Related Party Transactions

1 November 2012

African Minerals Limited

Announcement about related party transactions

African Minerals Limited ("African Minerals", "AML" or "the Company") announces that during 2011 and 2012 it and/or its subsidiaries (together the "AM Group") entered into various arrangements that constituted related party transactions pursuant to AIM Rule 13, which were not contemporaneously disclosed as required by the AIM Rules. This announcement is now being made to comply with AIM Rule 13.

These arrangements relate to supply of iron ore to, and agency fees payable to, China Railway Materials Company Limited ("CRM"), and cost allocations with companies controlled by Frank Timis, Executive Chairman of AML. They were undertaken in the ordinary course of business and (to the extent financial transactions occurred in the relevant period) were previously disclosed in the Company's 2011 Accounts and/or interim results to 30 June 2012.

Arrangements with CRM

·; Sales agency fees fixed and capped at $24m/year

·; 20 year sale and purchase agreement for at least 5mtpa of iron ore at market prices

·; 0.5mt iron ore sales to CRM in 2012 as principal (rather than as agent) at market prices

As announced on 1 April 2010, the Company (through a subsidiary) entered into a sales agency agreement (the "Sales Agency Agreement") with CRM. This appointed CRM as its exclusive agent for sales of hematite iron ore into China, with a minimum of 5 million tonnes per annum, ("mtpa") and an anticipated maximum of up to 8 mtpa, which was at that stage the maximum envisaged iron ore production for Tonkolili phase 1. The Sales Agency Agreement was for 20 years, with CRM entitled to a $3/tonne commission on hematite iron ore sold by AML into China. CRM was not a "related party" within the meaning of the AIM Rules at the time that the Sales Agency Agreement was entered into.

Since then, the AM Group has increased its projected phase 1 production from 8 mtpa to 20 mtpa (as announced at various times) and the AM Group and CRM entered into discussions about the extent of CRM's entitlement in relation to this additional tonnage. The outcome of this was an agreed clarification to the Sales Agency Agreement, under which, for the duration of the agreement, and in addition to all other terms, the sales commission payable by the AM Group to CRM for sales of iron ore into China is fixed and capped at $24m per year, irrespective of the actual volume of sales into China. At the same time, the AM Group and CRM (through a subsidiary) entered into a 20 year sale and purchase agreement for at least 5 mtpa of iron ore at a market price based on the Platts 58 CFR North China index. The clarification to the Sales Agency Agreement and the sale and purchase agreement (the "Clarification Agreements") were entered into on 26 August 2012, at which time CRM was a related party within the meaning of the AIM Rules by virtue of its substantial shareholding in the Company, and therefore constituted a related party transaction pursuant to AIM Rule 13.

The directors of the Company (other than Mr Li Zhimin, being a CRM representative) consider, having consulted with Deutsche Bank, the Company's nominated adviser, that the terms of the Clarification Agreements are fair and reasonable insofar as its shareholders are concerned.

Before the clarification to the Sales Agency Agreement, on 6 December 2011 the AM Group entered into a sales agreement with a subsidiary of CRM (the "Sales Agreement") to sell approximately 0.5 mt of iron ore to a subsidiary of CRM as principal, rather than effecting this as an agency sale through CRM under the existing Sales Agency Agreement. These sales, which all occurred during 2012, took place at market prices based on the Platts 58 CFR North China index. At the time the Sales Agreement was entered into, CRM was a related party within the meaning of the AIM Rules by virtue of its substantial shareholding in the Company, and therefore the entering into of the Sales Agreement constituted a related party transaction pursuant to AIM Rule 13.

The directors of the Company (other than Mr Li Zhimin, being a CRM representative) consider, having consulted with Deutsche Bank, the Company's nominated adviser, that the terms of the Sales Agreement are fair and reasonable insofar as its shareholders are concerned.

Arrangements with companies controlled by Frank Timis

During 2011 and 2012 the AM Group has had informal arrangements for the allocation of certain costs (as set out below) (the "Cost Allocations") with companies controlled by Frank Timis, Executive Chairman of AML, being African Petroleum Corporation Limited, International Petroleum Limited and Pan African Minerals Limited (and/or their respective subsidiaries). Each of these companies are a related party within the meaning of the AIM Rules by virtue of being an associate of Frank Timis, and as such, the Cost Allocations constituted related party transactions pursuant to AIM Rule 13.

The details of these Cost Allocations were (to the extent they occurred in the relevant period) disclosed in Note 12 to the Company's interim results to 30 June 2012, and in Note 23 to the Company's accounts for the year ended 31 December 2011, and were reviewed and approved as part of the Audit Committee and Board approval of those accounts. These Cost Allocations continued into Q3 2012, including some adjustments for charges for services allocated in earlier periods. Details of these Cost Allocations (as adjusted) for the year ended 31 December 2011, the six months ended 30 June 2012 and the three months ended 30 September 2012 are set out below:

African Petroleum Corporation Limited is a company of which Frank Timis is a Director and has an ownership interest of 39.5%. Transactions relate to provision of jet services by African Petroleum Corporation Limited to AML and recharges by AML to African Petroleum for shared London office rental and related expenses.

International Petroleum Limited is a company of which Frank Timis is a Director and in which he has an ownership interest of 37.75%. Transactions relate to recharges by AML to International Petroleum Limited for shared London office rental and related expenses.

Pan African Minerals Limited is a company of which Frank Timis is a majority shareholder with an ownership interest of 65%. Transactions relate to recharges by AML to Pan African Minerals Limited for the provision of certain AML staff on Pan African Minerals Limited projects and for shared office rental and related expenses.

The directors of the Company (other than Frank Timis) consider, having consulted with Deutsche Bank, the Company's nominated adviser, that the terms of the Cost Allocations are fair and reasonable insofar as its shareholders are concerned.

On 31 October 2012, the Company (or its subsidiaries) entered into agreements formalising the cost allocations (the "Cost Allocation Agreements") with each of African Petroleum Corporation Limited, International Petroleum Limited and Pan African Minerals Limited (or their subsidiaries), on substantially the same terms as reflected in the Cost Allocations shown above. The entering into of the Cost Allocation Agreements constituted related party transactions pursuant to AIM Rule 13.

The directors of the Company (other than Frank Timis) consider, having consulted with Deutsche Bank, the Company's nominated adviser, that the terms of the Cost Allocation Agreements are fair and reasonable insofar as its shareholders are concerned.

Contacts:

African Minerals Limited

Mike Jones

+44 20 3435 7600

FTI Consulting

Billy Clegg / Ben Brewerton

+44 20 7831 3113

Deutsche Bank (NOMAD)

Brent Nabbs

+44 20 7545 8000