Memorandum of Understanding with CCCC

24 May 2011

African Minerals Limited

("AML" or "the Company")

Memorandum of Understanding with China Communications Construction Company Limited ("CCCC")

African Minerals Limited (AIM:AMI) is pleased to announce that it has signed a Memorandum of Understanding ("MoU") with China Communications Construction Company Limited ("CCCC") in respect of the optimisation and finalisation of a Final Engineering Study ("FES") for all aspects of infrastructure for the Phase II and Phase III expansions of the AML Tonkolili Iron Ore project in Sierra Leone.

Subject to parties agreeing a formal appointment contract, CCCC will develop the FES, and on completion will prepare a proposal to act as Engineering, Procurement, Construction and Management ("EPCM") contractor to the Company. Subject to final agreement, CCCC will be appointed AML's Strategic EPCM Contractor. This MOU, which is intended to be binding between the parties, will be exclusive for a period of 6 months, during which time the engineering studies will be completed.

CCCC, AML and the Government of Sierra Leone also intend to establish a Joint Venture to design an expansion to the Bumbuna hydro-electric power generation facilities to satisfy the power needs of phases II and III of the Tonkolili project.

Following the completion of the FES, and subject to the award of the EPCM contract, CCCC will use its best efforts to facilitate debt funding to part finance the design and construction of Phase II, Phase III, and, separately, for the related hydro-electric power infrastructure.

Highlights of MoU

·; CCCC will review, optimise and finalise the detailed engineering design of the infrastructure (including any port and railway and related construction) required for Phases II and III of the Project with all necessary provision of information, input and facilitation by AML. CCCC have agreed to bear the future expenditure relating to the preparation of the FES.

·; Specifically the finalised detailed engineering design will cover the civil engineering works required for construction of the marine works, ports, loading facilities, stockyards, railway, tailings dams and any other civil engineering works in connection with the project expansions.

·; CCCC will also prepare a proposal to AML for a Turn Key EPCM contract, with a performance guarantee, on terms to be agreed between the parties for the engineering, procurement, construction and management of the infrastructure establishment for Phases II and III of the Tonkolili iron ore project;

·; AML will lead the establishment of a joint venture with CCCC and the Government of Sierra Leone to design, construct and operate hydro-electric power facilities at Bumbuna in Sierra Leone to provide power to Phases II and III of the Project. The MoU envisages that under the terms of such joint venture AML (or one or more of its subsidiaries) will provide a guaranteed power off-take agreement on terms to be agreed with the operator of the hydro-electric power facilities;

·; Subject to the award of the EPCM contract, CCCC will use its best efforts to facilitate debt funding from Chinese financial institutions at rates and on terms commercially acceptable to AML, for the detailed design and construction of the infrastructure for Phases II and III of the Project; 

·; The funding structure for the detailed design and construction of the hydro-electric power facilities referred to above will be negotiated between the Government of Sierra Leone, CCCC, and AML;

·; The execution of final transaction documents will require the parties to obtain all internal and external approvals;

·; The MoU sets out the terms in general that the parties intend will be the principal terms of the transactions envisaged by the MoU. The parties intend the provisions of the MoU to create legally binding and enforceable rights or obligations. However the parties recognise that this MoU is not exhaustive of all the matters that the parties may wish to cover in the final agreements reached between them or the terms that will govern the Transaction Documents.

Commenting on the MoU, Frank Timis, Executive Chairman of African Minerals said: 

"We are delighted to have signed this agreement with CCCC, one of the largest construction companies in the world. Their engineering excellence and ability to procure funding will help to accelerate our expansion and development of phases II and III.

This infrastructure development agreement, if consummated, which incorporates the potential development of major hydro-electric power generation facilities, will benefit of the Company and its stakeholders, and will provide substantial benefit to the Government and the People of Sierra Leone."

Ends

Enquiries:

African Minerals Limited +44 20 7104 2280

Mike Jones

Canaccord Genuity Limited +44 20 7050 6500

Robert Finlay / Guy Blakeney

Aura Financial +44 20 7321 0000

Michael Oke / Andy Mills 

Notes to Editors

About AML:

African Minerals is developing the wholly owned 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 12 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 around 5,000 people in Sierra Leone, 78% of whom are Sierra Leonean nationals.

The Company is also developing significant port and rail infrastructure to support the development of the project, via African Rail and Port Services ("ARPS"), in which the Government of Sierra Leone has a 10% interest.

African Minerals is registered in Bermuda and is listed on the AIM market of the London Stock Exchange.

About CCCC:

The CCCC Group is principally engaged in the design and construction of transportation infrastructure, dredging and heavy port machinery manufacturing businesses. It is the largest engineering and construction company in China and one of the largest marine engineering and port construction companies in the world including the largest dredging fleet in the world (and number two in the world by revenue). CCCC is also one of only three licenced State Owned railway construction companies in China. The Company has established an eminent reputation in Asia, Africa, Middle East and South America for the past 20 years, during which time it has been involved in projects in over 76 countries. It has been included in the Engineering News Records' list of the world's top 225 international contractors since 1992 consecutively. In 2010 it was confirmed as the 13th largest global construction contractor, and the largest in China. As at the end of 2009 it employed almost 113,000 persons.

CCCC is listed on the Hong Kong Stock Exchange and on the Shanghai Stock Exchange.