Preliminary Results for the year ended 31/12/2010

 12 April 2011

African Minerals Limited

("AML" or "The Company")

Preliminary Results for the year ended 31 December 2010

Highlights of 2010

·; Significant in situ resource upgrade from 5.1Bnt to 12.8Bnt.1

·; Implementation of Three Phase development strategy to deliver rapid access to cashflow.

·; Phase I Direct Shipping Ore ("DSO") project development on schedule to enter commercial production in Q4 2011.

·; Phase I production capacity increased from 8Mtpa to 12Mtpa and low cash costs expected at $27.50/t.

·; All Tonkolili project mining licences awarded, environmental permits issued and fiscal terms agreed with the Government of Sierra Leone ("GoSL").

·; $1.2Bn Phase I project fully funded.

·; $1.1Bn raised since January 2010.

·; Definitive Engineering Study for an expanded Phase II (23Mtpa hematite concentrate project) under review, Definitive Feasibility Study to be commissioned in Q2 2011.

·; Major strategic partnership signed with China Railways Materials Commercial Corporation ("CRM") providing access to finance, agency iron ore sales, enhanced procurement, supplier relationships and expertise.

·; Board strengthened by addition of Dermot Coughlan and Roger Liddell as Independent Non-Executive Directors ("INEDs"), Liu Guoping as NED, and Miguel Perry as CFO.

·; Appointment of Mr Gibril Bangura as Executive Chairman, African Minerals Limited (Sierra Leone).

·; Effective today, appointment of Nina Shapiro as INED, and Bernard Pryor, also as INED, from 12 July 2011.

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1 Including 126.5Mt of direct shipping ore (“DSO”), 1.1Bnt of saprolite ore suitable to produce a hematite concentrate, and 11.6Bnt of magnetite ore.

Commenting on today's announcement, Frank Timis, Executive Chairman of African Minerals said:

"I am delighted at how the Company is maturing from developer into producer, and I commend all of the management and staff at AML and our contractors for the outstanding results that they have achieved to date.

None of this would have been possible without the continued support of our shareholders and our hosts, the Government and people of Sierra Leone.

Finally, I am delighted to welcome Nina Shapiro and Bernard Pryor as Independent Non-Executive Directors, whose experience will be invaluable as we move to the next phase of the Company's development."

Commenting on today's announcement, Alan Watling, Chief Executive of African Minerals said:

"The AML project team has done a wonderful job in bringing us to the brink of production, safely and on a demanding schedule. The support of our hosts, our shareholders, our financiers, our suppliers and contractors has enabled us to reach this exciting point where we now confidently anticipate moving into commercial production in Q4 2011."

For further information please contact

African Minerals Limited +44 20 7104 2280

Mike Jones

Aura Financial +44 20 7321 0000

Michael Oke / Andy Mills 

Canaccord Genuity Limited +44 20 7050 6500

Robert Finlay / Guy Blakeney

There will be an analyst and investor tele-conference starting at 09.30 UK on 12 April 2011. A slide presentation to accompany the call will be available on the Company's website www. african-minerals.com following the RNS announcement of the preliminary results.

The dial in details are : Tel : +44 (0) 20 3140 0668 : Passcode : 631 283#

There will be a separate call for North American analysts and investors at 8:30am EDT (13:30pm BST) also on Tuesday 12 April.

The dial in details are : Tel : +1 631 510 7490 : Passcode : 350431#

Notes to Editors

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 approximately 3,600 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"), with the Government of Sierra Leone as 10% partners.

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

Preliminary Results

Executive Chairman's Statement

In 2010 we successfully laid the foundations for long term production and progressed from being an explorer into a developer. We are proud to have taken the Tonkolili deposit from an early stage exploration opportunity to a globally significant iron ore resource. In addition to minesite development we have also largely completed the large scale infrastructure for iron ore shipment following work on Pepel Port facilities and on over 200km of rail, of which over half is entirely new track.

The fact that we have been able to do this, and receive all relevant mining and environmental licences in just over 3 years is testament both to the skills of our management and operational team in Sierra Leone and the strong and valued support of our hosts, the Government and people of Sierra Leone.

Through the course of the year we have continued developing our three phase strategy for Tonkolili, and have increased the production capacity of Phase I by 50% from the original 8Mtpa of ore to 12Mtpa. We are on target to bring Phase I into production in Q4 2011. With an expected cash cost of $27.50/t at full capacity, the completion of Phase I will transform African Minerals from a developer to a producer and provide a solid platform for future growth.

With the support of our investors, we have also successfully raised well in excess of US$1.1Bn from equity and debt markets to fund Phase I. We have also concluded a strategic partnership with China Railway Materials Commercial Corporation ("CRM"), as a result of which they have become significant shareholders in the Company, have signed a magnetite offtake agreement and have provided us with access to major Chinese suppliers and markets and the benefit of their considerable scale in procurement and expertise in infrastructure development.

Given the substantial cashflows expected in 2012 from a fully funded Phase I, we now have several options for financing the development of Phase II, which is expected to add a further 23Mtpa of hematite concentrate. We are currently considering a number of different options with respect to funding the development of Phase II, one of which remains partnering with Shandong Iron and Steel Group Co Ltd, with whom we are in continued discussion.

In order to support this process, we are expanding and accelerating our work around Phase II by progressing from a Definitive Engineering Study ("DES") to a more detailed Definitive Feasibility Study ("DFS") which we expect to complete in the course of the year. The completion of this DFS will facilitate further funding, and will give us greater flexibility with regard to access to project or corporate debt facilities as appropriate.

In light of the growing size, scale and ambitions of the Company, we have also considerably strengthened our Board of Directors with the addition in 2010 of three very experienced non-executive directors - Dermot Coughlan as Independent Non-Executive Director, Roger Liddell as an Independent Non-Executive Director and Liu Guoping as a Non-Executive Director and representative of CRM. As announced separately, we also welcome Bernard Pryor and Nina Shapiro as Independent Non-Executive Directors.

In addition, our executive team has been significantly boosted with the addition of Miguel Perry to the Board of Directors as CFO in October 2010. The Company continued to strengthen its senior management team with the appointment of Jack Rowley as COO in February 2011.

As we develop and expand our operations we are cognisant of our responsibility to operate in a manner which is sustainable in the long-term, and are committed to ensuring that our operations have a net positive benefit for the people of Sierra Leone. We aim to operate to global best practice standards in health and safety, community relations and environmental protection.

The Company aims to reward shareholders by transferring to them the value inherent in our resources, whilst enriching the human and natural environment affected by our operations.

Together with our contractors, employees directly involved in the Tonkolili Project at the end of 2010 numbered around 3,160, of whom 78% were Sierra Leoneans.  The earnings of our Sierra Leonean employees are considerably higher than the national average, and have a substantial multiplier effect on the economy.  As AML transitions through this year from developer to producer, the direct revenues to the Government will start to become noticeable in the form of corporate taxation, royalties on iron ore sales, direct contributions to environmental and community funds, and through the Government's 10% ownership of the African Port and Rail Services.

Phase I of the project is fully funded and on schedule, with physical completion at approximately 70% as of today; major procurement is complete and all major contractors are mobilized. We are pleased that the critical path items including new rail excavation work and bridging are ahead of schedule and well managed, and we are confident that we will be in a position to start shipping our product in Q4.

We look forward to making 2011 a transformational year in which African Minerals will become a globally significant producer to the benefit of all of our stakeholders.

Frank TimisExecutive Chairman11 April 2011

Business Review

China Railway Materials Commercial Corporation

In June 2010 we welcomed CRM, a major Chinese industrial corporation, as a shareholder and partner. CRM has been able to provide us with access to expertise, raw materials, equipment, access to other major suppliers, and have given considerable support to the Company, providing additional finance by exercising their subscription rights, and have helped us achieve significant savings in procurement.

As part of the transaction with CRM, CRM and AML signed a 20 year undiscounted magnetite off-take agreement for minimum of 10 million tonnes per annum of magnetite iron ore production from Phase III. Additionally, under a Hematite Agency Agreement, CRM has been appointed AML's agent for a minimum of 20 years for expected sales in China of between 5 Mtpa and 8 Mtpa of hematite iron ore from Phases I and II of the Tonkolili project.

Mining Licences

In August 2010 the Government of Sierra Leone approved, and the Parliament of Sierra Leone unanimously ratified, the Mining Lease (the "Mining Lease") for the Tonkolili iron ore and related infrastructure projects (the "Projects").

Parliament also approved the fiscal regime that will govern the development and operation of the Projects and the Company's proposed mine and logistics plans for the Projects.

Under the Mining Lease, the Government has granted the Company two Large Scale Mining Licences, which are valid for a period of 25 years, following which they will be renewable for further 15 year periods in accordance with the Mines and Minerals Act 2009.

The Government also awarded an Environmental Impact Assessment Licence ("EIA Licence") to the Company, following the Government's review of the Company's environmental impact assessment statement. The EIA Licence is renewable annually on a rolling 12 month basis.

Mineral Resources

Tonkolili started the year with a JORC compliant ore resource (all categories) of 5.1Bnt. In December 2010 after completing a further 108,709m of drilling, SRK Consulting (UK) Ltd reported an increased JORC compliant ore resource estimate of 12.8Bnt with the addition of substantial DSO and saprolite ore minerals resources, and a further extension of the magnetite mineral resource.

Summary In Situ Resource statement

Source : SRK Consulting (UK) Ltd, Mineral Resource Estimate 16 December 2010

Mining

Phase I

The delineation of the 126Mt of DSO gives us the ability to enter production in Q4 2011, ramping up to a planned production rate of up to 12Mtpa of DSO lump and fines product, with an iron grade of 59% FeO. Phase I is a $1.2Bn project that involves the refurbishment of the Pepel Port, the refurbishment of 74km of existing railway, the completion of a new 126km narrow gauge rail road and the establishment of a major mine at Tonkolili.

In 2010 work progressed well towards establishing the mine and processing facilities, culminating in the commissioning of the first of two streams of a 2.5Mtpa dry mobile crushing facility, and the first production bench ore blast, both in December 2010.

Post year end, our focus has been on continuing to produce stockpile material building up to the establishment of sufficient material to transfer to the stockyards, once completed, at Pepel, and to complete the scoping and design of the new Phase IB 12Mtpa wet processing facility. That work has now been completed and commissioning of that facility is expected by year end.

The two mobile crushers have sufficient capacity to stockpile material such that, once shipping starts, the stockpiles at the mine will be run down so that the targeted production of between 2.0 and 2.5 Mt in Q4 can be maintained prior to commissioning of the Phase IB wet process facility.

With that facility commissioned, total installed capacity at Tonkolili will comfortably support our steady state Phase I DSO target of 12Mtpa. The current resource will be sufficient to produce at that rate in Phase I for approximately 9 years. Management estimates that direct costs will be $27.50 per tonne of product, once in full production.

Project delivery across all the various aspects of the Phase I project currently remains on schedule to deliver first ore on ship in early Q4 2011.

Phase II

We now look towards the next stage in the Company's development, being the establishment of the major Phase II production facility at Tonkolili and new deep water port at Tagrin Point. The completion of this project will add 23Mtpa of hematite production and take our designed production capacity to 35Mtpa. The 1.1Bnt saprolite resource of Phase II will support the production of a 64% FeO hematite concentrate for approximately 20 years, at an estimated cost per tonne of circa $21/t for this phase. The original capital estimate for this expansion was around $2Bn. We would expect to be in production 30 months after funding the expansion project.

Phase III

The approximately $6bn Phase III magnetite project, with the potential to produce 45Mtpa of high quality 70%+ magnetite concentrate, will also require the construction of a high speed standard gauge rail line and expansion of the Tagrin Point port facilities. Phase III is the multi-generational premium resource at the Tonkolili Project, requiring the construction of a major magnetite processing facility. The current resource implies a mine life in excess of 60 years with attractive cash costs by current industry standards, estimated at circa $23/t.

Infrastructure

Rail

Our Phase I all-rail programme commenced in May 2010, with the rehabilitation of the existing 74 km of railway from Pepel Port to Lunsar, and the construction of a new 126 km narrow gauge railway line from Lunsar to Tonkolili, with 3 bridges on each section.

Our first construction locomotive was delivered to Sierra Leone on 2 September 2010, being greeted by the President of Sierra Leone in a welcoming ceremony at the main port in Freetown, and is now being used to transport ballast and materials along the refurbished part of the railway. The refurbished rail section was re-opened in February 2011, and is now being ballasted and tamped ready for full scale operations.

The new rail section requires the completion of clearing, excavation, cut and fill, bridging, and construction of the engineered rail formation, all ahead of track laying. The first sections of prepared formation have been handed over to the track laying crews, and work continues on schedule with the expectation that the track will be open for transportation from port to mine in late Q3 2011.

Port

Pepel Port's rehabilitation is designed to support a capacity of at least 14Mtpa, being 12Mtpa of DSO hematite iron ore from Phase I plus additional capacity for third party usage. Civil concrete contractors were mobilized in September 2010 in preparation for the structural work and mechanical contractors mobilized in November to construct the first stockyard, conveyor gantries and transition towers.

The stacker for the first 400,000t stockyard has been fabricated and is en route to the port, and is expected to arrive in May 2011. Development has begun on the automation of the port operating plant. Marine civils contracts have been awarded and dredging of the Pepel Channel commenced in February 2011.

Two transshipment vessels, to transport our product from the 12m draught Pepel Port to the 20m+ deepwater channel 32 nautical miles away, have been contracted to be delivered once all marine works have been completed, which is expected to be towards the end of Q3 2011.

In addition to this work at Pepel for Phase I, we have also commenced preparation work for the design and development of Phase II's new Tagrin Point port. Tagrin Point will be a deep water 20m+ draught port capable of supporting Phases 2 and 3 of the Tonkolili project.

Environmental, Health and Safety

AML aims to set the benchmark standard for West African mining operations and to become the mining operation of choice for professionals in this region. Our goal is to ensure a consistent level of good Health, Safety, Security, Risk and Emergency Response management by applying a risk based approach.

Safety is an overarching value for the Company and a critical component of the Company's long term success. In 2010 African Minerals itself achieved a positive safety performance with no fatal accidents. Unfortunately one of the Company's contractors recorded one fatality during 2010 where an employee working for a diving sub-contractor sadly lost his life in March 2010. In 2011, an earthmoving accident claimed the life of a contractor operator in February, and in March malaria regrettably accounted for one further contractor fatality. We continuously review our safety processes and are working with our contractors and healthcare team on the ground to ensure that such incidents are avoided entirely with the aim of zero harm.

In 2010 we conducted a full review and restructuring of Health, Safety, Environment and Security (HSE&S), and put key management in place to cover all our strategic positions. We have implemented a structured incident reporting/response procedure, and engaged an international standard emergency evacuation service provider. Going forward we plan to develop comprehensive capacity to support the requirements of our expanding construction phase, and at the same time plan for the implementation of the operational mining phase of AML in Sierra Leone.

Corporate Social Responsibility

African Minerals continues to build strong relationships with national and local governments and organizations. Consultation Committees have been established in seven chiefdoms to manage community needs for Phase I project activities; crop compensation amounts have been agreed through consultation with affected parties and the Ministry of Agriculture, Forestry and Food Security; a Social Impact Assessment for Phase I has been completed including a Stakeholder Engagement Plan, Community Development Action Plan and a Resettlement Policy Framework; and employment offices are currently being opened up in three key chiefdoms to provide easier access for communities to AML employment opportunities.

People

Throughout the course of the year, the workforce directly involved in the development of Tonkolili has increased considerably from 750 at the end of 2009 to 3,160 at the end of 2010, 78% of whom are Sierra Leoneans. Direct employees of African Minerals at the end of 2010 numbered 973, of which 788 were Sierra Leonean.

To support this rapid rise, our in-country support services have been strengthened with the addition of senior level staff in Services, Logistics, Human Resources and Medical.

Other Projects and Divestments

During the course of the year the diamond assets were disposed of in return for an equity stake in Obtala Resources. The Canadian exploration under White River Resources has been written off and the Baobab Resources portfolio stake has been sold in the market. The Marampa project has now also been completely acquired by Cape Lambert Resources Limited.

As a part of the original agreement with Marampa to Cape Lambert Resources Limited, African Minerals had agreed to provide access to Pepel Port for their product shipment in return for an element of funding and ownership. In February 2011, AML and Cape Lambert agreed to vary that arrangement by granting Cape Lambert access to 2Mtpa at Pepel and an additional 3Mtpa at Tagrin Point, once operational, on an arms-length commercial basis, the detailed terms of which are currently being negotiated.

As such, AML has been able to retain its ownership of this important transportation infrastructure.

Financial Review

Total of $1,148m raised since Jan 2010 to fully fund Phase I

In January 2010 the company carried out an underwritten cash placing of £80m ($130m) by issuing 20 million shares at £4.00 per share. This was followed in April 2010 by the signing of a definitive agreement with China Railway Materials Commercial Corporation ("CRM") to subscribe for 12.5% of the enlarged share capital of AML or 33,579,474 shares at £5.00 per share, for proceeds of £168m ($247m).

In November, the Company embarked on a major fund raising to allow the independent completion of Phase I, successfully placing 45m shares at £4.25 per share, raising £191.3M ($307M). This was supplemented post year end by CRM as they exercised their pre-emption rights, subscribing for a further 6,991,450 shares and raising £29.7m. ($46M).

As part of the major funding announced in November, the Company also launched a secured loan facility. The facility was completed in February 2011 and raised $417.7m.

As a result, since January 2010 the Company has raised a total of $1,148m providing it with the full financial resources to take Phase I into production.

Headroom analysis

As at the end of December, the Company had a cash balance (post the receipt of proceeds from the November equity issue) of $372m. Subsequent to year end, the Company received $46m as CRM exercised its pre-emption rights, and completed the secured loan facility, both as mentioned above.

The project capital requirement, including all capitalized expenditure from January 2010, was as at the end of December 2010 an estimated $1.1Bn to commencement of revenue (ie first ore on ship). As at that time approximately $380m of this expenditure had already been incurred, leaving $720m to spend.

With a total of $836m available with cash, debt, and the CRM funding, the Company confirmed its confidence that it had sufficient funds at year end to complete the project into revenue, with estimated headroom at that time of $116m.

Since year end, various changes of scope within the approved budget have occurred, and the overall cost of the Phase I project has increased from $1.1Bn to $1.2Bn, which includes exploration, capital, pre-production, financing and other costs associated with development.

Within African Rail and Port Services, the budget has been increased by $55m, $34m of which will impact the project prior to "First Ore On Ship" and the anticipated commencement of revenue. The major element of this increase in scope is that dredging work totaling $31m, previously expected to be financed by the vendor, has had to be funded by the company. Within the Mine project, scope has increased by $66m, $28m of which will impact the project prior to revenue. The principal drivers are the change in scope in the Phase IB wet plant from 10Mtpa to 12Mtpa, which added $41m, and offset by savings in pre-production expenses and waste stripping. With additional variations of $23m in services, the total increase in capital cost for the Phase I project is $144m, $85m of which is expected pre revenue. This will be offset by additional funding of $40m, principally from vendor financing and savings on the secured loan facility.

As at the end of March it was estimated that the Company had approximately $71m of headroom to completion of its build to First Ore On Ship. This headroom is currently being closely managed and monitored on a monthly basis.

Taxation

Major features of the fiscal regime include:

·; A Mining Lease fee of US$1m pa;

·; A 3.2% royalty of the FOB sales price of iron ore production which includes 0.1% to be contributed to an environmental and social protection and impact mitigation fund, to be managed and controlled by the Company, and 0.1% to a community development fund for the benefit of communities impacted by the Projects;

·; A corporate tax rate of 25% for the life of the mine, with a 4yr accelerated depreciation allowance (40%, 20%, 20%, 20%);

·; 5% withholding tax on dividends; and

·; Exemptions for Goods and Services Tax (GST), and import tax for the Company and its contractors.

In February 2011, AML volunteered to prepay $10m in employee withholding tax with regards to forecast liability in 2011, in order to support infrastructure development in the country.

FY2010 Summary

Financial result

The Group generated an operating loss for 2010 of $51.9m. This principally consisted of employee costs and travel of $31.6m, foreign exchange losses of $11.1m resulted from loss on conversion of the February equity placing and other sundry losses resulting from the translation of non-US$ bank balances, impairment of intangible assets of $4.5m resulting principally from write down of our investments in White River Resources a nickel exploration project ($2.6m) and Pinnacle Coal a Sierra Leone coal exploration project ($1.3m), neither of which form an ongoing part of the Group's core activities.

Dividend income of $7.3m was received from our investment in Cape Lambert Resources Limited.

Taxation credit of $10.3m relating to recognition of deferred tax assets on losses in Sierra Leone that are in excess of deferred tax liabilities.

Other comprehensive income of $11.7m resulted from fair value increases in the Group's listed investments, the main components of which are in respect of Cape Lambert Resources Limited ($5.8m) and Obtala Resources Limited ($8.0m).

Total comprehensive loss for 2010 amounted to $24.3m.

Balance Sheet

Exploration and evaluation assets increased by $108.2m to $198.1m, resulting from continued feasibility and exploration work on the Tonkolili project along with initial pre-production costs as the project ramps up towards commercial production in Q4 2011.

Assets under construction and property, plant and equipment increased by $262.6m to $269.1m resulting from expenditure on the Tonkolili mine, the construction and refurbishment of the new and existing rail and the refurbishment and upgrade of the Pepel Port facility.

The Group has established a deferred tax asset of $81.4m which is primarily in respect of tax losses in Sierra Leone. This asset has been recognized as the business predicts that profits will be available from future periods to utilize these losses. In addition a deferred tax liability of $73.2m has been recognized relating to accelerated capital allowances in Sierra Leone.

Approximately $730m was raised through various equity placings as described above and since the year end the Group has closed a secured non- revolving credit facility for an amount of $417.7m.

At the end of 2010 cash and cash equivalents amounted to $372.4m (2009 : $76.6m)

Total equity and liabilities as at 31 December 2010 amounted to $929.5m

Prior period adjustments

A number of prior period adjustments have been identified as a result of errors, changes in policy or a review by management as to the most appropriate method of accounting given the current activities of the Group. In summary the adjustments relate to:

Provision for Sierra Leone payroll taxes not previously accrued or paid over to the Sierra Leone tax authorities $10.2m, of which $5.5m relates to prior to 2009. The adjustment for this item is reflected in exploration and evaluation assets.

Impairment of plant and equipment relating to assets that were not functional, this adjustment relates to 2008 and would be reflected through the consolidated statement of comprehensive income in that year, this amounts to $1.4m.

Provision for receivables that are not deemed recoverable of $1.4M, of which $0.4m relates to prior to 2009.

Provision for a receivable from Marampa Iron Ore Limited, which was disposed of in 2009 and is not deemed recoverable of $1.8m. This will adjust the gain on disposal made in 2009.

Reversal of $4.7m relating to depreciation which was recorded in 2009 not in line with Group capitalization policy.

In connection with the disposal of Marampa Iron Ore Limited, the profit on disposal was previously split between 2008 and 2009. The full profit on disposal of $42.3m should all have been recognized in 2009, resulting in a net gain of $28.7m in 2009.

Overall the prior period adjustments show an increase in the total comprehensive profit in 2009 of $29.3m and a total adjustment to equity holders of $0.1m.

Principal Risks

The principal risk facing the company is in the attainment of commercial production at Tonkolili in Q4 2011. Failure to attain commercial production timeously will negatively impact financial resources. Delay to completion and commissioning of the rail and port infrastructure is the major driver of this risk. This is discussed further in Note 2 to the financial statements.

Markets

The marketing of our Phase I direct shipping ore is greatly assisted by our agency agreement with CRM. CRM expects to be able to market between 5Mtpa and 8Mtpa of our hematite product into China. AML is also looking to European markets, where the norm for smaller vessels for shipment to those markets plays to the benefit of both the seller and the buyer with lower overall freight costs.

Testwork by Ammtec on our product has demonstrated a typical saleable grade of 59% FeO, with alumina of 5.8% and silica of 1.0%. The lump product has attractive physical qualities of high integrity and high porosity, with a low level of phosphorous. Several larger samples are currently being assembled for production scale testing at a number of steel mills, ahead of commencement of commercial production.

To support this effort, we welcome Mr David Tucker as Head of Sales and Marketing. Mr Tucker joins AML from Hatch Beddows Strategy Consultants, which he joined after spending 21yrs at Rio Tinto PLC with specific international experience gained in Western Europe, China, Korea, Taiwan, Hong Kong, Australia, Pakistan and South Africa. In London he headed the Hammersley marketing group, and in Hong Kong was responsible for all Asia Pacific sales.

Outlook for 2011

The principal focus for 2011 is the commencement of commercial production at Tonkolili in Q4. To that end we are pleased that the refurbished rail section has been completed, the excavation of the new rail section is continuing on schedule; the first part of the formation of the new rail has been handed over to the first of our track laying crews; dredging work in Pepel channel and marine engineering has commenced; stockyard preparation at Pepel is nearing completion and first stacker is awaiting imminent delivery; locomotive and rail-car delivery is on track; shiploader refurbishment is almost complete; procurement for the Phase IB mine process plant has been completed and delivery is on track.

With the project at this stage of completion we are confident of getting first ore on ship as planned in early Q4 2011.

Qualified Persons

The information in this press release that relates to Mineral Resources is based on information compiled under the direction of Mr Howard Baker, who is a Member the Australasian Institute of Mining and Metallurgy ("AusIMM").

Mr Baker is a full time employee of SRK and has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the 'Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves'. Mr Howard Baker has reviewed this press release and consents to the inclusion in the press release of the matters based on his information in the form and context in which this appears.

The information in this press release that relates to metallurgy is based on information compiled and reviewed by Rodney Elvish, who is a Fellow and CPMet of the Australasian Institute of Mining and Metallurgy ("AusIMM"). Mr. Elvish is an independent consultant to the Company, and has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the 'Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves'. Mr. Elvish has reviewed this press release and consents to the inclusion in the press release of the matters based on his information in the form and context in which this appears.

The information in this press release that relates to geological exploration was compiled and reviewed by Marcus Reston, who is a Member of the Australian Institute of Geoscientists ("AIG"). Mr Reston, General Manager: Geology & Exploration, is a full-time employee of the Company and has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the 'Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves'. Mr Reston has reviewed this announcement and consents to the inclusion in the announcement of the matters based on his information in the form and context in which this appears.

1.1 Corporate Information

This preliminary announcement for the year ended 31 December 2010 contains extracted financial information from the Group's unaudited non-statutory consolidated financial statements. This announcement does not contain audited information for the year ended 31 December 2010.

The unaudited consolidated financial statements of African Minerals Limited for the year ended 31 December 2010 were authorised for issue in accordance with a resolution of the directors on 11 April 2011. African Minerals Limited is registered and domiciled in Bermuda and is listed on the AIM market of the London Stock Exchange.

The registered office of the Group is African Minerals Limited, Victoria Place, 31 Victoria Street Hamilton, HM10, Bermuda.

The principal activities of the Group are the development of iron ore mining and infrastructure assets in Sierra Leone.

1.2 Basis of preparation

The unaudited consolidated financial statements of African Minerals Limited and all its subsidiaries (the 'Group') have been prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB) and adopted by the European Union (EU) as they apply to the financial statements of the Group for the year ended 31 December 2010.

The unaudited consolidated financial statements have been prepared on a historical cost basis, except for certain available for sale investments that have been measured at fair value. The consolidated financial statements are presented in US dollars and all values are rounded to the nearest thousand except when otherwise indicated.

1.3 Basis of consolidation 

The unaudited consolidated financial statements comprise the financial statements of the Group as at 31 December 2010.

Subsidiaries are fully consolidated from the date of acquisition, being the date on which the Group obtains control, and continue to be consolidated until the date when such control ceases.

The financial statements of the subsidiaries are prepared for the same reporting period as the parent company, using consistent accounting policies.

1.4 Restatement 

IAS 1 requires an entity to present a statement of financial position at the beginning of the earliest comparative period when it applies an accounting policy retrospectively, reclassifies items in its financial statements, or when it makes a retrospective restatement of items in its financial statements. In these situations, the standard states that an entity must present, as a minimum, three statements of financial position, two of each of the other statements and related notes. The Group moved from recognition of certain derivative assets as fair value through the comprehensive statement of income to fair value through reserves, reclassified short term deposits to cash and cash equivalents, made retrospective restatements and applied those changes retrospectively in accordance with IAS 8; the Group has also included a statement of financial position as at 1 January 2009. Refer to note 3 for restatement details.

1.5 Significant accounting judgements, estimates and assumption 

The preparation of the Group's consolidated financial statements in conformity with IFRS requires management to make judgments, estimates and assumptions that affect the reported amounts of assets, liabilities and contingent liabilities at the date of the consolidated financial statements and reported amounts of revenues and expenses during the reporting period. Estimates and assumptions are continuously evaluated and are based on management's experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. However, actual outcomes can differ from these estimates. In particular, information about significant areas of estimation uncertainty considered by management in preparing the consolidated financial statements is described below.

Going concern

Management have prepared these financial statements on the assumption that the Group is able to continue as a going concern. See note 2.

Ore resource estimates

Ore resource estimates relate to the amount of ore that can be economically and legally extracted from the

Group's mining properties. The Group estimates its ore resource based on information compiled by appropriately qualified persons relating to the geological data on the size, depth and shape of the ore body, and requires complex geological judgments to interpret the data. The estimation of recoverable resource is based upon factors such as estimates of foreign exchange rates, commodity prices, future capital requirements, and production costs along with geological assumptions and judgments made in estimating the size and grade of the ore body. Changes in the resource estimates may impact upon the carrying value of exploration and evaluation assets, mine properties, property, plant and equipment, recognition of deferred tax assets, and depreciation and amortisation charges.

Exploration and evaluation expenditure 

The application of the Group's accounting policy for exploration and evaluation expenditure requires judgment in determining whether it is likely that future economic benefits are likely either from future exploitation or sale or where activities have not reached a stage which permits a reasonable assessment of the existence of reserves. The determination of a Joint Ore Reserves Committee (JORC) resource is itself an estimation process that requires varying degrees of uncertainty depending on sub-classification and these estimates directly impact the point of deferral of exploration and evaluation expenditure. The deferral policy requires management to make certain estimates and assumptions about future events or circumstances, in particular whether an economically viable extraction operation can be established. Estimates and assumptions made may change if new information becomes available. If, after expenditure is capitalised, information becomes available suggesting that the recovery of expenditure is unlikely, the amount capitalised is written off in profit or loss in the period when the new information becomes available. Deferred exploration costs are carried at historical cost less any impairment losses recognised.

1.6 New and amended standards and standards issued but not effective 

The accounting policies adopted are consistent with those of the previous financial year. The following new and amended IFRS and Interpretations effective as of 1 January 2010 did not have a financial impact on the Group:

- IFRS 3 Business Combinations

- IFRS 3 Business Combinations (Revised) and IAS 27 Consolidated and Separate Financial Statements

- IFRS 8 Operating Segments

- IAS 1 Presentation of Financial Statements

- IAS 17 Leases

- IAS 38 Intangible Assets

- IAS 39 Financial Instruments: Recognition and Measurement

- IAS 7 Statement of Cash Flows

- IAS 36 Impairment of Assets

- IFRS 2 Group Cash-settled Share-based Payment Transactions

Improvements to IFRSs 

In April 2009, the IASB issued an omnibus of amendments to its standards, primarily with a view to removing inconsistencies and clarifying wording. There are separate transitional provisions for the amendments to each standard. The adoption of the following amendments resulted in changes to accounting policies but did not have any impact on the financial position or performance of the group: 

- IAS 1 Presentation of Financial Statements

- IAS 17 Leases

- IAS 38 Intangible Assets

- IAS 39 Financial Instruments: Recognition and Measurement

- IAS 7 Statement of Cash Flows

- IAS 36 Impairment of Assets

Standards issued but not yet effective 

Standards issued but not yet effective up to the date of issuance of the Group's financial statements are listed below. This listing is of standards and interpretations issued, which the Group reasonably expects to be applicable at a future date. The Group intends to adopt those standards when they become effective and does not expect the impact of such changes on the financial statements to be material.

- IAS 24 Related Party Disclosures (Amendment)

- IAS 32 Financial Instruments: Presentation - Classification of Rights Issues (Amendment)

- IFRS 9 Financial Instruments: Classification and Measurement

- IFRIC 14 Prepayments of a minimum funding requirement (Amendment)

- IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments

- The IASB issued Improvements to IFRSs, an omnibus of amendments to its IFRS standards. The amendments have not been adopted as they become effective for annual periods on or after either 1 July 2010 or 1 January

2011. The amendments listed below:

- IFRS 3 Revised Business Combinations

- IFRS 7 Financial Instruments: Disclosures

- IAS 1 Presentation of Financial Statements

- IAS 27 Consolidated and Separate Financial Statements

- IAS 12 Recovery of Underlying Assets

The Group, however, expects no impact from the adoption of the amendments on its financial position or performance.

1.7 Summary of significant accounting policies 

Exploration and evaluation assets (note 8)

Exploration costs are capitalised as exploration and evaluation assets until a decision is made to proceed to development. Related costs are then transferred to mining assets. Before reclassification, exploration costs are assessed for impairment and any impairment loss recognised in the statement of comprehensive income. Subsequent development costs are capitalised under mining assets, together with any amounts transferred from exploration and evaluation assets. Mining assets are amortised over the estimated life of the commercial mineral reserves on a unit of production basis.

Pre-licence costs

Pre-licence costs are expensed in the period in which they are incurred.

Property, plant & equipment

Plant and machinery and fixtures and fittings are shown at cost less accumulated depreciation and impairment losses. The initial cost of an asset comprises its purchase price or construction cost, any costs directly attributable to bringing the asset into operation together with any incidental cost of purchase. The purchase price or construction cost is the aggregate amount paid and the fair value of any other consideration given to acquire the asset.

Assets under construction relate to infrastructure assets and are not depreciated until the construction is completed and the mine is operational. This is signified by the formal commissioning of the mine for production.

Depreciation is charged to the statement of comprehensive income on a straight-line basis over the expected useful lives of the assets concerned. The depreciation rates are as follows:

Subsequent expenditure relating to a fixed asset item is capitalised when it is probable that future economic benefits from the use of the asset will be increased. All other subsequent expenditure is recognised as an expense in the period in which it is incurred. Repairs and maintenance which neither materially add to the value of assets nor appreciably prolong their useful lives are charged against income. Gains/(losses) on the disposal of fixed assets are credited/(charged) to income. The gain or loss is the difference between the net disposal proceeds and the carrying amount of the asset.

The asset's residual values, useful lives and methods of depreciation are reviewed at each reporting period, and adjusted prospectively if appropriate.

Financial instruments:

 a) Financial assets

 Investments available for sale

Changes in fair values of investments available for sale are recorded through fair value reserves.

Trade and other receivables

Trade and other receivables are stated at amortised cost less provision for doubtful debts. Trade and other receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market.

Cash and cash equivalents

Cash and cash equivalents are measured at fair value, based on the relevant exchange rates at balance sheet date. Cash and cash equivalents comprise cash, cash at hand and short term deposit amounts with original maturity of less than three months.

b) Financial liabilities

Trade and other payables

Trade and other payables are non-derivative financial liabilities that are not quoted in an active market.

Impairment

The carrying amounts of the Group's assets are reviewed at each balance sheet date to determine whether there is any indication of impairment. An asset's carrying value is written down to its estimated recoverable amount, being the higher of its fair value less costs to sell and value in use, if that is less than the asset's carrying amount.

Impairment reviews for deferred exploration and evaluation costs are carried out on a project by project basis, as each project has the potential to be an economically viable cash generating unit. An impairment review is undertaken when indicators of impairment arise but normally when one of the following conditions apply;

- unexpected geological occurrences render a deposit uneconomic

- title to an asset is compromised

- variations in commodity prices render the project uneconomic

- variations in the currency of operation

- variations to the fiscal and tax legislation in the country of operation

Operating leases

Operating lease payments are recognised as an operating expense in profit or loss on a straight-line basis over the lease term.

Finance Income

Interest income is made up of interest received on cash and cash equivalents.

Deferred taxation

Deferred income tax is provided using the balance sheet method on temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

Deferred income tax liabilities are recognised for all taxable temporary differences.

Deferred income tax assets are recognised for all deductible temporary differences, carry forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilised, except: 

- In respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, deferred income tax assets are recognised only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised.

The carrying amount of deferred income tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised. Unrecognised deferred income tax assets are reassessed at the end of each reporting period and are recognised to the extent that it has become probable that future taxable profit will be available to allow the deferred tax asset to be recovered.

Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.

Deferred income tax assets and deferred income tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against current income tax liabilities and the deferred income taxes relate to the same taxable entity and the same taxation authority.

Foreign currencies

The consolidated financial statements are presented in US dollars, which is the parent company's functional currency and the Group's presentation currency. Transactions in foreign currencies are initially recorded in the functional currency at the respective functional currency rates prevailing at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the spot rate of exchange ruling at the reporting date. All differences are taken to profit or loss or other comprehensive income, should specific criteria be met. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rate as at the date of the initial transaction. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined.

Inventories

Inventories are valued at the lower of cost and net realisable value. Inventories are made up of fuel and spare parts for maintenance equipment. There is no obsolescence due to the high turnover of inventories.

Provisions

Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Where the Group expects some or all of a provision to be reimbursed, the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain. The expense relating to any provision is presented in profit or loss net of any reimbursement.

Share- based payments 

Options

The Group issues equity-settled share-based payments to certain Directors, officers, employees and suppliers by the issue of new shares or by the use of shares previously acquired. The grant date fair value of the share plans is recognised as an expense over the expected vesting period with a corresponding entry to retained earnings. The estimate of the number of awards likely to vest is reviewed at each statement of financial position date up to the vesting date, at which point the estimate is adjusted to reflect the actual awards issued. No adjustment is made after the vesting date even if the awards are forfeited or not exercised.

Fair value of the options is measured by use of the Black-Scholes pricing model. The estimated life of the instrument used in the model has been adjusted, based on management's best estimate, for the effects of non-transferability, exercise restrictions and behavioural considerations.

Performance shares

The Group issues performance shares on the completion of certain conditions being met, eg the award of the mining lease for the Tonkolili iron ore project and the completion of the China Railway Materials Commercial Corporation's ('CRM') equity subscription completed in June 2010.

The Company has also entered into agreements to award senior executives with shares in the Company based on certain performance conditions being met. Conditions include the completion of certain feasibility studies and the achievement of various iron ore production targets. The fair value of performance shares is charged to the statement of comprehensive income over the period between the date of grant and the date the performance conditions are expected to be met.

 Warrants

Non-market based vesting conditions are taken into account in estimating the number of awards likely to vest. Fully-paid shares are valued at market value at the date of issue.

The grant date fair value of warrants granted to employees is recognised as an employee expense, with a corresponding increase in equity, over the period that the employees become unconditionally entitled to the warrants. The amount recognised as an expense is adjusted to reflect the actual number of warrants for which the related service and non-market vesting conditions are met. To calculate the fair value of the warrants, the Black & Scholes pricing model has been used. 

Segment reporting

The Group is managed as a single entity which is developing the mine and related infrastructure in order to meet commercial production in Q4 2011. In accordance with IFRS 8 Operating Segments, the Group presents its results in a single segment which are disclosed in the statement of comprehensive income for the Group.

The Group does not have any significant non-current assets that are located in the country of domicile of the Group. The vast majority of the non-current assets are located in Sierra Leone.

The Group has prepared detailed cash flow forecasts through to December 2012 that support the conclusion of the Directors that the Group will be able to operate as a going concern with its current resources.The cash flow forecasts are dependent on completing construction and development of Phase 1 of the Tonkolili iron ore project, which encompasses the construction/refurbishment of the mine, railway and port facilities to enable the Group to start generating revenue from Q4 2011. In the event the Group is unable to achieve this timetable, which is dependent on achieving certain key milestones before the 2011 rainy season in Sierra Leone, or the costs to complete are significantly higher than those forecasted, it may have to seek additional sources of financing. The Group has several options by which this additional financing can be raised. In the event the first shipment of ore is delayed beyond 28 February 2012, the long stop date referred to in the debt facility agreement, the Group would be in default of its debt covenants. In this event, the Group may seek to renegotiate the terms of the debt facility or seek alternative financing.The Directors have concluded that the matters discussed above represent material uncertainties that may cast significant doubt over the Group's ability to continue as a going concern. Nevertheless, the Directors after making enquiries and considering these material uncertainties are confident that the Group will continue to have adequate resources to continue in operation for the foreseeable future. For this reason, the financial statements of the Group have been prepared on a going concern basis.Accordingly, these financial statements do not include any adjustments to the carrying amount or classification of assets and liabilities that would result if the Group was unable to continue as a going concern. In light of the above material uncertainties the audit opinion in relation to the financial statements for 31 December 2010 will include an emphasis of matter paragraph relating to going concern.

Adjustments

1. Relates to payroll taxes in Sierra Leone which were not previously accrued or paid to the Sierra Leone tax authorities, as at 31 December 2009 this was $4,671,000, 31 December 2008 $3,442,000 and at 1 January 2008 $2,089,000.

2. Relates to impairment of property, plant and equipment in 2008 for assets not deemed functional of $1,392,000.

3. Relates to the write-off of receivables that are not deemed recoverable as at 31 December 2009 this was $1,004,000 and as at 31 December 2008, $391,000.

4. Relates to the write-off of a receivable from the Marampa Iron Ore Limited which was disposed of in 2009 that is not deemed recoverable as at 31 December 2009 of $1,820,000.

5. Relates to change in investments previously recorded at fair value through profit and loss to available for sale investments. Changes in available for sale investments previously recorded in the consolidated statement of comprehensive income are restated through other comprehensive income in the fair value reserves, as at 31 December 2009 gain of $18,182,000 and 1 January 2009 loss of $8,463,000. In 2008 $2,759,000 fair value of investments available for sale were recorded through statement of comprehensive income, these have been corrected as fair value through reserves.

6. Reclassification of short term investments to cash and cash equivalents as these investments meet the definition of cash equivalents. The cash flow statement has also been restated accordingly. The related amount for 2009 was $71,742,000.

7. Relates to reclassification of exploration and evaluation expenditure to assets under the course of construction as the related assets were still under construction as at the balance sheet date. The related amount for 2009 was $3,002,000.

8. Relates to a correction regarding 2009 exercised share options. Previously exercised options of $582,000 were incorrectly credited to retained earnings, the correcting entry credits the share premium account.

9. Relates to a correction of charge to statement of comprehensive income for 2009 performance shares of $971,000 not previously charged. The corresponding entry credits the equity reserves account.

10. Relates to a correction for foreign exchange on a share issue in 2008 which was incorrectly booked at the foreign exchange rate at the date of cash receipt. The correcting entry of $967,000 gain is calculated from the foreign exchange rate at the date the transaction occurred.

11. Relates to a correction for foreign exchange on a share issue in 2009 which was incorrectly booked at the foreign exchange rate at the date of cash receipt. The correcting entry of $332,000 loss is calculated from the foreign exchange rate at the date the transaction occurred.

12. Relates to 2009 capitalisation of depreciation of $4,695,000 Sierra Leone plant, property and equipment, which was not booked in line with the Group's capitalisation policy. Subsequently this has been transferred to exploration and evaluation assets.

13. Reclassification of diamond revenue from continuing operations to discontinued operations.

As part of the sale and purchase agreement in 2008, the Company sold 30% of the shares in Marampa to Cape Lambert. Under IAS 27, the Company has restated this transaction and taken into account the potential voting rights. This is due to Cape Lambert's ability to reverse the transaction via their put option. As such, the Company maintained control in 2008 and pushed the full disposal into 2009, when the control of the company passed to Cape Lambert. The following adjustments were recorded:

14a. - Removal of gain and minority interest14b. - Movement of the fair value of the put liability to other comprehensive income. In 2008 the put liability is credited to fair value reserves and recycled in 2009.

14c. - 2009 gain on disposal of subsidiary and reclassification to discontinued operations.

14d - 2008 gain on disposal pushed into 2009, the corresponding entry is on the accumulated deficit.

14e - Deferred funding adjusted for Cash and Cash Equivalents and receivables of $4,667,000 and $20,000,000 respectively.

During 2009, the disposal of the additional 70% of Marampa was agreed; therefore the additional profit from 2008 has been correctly included in the total gain on disposal.

14. Relates to reclassification of deposits from non-current deposits to current deposits.