Minerals is continuing to make progress towards stabilising Tonkolili's integrated mine, rail and port operations at the 20Mtpa level. H1 has demonstrated strong volume, production and sales capability, coupled with the benefits of improved financial control and therefore the ability to reduce cash cost.

"Our wet season product strategy is performing well, but we have suffered interruptions to our shipping in Q3 due to major maintenance and operational issues with our contracted trans-shippers. As a result, we are lowering guidance, to export between 11Mt and 13Mt of product in 2013. We continue to focus on bringing down cash cost to our targeted $30/t level, which we expect to achieve by the end of the year as we increase our monthly volumes.

"We are also working to re-define our Phase 2 expansion plans with a focus on efficient capital investment and maximising returns on investment, and we expect to provide further detail in due course. We currently aim that all capital requirements for Phase 2 will be met by available cash and existing debt facilities, plus new project level debt."

Frank Timis, Executive Chairman, said:

"I would like to welcome Bernie to our executive management team on the occasion of his inaugural results. I am sure he will be able to take this company forward successfully, building on the foundations already laid, and continuing to work closely with our partners SISG and CRM, whose support has been very much appreciated.

After a good start in the first half, the executive team will now focus on stabilising the Tonkolili project to produce consistently at 20Mtpa with cash costs of $30/t, while right-sizing our next expansion, to provide superior returns to the project's shareholders.

On behalf of the Company, I wish to offer our thanks to our employees, contractors, suppliers, partners, as well as the communities in which we operate, and to the people and Government of Sierra Leone, for a successful first half to the year."

Analyst Presentation

There will be a presentation and webcast for analysts by Bernie Pryor, Chief Executive Officer and Miguel Perry, Chief Financial Officer, starting at 9:00am BST on 11th September 2013, at the offices of Jefferies, at Vintner's Place, 68 Upper Thames Street, London EC4V 3BJ.

The presentation and webcast for analysts can also be accessed by conference call at 9.00am. Dial in details are as follows:

UK & International Number: +44 (0) 20 3139 4830

Participant Pin Code 28080224#

Audio Playback Numbers (available for 7 days)

UK Toll Number: +44 (0) 20 3426 2807

Audio Playback Reference 641975#

Participants for the webcast should register at the Company's website www.african-minerals.com. A recording of the presentation will be available thereafter.

Contacts:

African Minerals Limited

+44 20 3435 7600

Mike Jones

FTI Consulting

+44 20 7831 3113

Ben Brewerton

Jefferies

+44 20 7029 8000

Nick Adams / Alex Collins

About African Minerals

African Minerals operates the Tonkolili Iron Ore Project (the "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 Project operations are expected to produce 20 million tonnes of iron ore per annum at full capacity, with this export rate of production having first been achieved in June 2013.

The next stage of Project expansion, Phase 2, now contemplates the production of an increased tonnage of 64% high grade hematite concentrate and the expansion of the current port facilities at Pepel, with the first saprolite plant 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 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 the right to a 10% free carried interest from AML.

www.african-minerals.com

African Minerals LimitedInterim Results6 Months to June 30 2013

Chief Executive's Review

African Minerals is continuing to make progress towards stabilising the integrated mine, rail and port operations at the 20Mtpa level, and we are pleased with how our assets are performing. H1 has demonstrated improved volume, production, and cost performance.

Phase 1

First half sales were principally related to delivery into the discounted offtake tonnages to AML's strategic partner, SISG, which accounted for 57% of all exports. The product shipped was predominantly All-in-32 ("A32") material and lump blend ("blend"), which accounted for 65% of our shipments. The shipping of blend is likely to continue into the early part of Q4. We expect the discounted tonnages to complete during Q3, leading to higher received average price capture in the second half of 2013. Once we enter the dry season we would also expect the discount associated with blend to fall away as we recommence shipping of our standard fines product.

Recent maintenance issues regarding our contractor's trans-shippers have, however, led to shortfalls of exports against expectations in Q3. The Company currently has three contracted trans-shipping vessels ("TSVs"), and we are in the process of contracting a fourth TSV to maximise tonnage sold during H2 and provide redundancy going forward.

Notwithstanding these issues, we will endeavour to achieve exports of 13Mt of product in 2013, while producing over 15Mt of saleable product. Our wet season strategy is performing well, and we have experienced no significant degradation of mining, processing, railing, materials handling or shipping due to rain. Our stockpiling is on track to build a fines stockpile of approximately 2.5 Mt for the start of the dry season.

However, cognisant of the variability that the wet season brings, and subject to the future availability of the trans-shipping fleet, our guidance is now for exports in FY 2013 of between 11Mt and 13Mt.

Costs

We are pleased to have achieved a $36/t C1 cash cost in June, when we despatched 8 vessels for a run rate of 16Mtpa. This gives us confidence in our ability to reduce cash costs to $30/t when we start to operate at a consistent 20Mtpa target run rate.

We will continue to focus on optimising this current phase of operation, and bringing down cash cost to the targeted $30/t level, which we expect to achieve by the end of the year. The cost cutting actions that we initiated after the production update in July, to both corporate and services have been largely completed, resulting in a headcount reduction of around 40% within those divisions, and forecast ongoing savings of $12m pa in direct salaries alone.

Phase 2

The move from producing Direct Shipping Ores ("DSO") to producing a high value saprolite concentrate is key to sustaining and growing the production profile at Tonkolili. As we look beyond the current Phase 1, we are continuing to work on defining our saprolite process flowsheets and life of mine planning. 

After careful consideration of all relevant factors, and potential investment returns, AML and SISG have directed the project's management team to prepare a case for expansion from 20mtpa on an optimal economic return basis, rather than proceeding immediately to a 35mtpa scope.

With a view to improving shareholder returns, reducing capital requirements and reducing risk, the Project companies' technical board is determining the maximum capacity which the current infrastructure can handle without significant further investment, and then right-sizing the saprolite and possibly magnetite processing for that increased capacity. Right-sizing is expected to significantly reduce capital requirements for the expansion, reducing timing and capital risk, optimizing operating cost, and providing improved shareholder returns, while retaining full optionality for further expansion at a later date. We expect to be able to provide more detail on this strategy in due course.

Once this strategy is finalised, and with capital schedules assessed, we expect to be in a position to determine the medium term capital and funding requirements for the business early in the New Year.

Funding

At the end of June, the Project companies had $461m of restricted cash, earmarked for the Phase 2 expansion.

The shortfall in sales in Q3 has tightened operating company level cash position, however post period end $156m has been released to the Project from restricted funds, including the deferral of the $56m warranty breach penalty to SISG. Additionally, the remaining $49m of the $250m project level PXF working capital facility remains undrawn.

Operational Review

Safety

Safety is a fundamental element of our continued success, and is a cornerstone of our corporate culture. The All Injury Frequency Rate for H1 was 1.74 injuries per 200,000 man hours, trending downwards from 2.23 in Q1 to 1.45 in Q2.

In April, the Company increased its effort to manage the threat of malaria, and initiated a wide range of mitigating activities. We are pleased to report that the Malaria Incident Frequency Rate has dropped from 25.1 incidences per 200,000 hours, when the scheme was initiated in April, to 22.8 at the end of June. We are targeting an 20% reduction in malaria incidence this year, to a target of 20.1.

Production

Production in H1 showed strong sequential improvement, quarter on quarter, as the ramp up continued. This resulted in the sailing of 10 Ocean Going Vessels ("OGVs") in the 30 days up to 16 June 2013, which was announced on 18 June 2013. The Company aims to export an average of 10 OGVs per month, with seasonal fluctuations, to achieve a 20Mtpa run rate.

At the mine, the contract ore fleet continues to grow, now with 3 x Cat 6030 shovels and 45 x Cat 777 haul-trucks as the principal earthmoving equipment. In the first half of this year the fleet moved 8.7Mt of material, of which 7.5Mt was Phase 1 Direct Shipping Ore ("DSO") for a low internal stripping ratio of 0.2:1, with the balance being low grade ore and saprolite which will be processed during our next phase of operations. Saprolite and low grade ore stockpiles now stand at 5.5Mt.

Of the 7.5Mt DSO mined, 7.0Mt were processed through the various plant facilities, with the balance remaining as run-of-mine stockpiles at the end of the period. Following the conversion of the 1D plant to wet screening in July, all of the process plants produce standard washed and screened lump and fines DSO product. However, 1D retains the capability to produce the All-in-32 product ("A32") to create a lump blend, should it be required in future as part of the Company's shipping strategy.

These plants produced a total of 6.1Mt of saleable product, for a yield of 87%, at an average grade of 58.1% Fe, a small uplift from the 57.5% Fe headfeed grade.

With 5.5Mt of this material exported, stockpiles of DSO product at the mine continue to grow as planned. As part of the wet season strategy fines are being stockpiled, while lump is blended with A32 to produce lump blend - a Group C cargo - with no moisture limitations, for shipping during this wet season. At the end of the period the mine had 2.4Mt of saleable ore ready for export.

The railway continues to operate without incident. Trains now consist of 4 locomotives and 112 wagons, delivering c. 8,000t per trip. The Project runs seven trains, with six locomotives and 264 wagons spare, an over-capacity of approximately 34% at the targeted 20Mtpa run rate.

The principal bottleneck to achieving the 20Mtpa target run rate had been the commissioning of the second large wagon dumper. The 6,000tph dumper number two was completed on 29 April, supplementing the 3,000tph dumper number one, which had previously constrained the operation to a maximum of between 12 and 14Mtpa.

With the second large dumper completed, the integrated mine, rail and port started to ramp up in earnest in early May, resulting in the achievement of 10 OGVs sailing within 30 days up to the 16 June.

As part of the initiative to support increased shipments, the fuel berth was completed to also act as a lay-by berth for our TSVs. This allows the waiting trans-shipper to berth immediately adjacent to the vessel being loaded as opposed to remaining at anchor in the harbour, and thus saving four hours of loading time.

Exports of 32 OGVs were achieved in H1. Of these, only 10 were standard lump and fines cargoes, with the remainder being A32 or lump blend. Whereas fines and A32 are considered Group A cargoes, capable of liquefaction and thus subject to transportable moisture limitations, lump and lump blend are considered Group C cargoes, and can be shipped irrespective of moisture content.

Maintenance issues with the trans-shippers have hindered exports during Q3. After a number of breakdown events with each of the vessels, the MV Nelvana had to be stood down for a number of weeks to repair a damaged propeller, requiring refitting in Europe. It is our expectation that this vessel will be back in service towards the end of September. The Company is procuring an additional TSV thereby providing additional shipping capacity and flexibility going forward.

All of the Company's assets - mine, plants, rail and port - continue to operate well, and our wet season strategy is succeeding. Recognising the slower than expected start to sales in Q3, and remaining cognisant of the effects of the wet season, we have prudently now reduced guidance to 11-13Mt for 2013.

Revenue

African Minerals currently exports essentially all of its production to China, and receives all of its revenues in US$. Our market strategy has been to commit 100% of our Phase 1 production to long term offtake contracts, predominantly with stakeholder counterparties. This provides us with confidence that we will be able to continue to sell our product through the full economic cycle.

The market for our product, be it fines, lump, blend or A32, remains strong. The low silica content of our ore makes it an attractive and sought after blending component. In H1 2013 all of our sales were made under fully committed offtake agreements to SISG, China Railway Materials Commercial Corporation ("CRM") and The Standard Bank of South Africa Ltd ("Standard Bank").

The key elements of pricing are the spot price (Platts 58% IODEX), freight rate, standard product discounts and investor discounts to our partner, SISG, and timing adjustments.

- Spot Price: Our product is priced with reference to the Platts 58% IODEX index, which peaked in Q1 in January at $136/t, falling to a low in June of $101/t. The average spot price in H1 was $119/t, while current Platts 58% IODEX spot price as at 9 September is $120.75/t. Prices are quoted per dry tonne landed in northern China.

- Freight Rate: Shipping rates for our Cape Size OGVs remained stable in the period, resulting in monthly average rates peaking in January at $19.46/t, falling to a low of $17.57 in May, with an average for the period of $18.20/t. Freight rates are quoted per wet metric tonne.

- Standard product discounts: Standard discounts for deleterious elements (mainly alumina) and other specifications were an average of $9/t. The blend and A32 products, which made up 65% of all shipments in H1, carry an additional $5/t discount over standard lump and fine products.

- Investor discount: During H1, the project delivered 3.14Mt, or 57% of all tonnage exported, to SISG under their discounted offtake agreement, with only 1.66Mt remaining to be delivered during H2. With approximately 5.5 -7.5Mt expected to be exported in H2, discounted offtakes are expected to make up 22-30% of shipments in H2. With the Free on Board ("FOB") Sierra Leone Reference Price between $60/t - $80/t, the SISG investor discount is 7.5%, and when it is between $80/t - $100/t the discount is 10%.

- Timing adjustments: Like many other iron ore exporters, the Tonkolili Project produces provisional invoices based on loading date spot prices, and receives final invoices based on landing date spot prices. Management makes estimates of the effect of changing spot prices between loading and landing, but where these occur over the end of a quarter, they remain estimates only, and are subject to later adjustment once final invoices are received. In Q1, the effect of prior period adjustments was approximately +$2/t, and in Q2 approximately -$8/t.

As a result of all of the above, the FOB received price in the first half of the year was $77/t. A royalty of 3.2% of revenue, adjusted for the CRM payments, was paid to the Government of Sierra Leone, as per the fiscal terms of the Mining Lease, amounting to $11m, in addition to payroll and other taxes.

As discussed, going forward we would expect the $5/t A32 discount to fall away once we start to ship standard products at the onset of the dry season, while the effect of the SISG discount will be reduced in H2 as delivery into the discounted offtake is completed.

Furthermore, the discount related to deleterious elements of our product is expected to contract too, as size specification penalties reduce with the shipping of a more closely graded lump and fines product.

The revenue recognised in the accounts, though, includes an additional amount associated with the unwinding of the deferred income associated with the discounted offtake. 

Operating Costs

The Company now reports its cash operating costs on the internationally accepted C1 basis, being the cash cost of goods sold. This measure excludes royalties, selling costs (including demurrage) and corporate office costs, which are reported separately.

C1 cash cost for the half year was $43/t, on a free on board ("FOB") basis. Cash cost trended downwards, in line with increasing production levels, from $49/t in Q1 to $40/t in Q2. In June, cash cost was $36/t at a run rate of 16Mtpa.

We remain confident that costs will continue to fall during H2 towards the targeted $30/t cash cost, commensurate with the delivery of a run rate of 20Mtpa over a sustained period.

Other costs at the project level included payment to CRM of $22m as part of the agreed marketing and agency fee associated with their offtake, and demurrage in H1 of $6m, equivalent to 5 waiting days per ship in H1. With steady state production, demurrage is expected to drop significantly.

Sustaining capital, largely associated with establishment of tailings dam facilities, the 1D plant conversion and Pepel camp upgrade, totalled $30m in the half year.

AML is committed to reducing costs at both the operational and corporate level. Initiatives have already been enacted, reducing corporate and services headcount by 40%, and further initiatives are planned over the coming months targeting a steady state corporate office overhead (London and Sierra Leone) of less than $30m pa.

Capital Costs

Expenditure on Phase 1 capital costs amounted to approximately $126m in H1, and is now largely complete.

Expenditure on the next stage of our development, the Phase 2 expansion into the saprolite hematite part of the orebody, commenced in H1 2013. To the end of June 2013, Phase 2 capital expenditure amounted to $25m.

Balance Sheet

As at 30 June 2013, the Group had the following available cash and debt facilities (all in US$m):

At the end of the period, $461m of the cash on the balance sheet remained restricted for use in the expansion of the project.

Phase 2 Expansion

Early works are continuing to focus, amongst other things, on the mineralogy of the saprolitic hematite orebody. At the time of the establishment of the 1.1Bnt resource in this part of the orebody, test work demonstrated that a 64% concentrate could be produced through gravity methods (dense media separation in this case) after grinding to a coarse 1mm. Mineralogical test work continues to better define this process, which is likely to incorporate spiral classification as the commercial recovery method.

Life of Mine planning is also continuing, and we are considering options such as depleting each part of the orebody sequentially versus progressing across the orebody concurrently exploiting saprolite and magnetite, as well as remnant DSO. Current planning is also considering the location and timing of a number of modular concentrator units.

Together with our partner SISG, we are considering how to maximise the capacity of the existing infrastructure without necessarily investing significant funds in an infrastructure upgrade. We are considering how prolonging the life of our assets, and making them work harder to well above 20Mtpa would provide a better IRR and a greater return to shareholders than progressing directly to the previously stated Phase 2 target of 35Mtpa. SISG and AML remain committed to appropriate expansions, and to accessing higher value 64% hematite and 70% magnetite products, but in the most cost effective manner, improving revenues and reducing capital costs, thus increasing free cash flow.

Until such assessments as to the real capacity of our infrastructure has been completed, work regarding the doubling up of the track and the upgrading of the port at Pepel has been put on hold.

We expect to provide further information regarding the next expansion, including power supply solutions, capital requirements, funding arrangements and the establishment of the project level debt banking syndicate, in due course.

Corporate

The Company continues to work towards aligning its governance with that described in the UK Corporate Governance Code of the Financial Reporting Council.

Until recently the make-up of the Board consisted of four executive directors, three non-independent, and four independent non-executive directors. In July 2013, the Board appointed Mr Ian Cockerill as independent director and Vice Chairman. At the same time, Roger Liddell was confirmed as Senior independent director.

On 14 August 2013, AML announced the appointment of Bernie Pryor as CEO, and Matthew Hird as CFO from 1 October 2013. Following the stepping down of Miguel Perry on 30 September 2013, the AML Board will have three executive directors, three non-independent directors, and four independent non-executive directors. The Board's nominations committee continues to assess other candidates with a view to establishing a Board with a majority of independent directors.

African Mineral's close relationship with its partners SISG and CRM lead from time to time to related party issues. These are fully communicated and disclosed in the normal course of business. A related party notification is also released to the market today regarding the settlement of previous warranty breaches and guarantees resulting from the SISG investment into 25% of the project in March 2012, totalling an additional $56m, payable by the project. The repayment of this amount to SISG has been deferred by SISG to provide working capital support for the operating companies.

It remains the aim of the project company Board to pay out as much of the earnings from the project as possible - with due regard to future cash requirements at the project level - to the project's shareholders, AML and SISG.

AML will be in a position to consider how best to apply the resulting cash to optimise shareholder returns, while maintaining adequate liquidity to support the business and its growth plans, only once it has completed its strategic work regarding the right-sizing of the Phase 2 expansion over the coming months. We expect to be able to discuss this in more detail at the time of our preliminary results for 2013.

Community

Consideration of the environmental impact of our mining, processing, rail, port and trans-shipping operations is an important part in our planning, development and operating activities. The Group is committed to operating responsibly and sustainably.

Our community engagement initiatives include the upgrading of medical facilities, schooling programmes, improved social services, industrial and agricultural support programmes, cultural and sporting projects, amongst many others across the 200km+ footprint of our activities.

Financial Review

Financial result HY 2013

The Company has successfully progressed the Tonkolili project from exploration, development, construction, commissioning and ramp up, and now into formal production.

As such revenue, operating costs, and depreciation regarding the project are now being recognised from 1 January 2013 in the income statement.

In 2012, iron ore sales and operating costs were capitalised to assets under construction, since the Group's infrastructure and mining assets were still undergoing commissioning.

Summary Financial Results

1 The Group calculates EBITDA as profit from continuing operations before tax and finance plus depreciation and amortisation and operating exceptional items.

Revenue $404.8m(HY 2012: nil, capitalised)

The Group recorded revenues of $404.8m in the period from 5.5m tonnes of exports. Revenues are discussed in detail in the Operational Review section above.

The 5.5Mt of exports contained 4.9Mt of dry iron ore, with a FOB received price of $77.2 per tonne, for direct cash receipts of $381.5m. In addition, a further $23.3m was released from the deferred income of the discounted offtake from the balance sheet.

Cost of sales $296.1m(HY 2012: nil, capitalised)

The group recorded $236.0m of C1 cash costs for the period, on a free on board basis. Cash costs are discussed in detail in the Operational Review section above. Also included in cost of sales is $60.1m depreciation.

Gross profit 26.8%(HY 2012: nil, capitalised)

As a result of the factors discussed above, the Group's gross profit was $108.7m, yielding a gross margin of 26.8%. There is no comparable gross margin due to the capitalisation of cost of sales and crediting of sales to assets under construction in 2012.

Operating loss $18.4m(HY 2012: Loss $119.4m)

The Group's operating loss results from $108.6m gross profit discussed above, less operating costs of $127.0m (HY 2012: $119.4m). Operating costs comprise $69.3m (HY 2012: $14.5m) selling, general and administrative expenses and $57.7m (HY 2012: $104.9m) operating non-recurring exceptional items.

Selling, general and administrative expenses principally comprise $39.9m (HY 2012: $nil, capitalised) sales and distribution costs, $16.6m (HY 2012: $4.0m) corporate wages and salaries, $4.7m travel expenses (HY 2012: $1.5m) and $2.0m share based payments (HY 2012: $4.1m)

Exceptional non-recurring operating items include provision of $40.0m in respect of production guarantees and warranty claims to SISG, (HY 2012: nil), the derecognition of assets under construction of $6.2m (HY 2012: nil), onerous offtake contracts and contractor claims of $8.2m (2012: $55.0m) and transaction costs and other professional fees of $3.3m (HY 2012: $31.9m). In HY 2012 $104.9m exceptional operating items included $86.9m transaction costs incurred in relation to the Shandong Iron and Steel Group transaction and $18.0m fuel misappropriation.

Loss after taxation $29.4m(HY 2012: $86.2m)

The Group's loss before taxation for the year of $24.6m principally arises from finance costs $36.3m (HY 2012: nil, capitalised), impairment charge $39.7m (HY 2012: nil), imputed interest cost of deferred income of $34.1m (HY 2012 : nil) and $18.4m operating loss discussed above, offset by a fair value gain on SISG put option of $103.8m (HY 2012: $53.1m)

Finance costs of $36.3m principally comprise convertible bond interest of $22.1m at effective interest rate of 12.62%, $5.5m asset financing facility interest and $4.3m cost overrun facility interest.

The Group recognised an imputed interest cost of $34.1m in the period, being the imputed interest charge associated with the $23.4m of unwinding of the discount from the SISG discounted offtake agreement for the purchase of iron ore, recorded as deferred income (see revenue, above).

As part of the Group's impairment review as at 30 June 2013, management has deemed Cape Lambert Resources Limited ($30.2m) and Obtala Resources Limited ($9.5m) investments impaired. Each listed investment has significantly decreased in market valuation for a prolonged period and under IFRS, the Group has recorded impairments in the income statement.

The fair value gain on financial instruments of $103.8m recognised by the Group is the movement recorded through the Income Statement on revaluation of the SISG non-controlling interest put option.

A put option exists in the SISG agreement whereby SISG can sell back its 25% interest in the project companies at fair value, in the unlikely event Frank Timis (Executive Chairman) voluntarily chooses to resign from the Board. Under IFRS the shares held by SISG are not recognised as non-controlling interest within equity and instead the put option is accounted for as a financial liability.

The Group's loss after tax for the period was $29.4m compared to $86.2m in the six months to 30 June 2012. A taxation charge of $4.8m was incurred in the period.

Other Comprehensive Income $11.1m (HY 2012: $20.5m loss)

Other comprehensive income of principally comprises reclassification of previous losses on available for sale investments. As discussed above, Cape Lambert Limited and Obtala Resources Limited investments have been impaired by $39.7m as at 30 June 2013 of which $28.6m relates to the reduction in fair value of the investments from 1 January to 30 June 2013.

Balance sheet

The Group transferred $2,516.8m of assets under construction to property, plant & equipment during the six months ended 30 June 2013. The depreciation on this property, plant & equipment totalled $60.1m for the period. $30m remaining in assets under construction predominantly relates to Phase II expenditure. As detailed above, there is asset derecognition of $6.2m in the period, this is due to a camp at the mine that was relocated.

As at 30 June 2013 the Group had total cash and cash equivalents of $501.6m, of which $460.9m is restricted, earmarked for funding of Phase 2 project expansion.

Borrowings are held at amortised cost on the balance sheet of $783.2m. The $202.0m increase in the period is principally due to project-level financing net of transaction fees of $208.7m and accrued convertible bond interest of $22.1m, less repayments of $12.4m.

Total equity decreased by $15.7m in the period to $1,035.8m. The movement is principally comprised an increase in accumulated deficit of $30.9m offset by $10.7m increase in fair value reserves due to impairment of investments as discussed and increase $1.8m in equity reserves due to share based payments.

The non-controlling interest put option liability of $602.2m recognised, as detailed above, is management's best estimate of the amount of the fair value that would be payable to SISG in the unlikely event Frank Timis voluntarily leaves the Board and SISG exercises its option to sell back its interest.

The deferred income of $547.9m recognised as at 30 June 2013, as outlined above is the present value of the iron ore offtake discount that SISG will receive under the agreement. As at 1 January 2013 the offtake was recognised as $537.2m. The increase of $10.7m relates to the adjustment to present value of the discount of $34.1m, offset by sales discount of $23.4m as detailed above.

Trade and other payables have decreased by $44.0m to $304m as at 30 June 2013, principally due to supplier payments made in the period.

Provisions of $58.1m mostly comprise decommissioning and restoration provision $31.5m recognised as at 30 June 2013, onerous contracts and contractor claims of $9.5m and legal disputes $6.2m.

Post Balance Sheet Events

As at 30 June 2013, the project companies had $461m of restricted cash, substantially earmarked for Phase II project expansion expenditure. Subsequent to the period end the Operating Company shareholders have agreed to the release of $156m from these funds, which will be used for working capital purposes and repayment of intercompany loans.

As at 30 June 2013, the Group had failed the debt service cover ratio loan covenant on each of the two Asset Financing Facilities. Post balance sheet, an amendment was agreed with Standard Bank to the covenant calculation as at 30 June 2013 and in subsequent periods to avoid a breach of covenant. Given that the amendment was received for each facility post balance sheet, the facilities have been classified as current liabilities as at 30 June 2013, irrespective of their maturity dates.