Q3 2013 Production Report

5th November 2013

African Minerals Limited

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

Q3 2013 Production Report

Sales guidance unchanged at 11-13Mt in 2013

African Minerals, the developer and operator of the Tonkolili iron ore mine in Sierra Leone, today announces its Q3 production update for the period ended 30 September 2013.

Highlights

· Quarterly production of 3.0Mt, (Q2 : 4.0Mt, YTD 9.2Mt)

· Quarterly sales of 2.8Mt, (Q2 : 3.4Mt, YTD 8.3Mt)

· Average FOB received price of $71/t (dry), (Q2 : $70/t, YTD $75/t)

· Average shipping rate of $20/t,(Q2 : $18/t, YTD $19/t)

· Stockpiles across mine and port of 2.6Mt of mainly fines product (Q2 : 2.4Mt)

· Sales guidance unchanged at 11-13Mt in 2013

· 4th trans-shipper, MV Argosy, has been contracted, and is expected to arrive on site early December

· Drilling programme planned for Q4 2013 to meaningfully extend the life of our DSO resource

· Report by Hatch (South Africa) on maximising our current infrastructure capacity, to be used for expansion above 20Mtpa, expected in Q4 2013

· Design and procurement of a further 9Mtpa A32 process plant, for expanded DSO production, expected to be constructed, commissioned and ramped up during H1 2014, to utilise this expanded capacity

· Pilot plant for industrial scale testing of saprolite flowsheets en route to Tonkolili

· Good progress on technical innovations related to addressing Transportable Moisture Limit, including the use of super-absorbent polymers First vessel destined for Tewoo sailed at the end of September, and second vessel sailed end October; due diligence and commercial negotiations continuing

Bernie Pryor, Chief Executive Officer of African Minerals, said:

"African Minerals is continuing to make satisfactory progress this year, despite the setbacks suffered in July and August with our transhipping fleet, which have now been resolved. Our strategy of shipping only Group C cargoes in the wet season, while stockpiling Group A fines, is proving successful, and we are confident that our sales guidance for the year will be met.

Our organisational review is complete, and we have reduced service and corporate staff by around 40%, without compromising production or other operations. We have put in place a number of initiatives, mainly around utilisation, efficiency and procurement, to further drive down costs in support of our aim of having our cash costs at around $30/t once the 20Mtpa production run rate is sustainably achieved, which we expect will be at the end of this year.

Hatch (SA) is now compiling the results of the review on infrastructure capacity with a view to determining the optimum immediate export capability, above 20Mtpa, at the rail and port. We expect to provide the results of those studies in Q4. Following the results of this review, the initial expansion for Phase 2 will be executed at that higher capacity level, determined from the outcome of the Hatch optimisation of existing rail and port capability. The pilot plant for industrial scale saprolite process flow-sheet definition is expected on site shortly.

Finally, we are happy to announce that the two vessels destined for Tewoo, as part of their due diligence process in relation to their proposed $990m transaction, have both been despatched. Due diligence by Tewoo is continuing, and negotiations regarding the commercial terms of the proposed transaction are well underway.

The Board remains focused on the Tonkolili project to sustain targeted production rates, reduce costs and increase returns."

 Summary

*After shareholder and material quality discounts, but excluding final invoicing adjustments on sales in Q3 which have not yet been finally priced

Safety

The project recorded 8 lost time injuries in the quarter, down from 17 in Q2, and the rolling All Injury Frequency Rate fell from 1.74 to 1.45 injuries per 200,000 man hours.

Production

Mining movement continued well in Q3, although access to the higher pits was reduced as the wet season cloud base impacted visibility. There was an increase in ore movement associated with stockpiling of saprolite for Phase 2, which also exposes more DSO at the lower pits.

The wet process plants processed 3.6Mt directly from the mine and 0.4Mt from Run of Mine ("ROM") stockpiles, 10% lower than the previous quarter, mainly as a result of careful operation of the damaged 2.4km long CV02 conveyor that was split in Q2. This belt will be replaced in Q4 once the wet season has ended, and at a time when there is less reliance on producing lump material from the wet plants.

In line with its wet season strategy, the mine has continued to stockpile fines material which will see fines being shipped in the coming dry season, while lump material is being blended with A32 material to form a Group C cargo of lump blend.

With the bulk of processing capacity currently dedicated to producing lump and fines material as described above, mass yield dropped in Q3 from 89% to 75%, resulting in the production of 3.0Mt of product at the mine.

With no lump stockpile available at the start of the wet season, and lower utilisation in respect of CV02, lump production was a constraint to exports. A32 stockpiles were reduced by 1.1Mt as it was blended with concurrent production of lump of 1.2Mt and 0.6Mt of A32. Fines stockpiles increased by 1.0Mt.

With a net reduction in mine stockpiles of 0.1Mt, stockpiles at the mine at the end of quarter were 2.3Mt of product.

Exports

As previously announced, exports were impacted at the start of the quarter by operational issues with each of our trans-shippers, thereby reducing our Trans-Shipping Vessel ("TSV") fleet from having three available to having on average of less than two through the quarter. These issues were discussed in the Interim Report. The fleet strength returned to three vessels at the end of September.

As a result, export capability was reduced from 7-8 Ocean Going Vessels ("OGVs") per month prior to these incidences, to 5-6 per month through the whole of Q3. This, together with sometimes constrained product availability noted above, reduced our exports from 3.4Mt in Q2 to 2.8Mt in Q3, while port stockpiles were increased by a further 0.3Mt. To improve availability in the future, and to provide some element of redundancy, a fourth TSV, MV Argosy, has been contracted, and is expected to be available from early December.

98% of exports in Q3 were of lump blend material, and sales through to the end of the wet season are expected to also be predominantly lump blend. Lump blend attracts an additional $3-5/t re-processing charge compared to standard fines pricing.

Sales

In Q2, 12 of the 20 OGVs (57% of tonnage) were delivered into the Shandong Iron and Steel Group Discounted Offtake Agreement ("DOTA"), and in Q3 six of the 16 vessels (37% of tonnage) were delivered into the DOTA. At the end of Q3, 4.16Mt of material had already been delivered into the 4.80Mt DOTA annual commitment.

The weighted average 58% IODEX Platts index price for the period was $111/t (dry), down slightly from $116/t in the previous quarter, while freight rates increased slightly in the period from an average of $18/t in Q2 to $20/t in Q3.

The achieved FOB price in Sierra Leone was $71/t (dry), marginally up from $70/t in the previous quarter, as a combined result of the drop in the benchmark price from $116/t to $111/t, the rise in freight rate from $18/t to $20/t, and the additional charge associated with selling more lump blend, offset by a lower proportion of sales into the DOTA (37% vs 56%) and a lower level of adjustments on final versus provisional invoicing ($2/t vs $8/t).

Guidance for 2013 sales remains between 11Mt and 13Mt in 2013.

Costs

Cost per tonne is materially influenced by the level of sales volumes, and hence has shown volatility across the year to date. Once sales volumes sustainably reach the targeted output rate of 20Mtpa, which we expect will be achieved around year end, it remains our objective that the C1 cash cost should be in the region of $30/t. A number of cost saving initiatives over and above those already implemented are being investigated as part of the preparation for the 2014 budget.

Balance Sheet

As at the end of September the Group had drawn principal debt of $832m, and had cash of $401m.

Project Update

DSO Resource Extension

The DSO resource was delineated in December 2010 with a total resource of 126Mt. However several high potential areas remained untested at that time. Drilling is shortly to commence on areas within the north-east section of our mining lease, along the Kasafoni structure, and we are confident to delineate significant additional DSO tonnage.

Furthermore we are also investigating the effects of adjusting the DSO cut-off grade to bring more material into the DSO resource from within the saprolite resource, whilst maintaining saleable product quality.

The results of these investigations, which are expected to add materially to the DSO resource, is expected in the New Year.

Infrastructure Capacity

As discussed in our Interim Report, the Company is now expecting to commence its Phase 2 expansion during 2014 to an initial capacity that maximises the capabilities of the existing infrastructure.

Hatch (South Africa) has been appointed to review the capacity of the existing rail and port infrastructure, and the most cost effective approach to increase output to optimum capacity. Their report is expected during Q4.

The Saprolite concentrators in Phase 2 would then be designed and constructed to utilise this enhanced capacity, and, subject to the extension of the DSO resource, production of premium grade concentrates will take place alongside extended DSO production for some time, thereby delaying additional capital requirements that would otherwise be needed for the construction of additional concentrators.

This strategy maintains optionality for further expansion, with an upgrading of rail and port capacity at Pepel, while minimising immediate capital requirements and improving free cash flow.

Procurement of additional DSO processing plant

In order to fully utilise the expanded infrastructure capability, and the planned extension of the DSO resource, the project will also expand its DSO processing capacity. Design of a new 9Mtpa A32 plant has been completed, and procurement has commenced with orders placed. It is expected that this plant will be delivered, constructed, commissioned and ramped up during H1 2014.

Saprolite Process Flowsheet Design - Pilot Plant

To support the saprolite process flowsheet design, initial test work has been performed by CSIRO in Australia. The next stage of industrial scale process flowsheet testing will now take place at Tonkolili, through a purpose-built configurable pilot plant. The pilot plant has been dispatched and is expected to arrive on site in November and enter operation once commissioned around year end, with flowsheet parameters to be decided during H1 2014.

Technological Innovations - Polymer

The Company is currently in the process of testing a super-absorbent polymer, which can be added to fines and A32 material, to absorb and lock up the contained moisture, and thus elevate the Flow Moisture Point and the Transportable Moisture Limit ("TML") at which Group A cargoes can be shipped. Results to date are encouraging, and if successfully implemented this initiative would allow the shipment of fines and A32 deeper into, and possibly throughout, the wet season.

Other Developments

On 26 September 2013 the Company announced the signing of a binding MOU with Tianjin Materials and Equipment Group Corporation ("Tewoo") for the sale of 10% of the underlying project companies from AML to Tewoo, and for AML to make a private placement to Tewoo for a post-issue holding of 10% of AML, for total proceeds of $990m. Part of the due diligence and approval process was the receipt of two trial shipments. The first of those shipments departed from Sierra Leone at the end of September 2013, and the second sailed at the end of October 2013. Due diligence by Tewoo is continuing, as well as negotiations regarding outstanding commercial terms of the transaction.

Contacts:

African Minerals Limited

+44 20 3435 7600

Mike Jones

FTI Consulting

+44 20 7831 3113

Ben Brewerton / Oliver Winters

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 run-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 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