Proposed Institutional Placing

24 May 2011

Mwana Africa PLC

("Mwana" or the "Company") (AIM: MWA)

Proposed Institutional Placing to raise £9.27 million (US$15 million);

Proposed Capital Reorganisation; and

Notice of EGM

Highlights

·; £9.27 million (approximately US$15.0 million) gross fundraising from existing and new institutional investors

·; Proceeds to fund drilling programme at Zani-Kodo and further exploration at the Semhkat base metals concessions in the DRC

·; Proceeds will also finance the care and maintenance programme at BNC and maintain Klipspringer in restart ready state

·; Ramp up at the Freda Rebecca gold mine continuing successfully, with 27,240 ounces of gold produced in the twelve months to March 2011 and implementation of Phase 2 commenced

The Board of Mwana Africa PLC is pleased to announce that it has conditionally placed 185,425,548 New Ordinary Shares of 1 penny ('p') with certain institutional shareholders and additional investors to raise gross proceeds of approximately £9.27 million (US$15.0 million) at a placing price of 5p per New Ordinary Share ("Placing Shares").

The Placing is conditional, inter alia, upon Shareholders passing the Resolutions set out in the Notice convening the Extraordinary General Meeting ("EGM") and upon the admission to trading on AIM of the Placing Shares.

In order to facilitate the Placing, the Board proposes to carry out a Capital Reorganisation whereby each of the issued Existing Ordinary Shares (which each have a nominal value of 10 pence) will be sub-divided into one New Ordinary Share of one penny (£0.01) and one Deferred Share of nine pence (£0.09).

The net proceeds of the Placing are expected to be approximately £8.77 million (US$14.2 million) and are intended to provide the funding to further Mwana's exploration programme, finance BNC on care and maintenance, maintain Klipspringer in a restart ready state and provide general working capital for the Group.

Kalaa Mpinga, CEO of Mwana, commented:  

"Today's fundraising will support our exploration programme at our promising gold and base metals assets in the DRC, whilst we continue the successful ramp-up of gold production at the Freda Rebecca Mine in Zimbabwe. In parallel, the care and maintenance programme will continue to maintain the integrity of our assets at Bindura, whilst we continue to seek finance to restart our operations. These are important and ongoing elements of our strategy to create shareholder value by developing our multi-commodity portfolio of assets across the African continent."

For further information, please visit www.mwanaafrica.comor contact:

Mwana Africa PLC Tel: +44 (0)20 7654 5580

Oliver Baring - Executive Chairman

Nominated Adviser and Broker

Ambrian Partners Limited Tel: +44 (0) 20 7634 4700

Anthony Rowland / Jen Boorer

Public Relations

Merlin Tel: +44 (0)20 7726 8400

David Simonson / Anca Spiridon

Definitionsused in this announcement have the same meanings as given to them in the Circular.

Introduction

The Company has conditionally placed 185,425,548 New Ordinary Shares with certain existing institutional shareholders and additional investors to raise gross proceeds of approximately £9.27 million (US$15.0 million) at a placing price of 5p per New Ordinary Share.

The net proceeds of the Placing are expected to be approximately £8.77 million (US$14.2million) and will enable the Group to provide funding to further its exploration programme, finance BNC on care and maintenance, maintain Klipspringer in a restart ready state and provide general working capital for the Group.

The Placing Price represents a discount of 15.25 per cent. to the closing mid market price of the Existing Ordinary Shares on AIM on 23 May 2011, being the last practicable date prior to this announcement.

The Placing is conditional, inter alia, upon Shareholders passing the Resolutions set out in the Notice convening the EGM and upon the admission to trading on AIM of the Placing Shares.

Capital Reorganisation

Currently, the share capital of the Company consists of an unlimited number of ordinary shares of 10 pence each, of which 532,475,160 Existing Ordinary Shares are in issue, credited as fully paid up (and a further 2,666,600 Existing Ordinary Shares are held by the Company in treasury).

Under the provisions of section 580 of the 2006 Act, the Company may not allot shares at a price which is less than the nominal value of those shares.

The Directors consider that a reorganisation of the Company's share capital on the basis of the Capital Reorganisation will enable the Company to proceed with the Placing. 

It is proposed that each of the issued Existing Ordinary Shares (which each have a nominal value of 10 pence) will be sub-divided into one New Ordinary Share of 1 penny and one Deferred Share of 9 pence.

Immediately after the Capital Reorganisation, every Shareholder will hold one New Ordinary Share and one Deferred Share in place of any Existing Ordinary Share held.

The Deferred Shares will have very limited rights and are effectively valueless. The Deferred Shares will have no voting rights and will have no rights as to dividends and only very limited rights on a return of capital. They will not be admitted to or listed on any stock exchange and will not be freely transferable.

The New Ordinary Shares will have the same rights as those currently accruing to the existing respective Ordinary Shares under the Articles, including those in respect of voting and entitlement to dividends. A Shareholder's pro rata entitlement to Ordinary Shares will not be affected. The sub-division should not affect the market value of a Shareholder's aggregate holding of Ordinary Shares.

Amendment to Articles

As part of the Capital Reorganisation, the Company intends to make consequential amendments to its Articles to include provisions in respect of the Deferred Shares. The Capital Reorganisation is conditional on the approval of the Shareholders at the EGM.

Exploration

Zani Kodo - Gold (DRC)

Mwana has a joint venture with the state-owned Office des Mines d'Or de Kilomoto (OKIMO) for gold exploration in the Ituri district of the DRC. The joint venture, in which OKIMO has a 20 per cent. free carried interest, covers gold mining rights over 1,605 square kilometres in Orientale Province, containing a series of highly prospective greenstone belts of Kibalian age which are considered to have the potential to host world-class gold deposits. Initial results from Zani-Kodo indicate potential for a significant gold deposit.

In 2010 an updated resource estimate was calculated at the Zani Kodo gold deposit in the DRC, based on the results of deeper drilling along 700 metres of a trend which has been accurately delineated over a strike length of 9 kilometres. The estimate outlined JORC compliant indicated resources of 255,916 oz of gold grading 3.21g/t and JORC compliant inferred resources of 997,850 oz of gold grading 3.62 g/t.

Mwana is intent on growing the current resource at Zani Kodo. This process will involve drilling some 18,000 metres of diamond core at mainly Le Badolite, Zani Central and Zani South, all of which occur along the Zani-Kodo Trend. In order to fund this drilling programme and further exploration on the project the Company intends to use US$5.2 million of the placing proceeds.

The Board is considering options to enhance value for Mwana shareholders, which include the possible spin-out of Zani-Kodo, although planning is still at a very preliminary stage.

SEMHKAT - Base Metals (DRC)

Mwana holds a 100 per cent. interest in SEMHKAT which has exploration concessions covering 4,845 square kilometres in the south east of the DRC. Exploration is focusing on sediment-hosted stratiform copper-cobalt, iron oxide copper gold (IOCGs) occurrences as well as on showings of lead and zinc.

A total of 55 holes totalling 5,831 metres have been completed at Kibolwe West. Copper mineralisation has been intersected in two distinct zones which appear to represent the limbs of an antiformal structure. Mineralised widths of up to 63 metres at 2.16 per cent. copper have been intersected. In addition a series of NNW trending breccias zones have been detected which appear to represent fault zones. Detailed geological modelling of the area is currently being undertaken.

Having completed the drilling at Kibolwe, Mwana now needs to identify new drill targets, planned for drilling in the last quarter of the year. The target areas that have been selected for this work are Mukema, Kitemena-Kitungulu-Kamungoti ('K-K-K' Area), and Lombe. Metallurgical testing and a scoping study is planned to be carried out for a potential copper sulphide plant at the Kibolwe project. The Company intends to use US$4.1 million from the Placing to continue exploration activity and to carry out the scoping study on this project.

Bindura Nickel Corporation

Mwana holds a 52.9 per cent. interest in BNC. The remaining shares are held by entities related to the government of Zimbabwe and by private and institutional investors. The company is listed on the Zimbabwe Stock Exchange.

BNC owns and operates the Trojan and Shangani underground mines and the Bindura Smelter and Refinery complex, all of which are currently on care and maintenance. BNC also owns the Hunters Road nickel deposit and development project (with a number of individuals having the right to subscribe for up to 18 per cent. of the entity established to develop the Hunters Road project). For the period 2001 to 2009, BNC production varied between 12,889t and 4,269t nickel metal annually. BNC's operations were put on care and maintenance from November 2008 following the decline in global nickel prices, and as a result of difficult operating conditions then prevailing in Zimbabwe.

Given recently improved metal prices and operating conditions in Zimbabwe, BNC are seeking to restart the Trojan mine and have developed detailed plans for the resumption of operations at Trojan which have been reviewed by SRK in a Competent Persons Report. On 7 February 2011 the Company announced that BNC had entered into an Offtake Agreement with Glencore, whereby Glencore will purchase all of the concentrate produced at the Trojan mine until such time as the Bindura smelter and refinery complex are re-started. All regulatory approvals have been received for the Offtake Agreement.

BNC continues to seek finance for the restart of mining operations at Trojan. In the meantime, as part of the pre start work and hot commissioning of key infrastructure, 25,600t of waste has been hoisted since August 2010, with a further 6,100t of ore being hauled underground of which 4,100t has been hoisted and crushed.

Whilst the Company continues to seek financing, which may include debt, to restart operations, working capital is required to maintain the BNC assets on the care and maintenance programme to ensure a lower restart cost and shortened time to production post restart. The Company plans to allocate US$3.6 million from the placing proceeds for this purpose.

Klipspringer Diamond Mine

The Klipspringer Diamond Mine in South Africa is located 250 kilometres north of Johannesburg and 35 kilometres south of Polokwane, the provincial capital of the Limpopo Province. The mine is a joint venture between Mwana and Naka Diamond Mining (Pty) Ltd, a Black Economic Empowerment company, in which Mwana's current stake is 65 per cent.

The development of the Klipspringer Diamond Mine commenced in 2001 with the construction of a decline down to 7 level (160 metres) and was in full production by February 2003. Following successful trials through 2006 and 2007, the mine was re-engineered and the underhand open stoping mining method introduced, resulting in a reduced tonnage but an improvement in grade and a reduction in the cost structure.

During the period April 2010 to March 2011 a total of 49,000 tons was mined. This yielded 22,700 carats, including a special stone of 31,25 carats valued at US$8,200 per carat. This is the largest stone recovered from the mine to date.

Following a number of severe weather incidents in December 2010 and January 2011, which flooded the shaft bottom and lower (7) level, a decision to cease production and development at Klipspringer for reasons of health and safety, was taken. The mine is currently in a recovery phase aimed at re-instating infrastructure that was damaged as a result of the flooding. Management are reviewing restart scenarios and timing. Proceeds of US$1.3 million from the Placing will be used to maintain the Klipspringer mine in a restart ready state whilst restart scenarios are reviewed.

Freda Rebecca Gold Mine

Commercial production at the Freda Rebecca gold mine recommenced in October 2009 following completion of Phase 1 of its refurbishment programme. 27,240 oz of gold were produced in the twelve months to March 2011. A gold resource at Freda Rebecca of 2.3 million oz at a 1.5g/t cut off was recently announced.

The mine is now consolidating the Phase 1 platform focusing on improvements in target grade, tonnage mined from underground sources and plant recoveries. In addition, the Freda Rebecca team commenced implementation of Phase 2 which it is expected will increase the mining rate to approximately 80,000t per month and achieve an annualised gold production rate of approximately 50,000 oz per annum.

Phase 2 involves the re-commissioning of the second mill circuit and mobilisation of additional underground equipment. In February 2011, Mwana announced that Freda Rebecca had drawn down US$4 million of a US$10 million facility from the IDC.

For the six month period to the end of September 2010, Freda Rebecca generated gross revenue of US$13.5 million and EBITDA of US$0.7 million.

Indigenisation legislation in Zimbabwe

The Zimbabwean Government published the Indigenisation and Economic Empowerment Act in 2007, which made provision for the indigenisation of up to 51 per cent. of all foreign owned businesses operating in Zimbabwe. Regulations in support of the Indigenisation Act were published in February 2010 in preparation for the implementation of the Indigenisation Act.

On 25 March 2011, the Minister of Youth, Indigenisation and Economic Empowerment published a statutory instrument, which sets out the requirements for the implementation of the Indigenisation Act and its supporting regulations as they pertain to the mining sector.

The company has submitted representations relating to the indigenisation regulations to the Zimbabwe Government and discussions are ongoing to determine the impact, if any, on Mwana's shareholding in its Zimbabwe assets.

Details of the Placing

The Placing is subject to the terms of a Placing Agreement which contains warranties from the Company in favour of the Placing Agents in relation to, inter alia, the accuracy of the information contained in the placing documentation and certain other matters relating to the Group and its business.

Lansdowne Partners Ltd ("Lansdowne"), currently a substantial shareholder in the Company, is subscribing for 24,723,407 New Ordinary Shares pursuant to the Placing. Following the Placing, Lansdowne will own 82,627,042 New Ordinary Shares, representing 11.51 per cent. of the enlarged issued share capital of the Company. As a substantial shareholder, Lansdowne is deemed to be a related party for the purposes of the AIM Rules for Companies.

The Board of Directors of the Company, having consulted with Ambrian in its capacity as nominated adviser to the Company, consider that the terms of the Lansdowne subscription, being the same as those for all other placees, are fair and reasonable insofar as the Company's shareholders are concerned.

The Placing is conditional, inter alia, upon Shareholders passing the Resolutions set out in the Notice convening the EGM, which is set out at the end of the Circular, and will shortly be available on the Company's website, and upon the admission to trading on AIM of the Placing Shares ("Admission").

Application will be made for the Placing Shares to be admitted to trading on AIM and, subject to the passing of the Resolutions, Admission is expected to occur at 8.00 a.m. on 14 June 2011. The Placing Shares will, when issued, rank pari passu in all respects with the Ordinary Shares, including the right to receive all dividends and other distributions declared, made or paid on such Ordinary Shares following Admission.

Following Admission of the Placing Shares, Mwana's issued share capital will consist of 717,900,708 New Ordinary Shares (excluding 2,666,600 Ordinary Shares, which are currently held by Mwana in treasury, and in respect of which no voting rights may be exercised). As such, the total number of New Ordinary Shares in Mwana to which voting rights are attached on the basis of one vote per Ordinary Share held will be 717,900,708.

The above total voting rights figure may be used by shareholders as the denominator for the calculations by which they will determine whether they are required to notify their interests in, or a change to their interest in, the Company under the FSA's Disclosure and Transparency Rules.

Directors Participation

As part of the Placing, the Directors below have indicated that they will subscribe for New Ordinary Shares as follows:

The interests (all of which are beneficial unless otherwise stated) of the Directors and their immediate families and the persons connected with them (within the meaning of section 252 of the Act) in the issued share capital of the Company or the existence of which could, with reasonable diligence, be ascertained by any Director as at the date of this document and as expected to be immediately following Admission are as follows:

Extraordinary General Meeting

An Extraordinary General Meeting for Shareholders to consider and, if thought fit, to pass the Resolutions in relation to the Placing will be held at Broadway House, Tothill Street, London SW1H 9NQ on 9 June 2011 at 10.00 a.m. Details of the EGM are set out in the Notice of EGM provided at the end of the Circular, to be posted today, and will shortly be available to view on the Company's website at www.mwanaafrica.com.

Irrevocable Undertakings

Certain Shareholders holding in aggregate 210,193,060 Ordinary Shares, representing 39.47 per cent. of the Existing Issued Share Capital, have irrevocably undertaken to vote in favour of the Resolutions.

Accordingly, the Company is in receipt of irrevocable undertakings to vote in favour of the Resolutions in respect of 210,193,060 Ordinary Shares representing in aggregate 39.47 per cent. of the Existing Issued Share Capital.

Recommendation

The Directors consider the Capital Reorganisation and the Placing to be in the best interests of the Company and its Shareholders as a whole and accordingly, have unanimously recommended that Shareholders vote in favour of the Resolutions, as all of the Directors intend to do in respect of their beneficial holdings amounting, in aggregate, to 41,611,651 Ordinary Shares representing approximately 7.81 per cent. of the Existing Issued Share Capital.

Notes to editors

Mwana Africa

Mwana Africa PLC is an AIM Listed pan-African resources company with operations in Zimbabwe and South Africa and exploration projects and interests in the Democratic Republic of Congo, Angola, Ghana and Botswana. The group has a diverse asset base including gold, nickel, copper and diamonds.