AMI.L Regulatory News (AMI)

03 November 2014

African Minerals Limited

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

Corporate Update

African Minerals, the developer and operator of the Tonkolili iron ore mine in Sierra Leone, notes that Timis Corporation Limited ("Timis Corp"), a company established and wholly owned by AML's Executive Chairman Frank Timis, has acquired the Sierra Leone mining assets of London Mining from the administrator PwC, and provides the following update.

Highlights

· The Board of AML, after careful consideration, decided on 10 October 2014 not to enter discussions to acquire the assets of London Mining in Sierra Leone given the potential impact on the debt refinancing schedule that is currently underway with Standard Chartered Bank, as communicated to the market on 30 September 2014

· Following this decision, the Board of AML formally allowed Frank Timis, acting in a personal capacity as Timis Corp, to enter discussions for the acquisition if he so wished

· It has been announced today that Timis Corp has successfully acquired the Marampa Mine from the administrators, PwC

· Timis Corp had previously informed AML that, if successful in this acquisition, it would require Timis Corp and AML to negotiate fair commercial access terms for AML's rail and port infrastructure, owned by AML's subsidiary African Railway and Port Services, or "ARPS"

· At an AML Board meeting held on 24 October 2014, the Board of AML approved Timis Corp's access to the ARPS rail and port infrastructure for 6Mtpa of iron ore product, subject to completion of commercial terms and any regulatory approvals, including the requirements of the AIM Rules

· Any commercial terms that may be agreed will be on an arms-length basis, will reflect standard commercial terms in the industry, will be accretive to AML, and will be fully assessed as a Related Party Transaction in accordance with Rule 13 of the AIM Rules

· Furthermore, AML and Timis Corp have agreed to undertake studies regarding the possibility of blending the products from Marampa and Tonkolili, to mutual advantage, with a view to accessing European steel making markets with a suitable quality high grade product and to also capture the benefits of lower freight rates.

Benefits to AML

Other than the implicit additional revenue through terms of any access agreement, once agreed, AML is expected to be able to benefit from the following:

· reduced infrastructure operating costs per tonne, as a result of a high fixed cost base benefiting from higher volumes transported

· the potential to blend Marampa's c65% Fe product with Tonkolili's c58% Fe product to create a product grade that is desirable in Europe, which would allow AML to benefit from significantly lower freight rates (in October the average freight differential benefit between China and Rotterdam from Pepel was $12/t)

· a potential significant premium in selling this European blend grade compared to the current DSO (Current Platts 58% Fe price is $67.50/t whereas Platts 62% Fe price is $80.00/t).

Alan Watling, CEO, African Minerals, said:

"It is very pleasing to see that the Marampa Mine will continue to be a major source of employment in Sierra Leone. The quick resolution by the administrators and Timis Corporation Limited has prevented the closure of an important asset for the local and national community.

African Minerals confirms it has agreed access for 6Mtpa to the rail and port infrastructure by Timis Corp to unlock the synergies between these assets, subject to the final negotiation of commercial terms and receipt of necessary approvals. Given the acknowledged related party nature of the transaction, those negotiations will be done on a completely arms-length basis, will reflect standard market pricing, and will be ratified in accordance with Rule 13 of the AIM Rules.

It is expected that, subject to the agreement of commercial terms, AML and ARPS will benefit substantially from lower infrastructure costs by virtue of higher tonnage, as well as the opportunities that will become possible through blending our combined products, accessing new markets in Europe and reducing our combined freight costs as a result, saving an estimated $12/t on current prices.

The fact that Timis Corp has exclusive access to 100Mt of Cape Lambert's adjacent weathered hematite material means that the Marampa Mine will continue to be able to process a consistent product for the next decade, continuing to provide additional revenue to AML."

Contacts:

African Minerals Limited

+44 20 3435 7600

Mike Jones

Tavistock

+44 20 7920 3150

Jos Simson / Nuala Gallagher/ Mike Bartlett

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 12.8 Bt. The multi-generational Project is being developed in a number of staged expansions. In 2013, African Minerals completed sales of 12.1 Mt to its customers. The current year sales guidance is for 16-18 Mt of exports.

Phase II expansion will see exports increase to 25 Mtpa, and will incorporate production of a high grade concentrate product. Concentrate production is expected to begin by the end of 2015 and will eventually displace current DSO production as concentrate volumes increase and the DSO resource depletes over time.

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