African Mining & Exploration Plc ANNUAL REPORT AND FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2011 21272-04 09/05/2012 Proof 4 21272-04 09/05/2012 Proof 4 contEnt S Business review Chairman’s Statement Chief Executive’s Report governance Report of the Directors Corporate Governance Statement Statement of Directors’ Responsibilities Report of the Independent Auditor financial Statements Consolidated Statement of Comprehensive Income Consolidated Statement of Financial Position Company Statement of Financial Position Consolidated Statement of Changes in Equity Company Statement of Changes in Equity Consolidated Statement of Cash Flows Company Statement of Cash Flows Notes to the Consolidated Financial Statements AGM Information Notice of Annual General Meeting Company Information Page 2 4 6 9 10 11 13 14 15 16 17 18 19 20 36 IBC AfricAn Mining & ExplorAtion plc — ANNUAL REPORT AND FINANCIAL STATEMENTS 2011 1 21272-04 09/05/2012 Proof 4 chAirMAn’ S StAtEMEnt In last year’s inaugural Chairman’s Statement I was able to describe the achievements the Company had made in a relatively short space of time. It is therefore with some frustration, that despite the Company pursuing a solid strategy, the expected benefits have not yet fully materialised. However, I believe that a platform has been created which should prove fruitful as we move forward. The Company’s recent investment in RAB and auger drilling capability is expected to provide effective reconnaissance exploration capability and should help counter the shortage of basic drilling equipment available from subcontractors in the region. The delay of its eventual deployment to the field hampered our progress on the ground. However, the drill rig is now fully operational and provides the Company with great flexibility. West Africa Operations Our Company is focused on the exploration and subsequent development of gold assets in West Africa. Mali, our initial country of operation, is the third largest gold producer in Africa and has a long and rich history of gold discoveries. Our West African operation is based in Bamako, the Capital of Mali, a country widely regarded as a model of development and democracy in West Africa. Recent events in Mali have seen a military coup d’état at the end of March, followed by sanctions imposed by ECOWAS (Economic Community of West African States) which were subsequently lifted, and an interim President, Dioncounda Traore who was previously the parliamentary speaker, has been installed. Elections are scheduled for the end of May. I am very pleased to report that all employees are safe, as is the Company’s property and equipment, and the impact on the Company’s exploration efforts so far was minimal. Indeed the Company was able to commence an auger drilling programme on the Karan permit area in early April. However, in light of some continued unrest in Bamako some disruption to our drilling programme may occur, especially due to shortages in fuel supplies. Exploration Although we believe that our current permits in Mali, Karan and Diatissan, have the potential for providing a significant resource base we are actively seeking opportunities to expand our areas of interest in additional geologically prospective areas. Initial results from the Karan drilling programme, which reported low grade gold halos had been intersected along with high grade intercepts of up to 11 g/t Au, were below expectations but have positively contributed to the Company’s understanding of the permit area. Five additional drilling targets have been identified and a drilling programme has commenced. The investment in our operational and drilling capability is being viewed very favourably by potential joint venture partners, and indeed we have recently signed an MOU on a prospective permit area which lies within the Yanfolila Greenstone Belt in Southern Mali. financial At the time of Admission to AIM in November 2010, the Company raised £4.3 million net of expenses, this was augmented by £1.6 million received following the exercise of warrants in the first half of 2011. This has provided the Company with a healthy cash balance which continues to be utilised principally to conduct detailed exploration programmes on the Company’s permits in Mali. Social responsibility The Company and its management are cognisant of its social and environmental responsibilities in the areas in which we operate and are committed to the development and maintenance of good relationships with stakeholder communities. To this end, the Board has formulated a Community Relations policy which focuses on the positive interaction with the local community especially bearing in mind the significant artisanal mining which is taking place. This policy was implemented and already forms the basis for effective community relations in our permit areas as required by the Government. 2 AfricAn Mining & ExplorAtion plc — ANNUAL REPORT AND FINANCIAL STATEMENTS 2011 21272-04 09/05/2012 Proof 4 chAirMAn’ S StAtEMEnt Market performance Although the gold market continues to be strong this was not reflected in stock market performance. As at mid April 2012 the AIM mining sector index was trading at almost 30% below the level of 1 January 2011. The Company’s share price performance has been no exception to this trend. Unfortunately the coup in Mali added to uncertainty in the region and negatively affected investor confidence. However, with the quantitative easing measures implemented in the US, the UK and elsewhere, and the debt crises in particularly the Eurozone during this year investment interest in gold remains high. Board changes Since I last reported Martyn Churchouse, the Company’s Technical Director, resigned from the Company due to conflicting commitments which would have prevented him from properly fulfilling his duties and providing the level of attention required by the Company. outlook The organisation’s enhanced and growing capacity provide a foundation that allows the Company to move forward positively in 2012 and I believe that we are in a stronger position compared with the same time last year. I would like to thank all the Company’s stakeholders for their strong support in the last year and I look forward to the coming year, which I hope will be exciting and rewarding for the Company and its Shareholders. Stephen D oke Chairman 4 May 2012 AfricAn Mining & ExplorAtion plc — ANNUAL REPORT AND FINANCIAL STATEMENTS 2011 3 21272-04 09/05/2012 Proof 4AGM InformationBusiness ReviewGovernanceFinancial Statements chiEf ExE cutivE’S rEport During the period the Company has maintained a clear focus on its strategy of creating a gold focussed exploration company concentrating on quality early exploration opportunities in West Africa. A key objective in achieving this has been to build a strong operational capability and setting up a network of relationships in the region. In addition we have investigated a number of 3rd party permit opportunities in Mali, Guinea and Senegal in order to diversify our exploration portfolio. Acquisition of Drilling Rig Following the completion of the initial 12,400 metre RC drilling campaign, the Company intended to undertake a RAB drilling programme to provide the necessary data on existing targets to outline where more RC and Core drill needed to be done. In addition, the Company had targeted an Auger drilling programme on both Karan and Diatissan permits to identify additional drill targets. However the scarcity of drill rigs with this capability in West Africa, combined with the demands for longer term drilling contracts made the acquisition of our own capability very attractive. The Board therefore made the decision to acquire a RAB and auger drill rig. The drill rig, which is mounted on an all-terrain vehicle, is capable of both RAB and Auger drilling and can drill down to depths greater than 100 metres in favourable ground conditions. Its rugged design and 4x4 functionality makes it highly mobile and will enable it to access rough terrain and road conditions conventional truck mounted drill rigs cannot operate in. This should enable the Company to operate during periods of seasonal rain thereby extending the length of the effective annual drilling season. With the acquisition of support equipment, a mobile exploration camp and the investment in ground magnetic survey equipment, AME has the capability to sample horizons beneath the laterite cover that masks most of the West African Gold Belt, simply and cost effectively. In areas which show enhanced prospectivity, the Company plans to undertake follow up RC and diamond core drilling. The Company’s investment in the drilling rig and support equipment puts us in a strong position to negotiate JV opportunities with holders of prospective ground and capitalise on our growing contacts in West Africa. The effectiveness of this strategy was confirmed by the signing of a Memorandum of Understanding (MOU) with Sahelienne des Mines SARL in April 2012. Sahelienne des Mines is, a Malian registered company that owns the Tekeledougou exploration permit in Southern Mali. The MOU gives AME an exclusive option to enter into an exploration joint venture following a six month due diligence period during which time AME will complete a preliminary exploration programme. Operations Karan permit The Karan permit area consists of a single, rectangular exploration permit for a total of 250km2, and is located approximately 90km southwest of the Malian capital, Bamako, on a metalled road. In the first half of 2011 the Company conducted a reverse circulation drilling programme of 12,400 metres focusing on a number of priority targets. The evidence accumulated to date, from drilling data and other sources, suggests the presence of gold mineralisation associated with a regional shear zone that extends north to south across the Karan permit with smaller cross-cutting and sub- parallel faults occurring within this structural corridor. The next step is to further enhance our understanding of the underlying geology which is complicated by the presence of a laterite cover and a thick saprolite layer of highly weathered rocks which extends in some cases to 100 metres in depth. The Company’s recently acquired drilling capability is an essential tool in achieving this. The outline plan for the Karan permit is that RAB drill fences will be completed at the three previously drilled targets of Mana, Fintakourouni and Kouroudjin to provide full cross-structure coverage, with additional RAB drilling at two targets near Kouroudjin, as identified from the Induced Polarisation (IP) geophysical survey, with follow up drilling taking place once the assay results of the initial RAB drilling have been processed. A ground magnetic survey over the Farague geochemical anomaly will also be conducted to provide structural information prior to auger drilling. The same approach will be used on several additional targets identified by Newmont in 2011. 4 AfricAn Mining & ExplorAtion plc — ANNUAL REPORT AND FINANCIAL STATEMENTS 2011 21272-04 09/05/2012 Proof 4 chiEf ExE cutivE’S rEport Kouroudjin, fintakarouni and Mana targets RAB drill fences have been planned to further test mineralisation identified during 2011’s RC drilling. Fences will be placed with an azimuth of 252-72°, perpendicular to the structure indicated by the artisanal pits, field structural measurements and regional geophysics. Three fences have been planned at each of the Mana, Fintakourouni and Kouroudjin targets, centred upon the best intercepts from the RC drilling. Nine RAB holes have been planned for each fence, with 50m hole spacing, the hole depths will be decided on site and the number of holes at each fence amended based on the drilling results and observations. IP work yielded some interesting results and correlations with the best intercepts from the RC drilling at RC11KDJ001 and 012. These anomalies appear to have a NNW strike and will be tested initially by two RAB holes as recommended by the IP consultant. These RAB holes drill into a chargeability anomaly, which is twinned by another similar, yet stronger anomaly to the west. farague target The Farague area contains the most strongly anomalous geochemical results within the Karan Permit. It was tested with a termite mound sampling programme in Q2 of 2011 which further delineated an anomalous zone. This area will be the subject of ~ 20 line km of ground magnetometer survey prior to drilling. The results of this geophysical survey will be used in conjunction with the geochemical results to create a plan for drilling an auger grid. Diatissan Permit The Diatissan permit is located in the West of Mali in a greenstone belt that includes the world class Sadiola and Loulo mines. In order to identify RAB drill targets at this permit, which contains several areas with geochem anomalies, AME commenced its planned work programme last year, whereby the previously excavated trenches were cleaned and re-sampled. The re-sampling exercise proved difficult due to the poor quality of mapping information from the original study. GPS co-ordinates of the original study did not match up with the re-trenching data, so meaningful correlation between the two sets of data was not possible. On the basis that AME has greater confidence in the data from its own programme it will use this data in conjunction with a ground magnetic survey over the majority of the permit area to define drill targets. The ground magnetic survey has just been finished and the preliminary interpretation has already defined one drill target at a structure that parallels the general trend over a distance of 400 to 600m. Further analysis of the data will be undertaken with the intention of identifying additional drill targets. Initial drilling at Diatissan is planned on at least four target areas, after the drilling programme at Karan. Two targets have anomalous gold in soil and stock works of quartz veining in trenches. Each target will initially be drilled with five RAB holes perpendicular to the structural trend. A third target area where another five RAB holes are planned is defined by distinct ridges where tourmaline sandstone is present. The fourth target is at the magnetic anomaly. Subsequent targets will be defined upon completion of the interpretation of the ground magnetometer survey data. guinea reconnaissance permits In May 2011 AME was granted three reconnaissance permits in Guinea. Following geological investigation, it was concluded that the permits were unlikely to yield an economic gold resource and will not be pursued. AME will continue to monitor opportunities to enhance its exploration portfolio. Social responsibility We continue to enjoy excellent relationships with the local population at both of our exploration permits. This has developed through our local subsidiary Tobon Tondo over a period of almost 16 years at Diatissan and over 7 years at Karan. The geological studies and preparation for the planned drilling programme, which began at Karan in April, have provided frequent opportunities to regularly engage with the local community in line with AME’s Community Relations Policy. outlook Our new operational drilling capability puts AME in a stronger position to identify potential resources at low cost whilst at the same time allowing AME to react quickly to opportunities. This provides AME with a strong competitive advantage which opens up opportunities to establish resource potential on both the Company’s existing properties, as well as any prospective properties under JV agreements. I am confident that the Company will start to gain traction as a result of the decisions and actions taken to date. Mark c Jones Chief Executive Officer 4 May 2012 AfricAn Mining & ExplorAtion plc — ANNUAL REPORT AND FINANCIAL STATEMENTS 2011 5 21272-04 09/05/2012 Proof 4AGM InformationBusiness ReviewGovernanceFinancial Statements rEport of thE DirEctorS The Directors present their report with the financial statements of the Company and the Group for the year ended 31 December 2011. Principal Activities and Business Review The principal activity of the Group in the year under review was exploration primarily of gold in two separate locations in the Republic of Mali, namely Karan and Diatissan. The loss of the Group as set out on page 13 is a fair reflection of the Group’s performance. Additionally the Company invested £920,476 on mineral exploration and evaluation on the licences it holds; this is capitalised as an intangible asset as set out in Note 9 in the financial statements. A review of the Group’s performance for the year and its prospects are included in the Chairman’s Statement on pages 2 and 3 and the Chief Executive’s Report on pages 4 and 5. Dividends The Directors do not recommend the payment of a dividend (2010: £nil). Events Since the Reporting Date There are no events since the reporting date to disclose. Principal Risks and Uncertainties The Board has identified various risk factors which taken individually or together may have a materially adverse effect on the Company’s business. The principal risks and how they are managed are as follows: General Exploration Risk Mineral exploration is a high risk undertaking and there can be no guarantee that exploration will result in the discovery of an economically viable ore body. Exploration tenements are carefully selected by experienced experts in regions of proven prospective geology. A methodical, staged approach is taken to the work and different technologies, as well as extensive fieldwork are used to identify targets for trenching and later drilling. Attraction and Retention of Key People The success of the Company is dependent on the expertise and experience of the Directors and senior management and the loss of one or more could have a material adverse effect on the Company. The Board has put in place a remuneration policy which includes a share option scheme in order to motivate and retain key employees. Future Funding Requirements The Company has an ongoing requirement to fund its exploration activities and may need to obtain finance from the equity markets in the future. Senior Management and the Board closely monitor the cashflows of the Group. Cashflow projections are presented regularly to the Board for review and this assists in ensuring expenditure is focussed on areas of greatest exploration potential. Overheads and administration costs are carefully managed. Exploration Licence Titles The licences will be subject to applications for renewal and any renewal is usually at the discretion of the relevant government authority. The licences in the Company’s portfolio have been the subject of legal due diligence in order to establish valid legal title. Country Risk The Company carries out exploration in countries which have experienced political instability which may cause disruption to the Company’s activities. This risk is mitigated by ensuring the Company meets its work and expenditure obligations, that it prioritises local in-country employment and that it maintains good relationships at all levels with government, administrative bodies and other stakeholders. The Board actively monitors political and regulatory developments. Directors The Directors who have held office during the period from 1 January 2011 to the date of this report (unless otherwise stated) are as follows: M J Churchouse – resigned 16 June 2011 M C Jones D D Chikohora S D Oke R A Williams – appointed 8 March 2011 6 AfricAn Mining & ExplorAtion plc — ANNUAL REPORT AND FINANCIAL STATEMENTS 2011 21272-04 09/05/2012 Proof 4 rEport of thE DirEctorS The Directors’ beneficial interest (including the beneficial interests of their immediate family) in the ordinary shares of the Company are as follows: M C Jones M J Churchouse D D Chikohora S D Oke R A Williams no. of shares held at 31 December 2011 no. of shares held at 31 December 2010 1,850,000 300,000 – – – 1,850,000 300,000 – – – The Directors’ interests in the share options and warrants of the Company are as follows: options at 1 Jan 2011 options granted during the year forfeited during the year options at 31 Dec 2011 Exercise price Date of the grant first date of exercise final date of exercise Shares M J Churchouse 2,000,000 3,000,000 M C Jones 600,000 D D Chikohora 750,000 S D Oke – R A Williams Warrants M J Churchouse 2,000,000 3,000,000 M C Jones 600,000 D D Chikohora 750,000 S D Oke – R A Williams – (2,000,000) – – – – – – – 500,000 – 3,000,000 600,000 750,000 500,000 – (2,000,000) – – – – – – – – – 3,000,000 600,000 750,000 – 10p 22/10/10 10p 22/10/10 10p 22/10/10 10p 22/10/10 16.1p 07/03/11 12.5p 22/10/10 12.5p 22/10/10 12.5p 22/10/10 12.5p 22/10/10 – – 21/10/11 21/10/11 21/10/11 21/10/11 07/03/11 21/10/11 21/10/11 21/10/11 21/10/11 – 21/10/15 21/10/15 21/10/15 21/10/15 06/03/16 21/10/15 21/10/15 21/10/15 21/10/15 – The remuneration of Directors during the year was as follows: Executive Directors M C Jones M J Churchouse non-Executive Directors S D Oke D D Chikohora R A Williams Directors’ emoluments 2011 Directors’ emoluments 2010 150,048 24,028 40,000 25,000 20,363 37,512 31,250 10,000 6,250 – 259,439 85,012 AfricAn Mining & ExplorAtion plc — ANNUAL REPORT AND FINANCIAL STATEMENTS 2011 7 21272-04 09/05/2012 Proof 4AGM InformationFinancial StatementsBusiness ReviewGovernance rEport of thE DirEctorS continued Directors’ indemnity The Group has agreed to indemnify its Directors against third party claims which may be brought against them and has in place a Directors and Officers’ insurance policy. group’s policy on payment of creditors The Group’s policy on the payment of all trade creditors is to ensure that the terms of payment, as specified and agreed with creditors, are not exceeded. Trade creditors as at 31 December 2011 represents 17 days (2010: 16 days) as a proportion of the total amount invoiced by creditors during the year ended on that date. Political and Charitable Contributions The Group made a donation of £100 (2010: £nil) to the British Heart Foundation during the year. No political donations were made by the Group in the year (2010: £nil). going concern After making enquiries, the Directors have reasonable expectation that the Company and the Group have in operational adequate existence for the foreseeable future. For this reason they continue to adopt the going concern basis in preparing the financial statements. to continue resources Statement as to Disclosure of Information to Auditors So far as the Directors are aware, there is no relevant audit information (as defined by Section 418 of the Companies Act 2006) of which the Group’s auditors are unaware, and each Director has taken all the steps that he ought to have taken as a Director in order to make himself aware of any relevant audit information and to establish that the Group’s auditors are aware of that information. Auditors The auditors, BDO LLP, will be proposed for reappointment at the forthcoming Annual General Meeting. On behalf of the Board: Mark c Jones Chief Executive Officer 4 May 2012 8 AfricAn Mining & ExplorAtion plc — ANNUAL REPORT AND FINANCIAL STATEMENTS 2011 21272-04 09/05/2012 Proof 4 corporAtE govErnAncE S tAtEMEnt The Company, being listed on AIM, is not required to comply with the UK Corporate Governance Code (“the Code”) issued in May 2010. However the Company has given consideration to the provisions set out in Section 1 of the Code annexed to the Financial Services Authority Listing Rules. The Directors support the objectives of the Code and intend to comply with those aspects that they consider relevant to the Group’s size and circumstances. Details of these are set out below. the Board of Directors The Board currently comprises one Executive and three Non-Executive Directors. The Board formally meets approximately every two months and is responsible for setting and monitoring Group strategy, reviewing budgets and financial performance, ensuring adequate funding, examining major acquisition opportunities, formulating policy on key issues and reporting to the Shareholders. internal financial control The Board is responsible for establishing and maintaining the Group’s system of internal financial controls. Internal financial control systems are designed to meet the particular needs of the Group and the risk to which it is exposed, and by its very nature can provide reasonable, but not absolute, assurance against material misstatement or loss. The Directors are conscious of the need to keep effective internal financial control. Due to the relatively small size of the Group’s operations, the Directors are very closely involved in the day-to-day running of the business and as such have less need for a detailed formal system of internal financial control. The Directors have reviewed the effectiveness of the procedures presently in place and consider that they are appropriate to the nature and scale of the operations of the Group. The Directors have implemented necessary controls and procedures to comply with the UK Bribery Act 2010. The Audit Committee An Audit Committee has been established which comprises three Non-Executive Directors – Roger Williams (who chairs the Committee), Stephen Oke and Douglas Chikohora. The Committee is responsible for ensuring that the financial performance of the Group is properly reported on and monitored, and for meeting the auditors and reviewing the reports from the auditors relating to accounts and internal controls. The Committee also reviews the Group’s annual and interim financial statements before submission to the Board for approval. The role of the Audit Committee is also to consider the appointment of the auditors, audit fees, scope of audit work and any resultant findings. The Remuneration Committee The Remuneration Committee comprises three Non- Executive Directors – Douglas Chikohora (who chairs the Committee), Stephen Oke and Roger Williams. It is responsible for reviewing the performance of the Executive Director and for setting the scale and structure of his remuneration, paying due regard to the interests of Shareholders as a whole and the performance of the Group. The remuneration of the Chairman and the Non-Executive Directors is determined by the Board as a whole, based on a review of the current practices in other companies. Anti-Bribery and Corruption It is the Company’s policy to conduct business in an honest way, and without the use of corrupt practices or acts of bribery to obtain an unfair advantage in line with the UK Bribery Act 2010. The Company takes a zero-tolerance approach to bribery and corruption and is committed to acting professionally, fairly and with integrity in all its business dealings and relationships wherever it operates and implementing and enforcing effective systems to counter bribery. AfricAn Mining & ExplorAtion plc — ANNUAL REPORT AND FINANCIAL STATEMENTS 2011 9 21272-04 09/05/2012 Proof 4AGM InformationFinancial StatementsBusiness ReviewGovernance StAtEMEnt of DirE ctorS’ rESponSiBilitiES The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company’s transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements comply with the requirements of the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. Website Publication The Directors are responsible for ensuring the Annual Report and the Financial Statements are made available on a website. Financial statements are published on the Company’s website in accordance with legislation in the United Kingdom governing the preparation and dissemination of financial statements, which may vary from legislation in other jurisdictions. The maintenance and integrity of the Company’s website is the responsibility of the Directors. The Directors’ responsibility also extends to the ongoing integrity of the financial statements contained therein. The Directors are responsible for preparing the Directors’ report and the financial statements in accordance with applicable law and regulations. Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have elected to prepare the Group and Company financial statements in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union. Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and Company and of the profit or loss of the Group for that period. The Directors are also required to prepare financial statements in accordance with the rules of the London Stock Exchange for companies trading securities on the Alternative Investment Market. In preparing these financial statements, the Directors are required to: ●● select suitable accounting policies and then apply them consistently; ●● make judgements and accounting estimates that are reasonable and prudent; ●● ●● in state whether they have been prepared accordance with IFRSs as adopted by the European Union, subject to any material departures disclosed and explained in the financial statements; prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business. 10 AfricAn Mining & ExplorAtion plc — ANNUAL REPORT AND FINANCIAL STATEMENTS 2011 21272-04 09/05/2012 Proof 4 rEport of thE inDEpEnDEnt AuDitor to the members of African Mining & Exploration Plc We have audited the financial statements of African Mining & Exploration Plc for the year ended 31 December 2011 which comprise the consolidated statement of comprehensive income, the consolidated and Company statement of financial position, the consolidated and Company statement of changes in equity, the consolidated and Company statement of cash flows and the related notes. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union and, as regards the parent Company financial statements, as applied in accordance with the provisions of the Companies Act 2006. This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Company’s members those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company’s members as a body, for our audit work, for this report, or for the opinions we have formed. Respective Responsibilities of Directors and Auditors As explained more fully in the statement of Directors’ responsibilities, the Directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board’s (APB’s) Ethical Standards for Auditors. Scope of the Audit of the financial Statements A description of the scope of an audit of financial statements is provided on the APB’s website at www.frc.org.uk/apb/ scope/private.cfm. opinion on financial Statements In our opinion: ●● ●● ●● the financial statements give a true and fair view of the state of the Group’s and the parent Company’s affairs as at 31 December 2011 and of the Group’s loss for the year then ended; the Group financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union; the parent Company financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union and as applied in accordance with the provisions of the Companies Act 2006; and ●● the financial statements have been prepared in accordance with the requirements of the Companies Act 2006. Opinion on other matters prescribed by the Companies Act 2006 In our opinion the information given in the Directors’ report for the financial year for which the financial statements are prepared is consistent with the financial statements. AfricAn Mining & ExplorAtion plc — ANNUAL REPORT AND FINANCIAL STATEMENTS 2011 11 21272-04 09/05/2012 Proof 4AGM InformationFinancial StatementsBusiness ReviewGovernance rEport of thE inDEpEnDEnt AuDitor continued Matters on which we are required to report by exception We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion: ●● adequate accounting records have not been kept by the parent Company, or returns adequate for our audit have not been received from branches not visited by us; or ●● the parent Company financial statements are not in agreement with the accounting records and returns; or ●● certain disclosures of Directors’ remuneration specified by law are not made; or ●● we have not received all the information and explanations we require for our audit. Scott Knight (senior statutory auditor) For and on behalf of BDO LLP, statutory auditor 55 Baker Street London W1U 7EU United Kingdom 4 May 2012 BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127). 12 AfricAn Mining & ExplorAtion plc — ANNUAL REPORT AND FINANCIAL STATEMENTS 2011 21272-04 09/05/2012 Proof 4 conSoliDAtED StAtEMEnt of coMprEhEnSivE incoME for the year ended 31 December 2011 Revenue Administrative expenses operating loss Finance income loss before tax Taxation loss for the year attributable to equity owners of the parent other comprehensive income Exchange gains/(losses) arising on translation of foreign operations other comprehensive income for the year total comprehensive income for the year attributable to equity owners of the parent loss per share attributable to equity owners of the parent expressed in pence per share: Basic and diluted Notes 2011 £ 2010 £ – (1,530,297) (1,530,297) 19,445 (1,510,852) – (1,510,852) 4 5 6 – (761,865) (761,865) 2,090 (759,775) – (759,775) 5,166 5,166 (10,501) (10,501) (1,505,686) (770,276) 8 (1.84) (2.88) The notes form part of these financial statements. AfricAn Mining & ExplorAtion plc — ANNUAL REPORT AND FINANCIAL STATEMENTS 2011 13 21272-04 09/05/2012 Proof 4AGM InformationGovernanceBusiness ReviewFinancial Statements conSoliDAtED StAtEMEnt of finAnciAl poSition as at 31 December 2011 Assets non-current assets Intangible assets Property, plant and equipment total non-current assets current assets Trade and other receivables Cash and cash equivalents total current assets total assets Equity and liabilities Shareholders’ equity Share capital Share premium Foreign currency reserve Warrant reserve Share-based payment reserve Merger reserve Retained earnings total equity attributable to equity holders of the parent liabilities current liabilities Trade and other payables total liabilities total equity and liabilities Notes 2011 £ 2010 £ 9 10 12 13 14 1,167,560 182,726 1,350,286 49,881 3,378,474 3,428,355 4,778,641 281,883 40,885 322,768 78,849 4,004,606 4,083,455 4,406,223 842,133 4,997,699 13,886 579,500 407,133 572,314 (2,705,408) 4,707,257 708,115 3,429,561 8,720 708,115 67,771 572,314 (1,323,171) 4,171,425 15 71,384 71,384 4,778,641 234,798 234,798 4,406,223 The financial statements were approved by the Board of Directors on 4 May 2012 and were signed on its behalf by: Mark c Jones Chief Executive Officer Company number: 07307107 The notes form part of these financial statements. 14 AfricAn Mining & ExplorAtion plc — ANNUAL REPORT AND FINANCIAL STATEMENTS 2011 21272-04 09/05/2012 Proof 4 coMpAny StAtEMEnt of finAnciAl poSition as at 31 December 2011 Assets non-current assets Intangible assets Property, plant and equipment Investments Other receivables total non-current assets current assets Trade and other receivables Cash and cash equivalents total current assets total assets Equity and liabilities Shareholders’ equity Called up share capital Share premium Warrant reserve Share-based payment reserve Retained earnings Merger reserve total equity liabilities current liabilities Trade and other payables total liabilities total equity and liabilities Notes 2011 £ 2010 £ 9 11 12 12 13 14 8,973 – 127,227 1,559,066 1,695,266 46,938 3,375,105 3,422,043 5,117,309 – – 125,927 201,094 327,021 71,765 4,000,994 4,072,759 4,399,780 842,133 4,997,699 579,500 407,133 (1,697,360) (82,188) 5,046,917 708,115 3,429,561 708,115 67,771 (660,026) (82,188) 4,171,348 15 70,392 70,392 5,117,309 228,432 228,432 4,399,780 The financial statements were approved by the Board of Directors on 4 May 2012 and were signed on its behalf by: Mark c Jones Chief Executive Officer Company number: 07307107 The notes form part of these financial statements. AfricAn Mining & ExplorAtion plc — ANNUAL REPORT AND FINANCIAL STATEMENTS 2011 15 21272-04 09/05/2012 Proof 4AGM InformationGovernanceBusiness ReviewFinancial Statements conSoliDAtED StAtEMEnt of chAngES in EQuity for the year ended 31 December 2011 Share capital £ Share premium £ foreign currency reserve £ Warrant reserve £ Share- based payment reserve £ 123,615 – 584,500 4,000,000 – (570,439) – – 19,221 – – 500,000 – – – 208,115 – – – – retained earnings £ Merger reserve £ total equity £ (355,281) 312,116 99,671 260,198 5,344,698 – – (208,115) – – (570,439) – – – – (10,501) – 708,115 3,429,561 134,018 1,559,670 – – – 8,720 708,115 – – – – – (128,615) – – – (759,775) (770,276) – 67,771 67,771 67,771 (1,323,171) 572,314 4,171,425 – 1,693,688 8,468 – – – – – 128,615 – – – 5,166 – – (1,505,686) 339,362 – 13,886 579,500 407,133 (2,705,408) 572,314 4,707,257 – (1,510,852) – – – 339,362 – – – – 8,468 – – – 842,133 4,997,699 At 1 January 2010 Issue of share capital Fundraising costs Bonus issue of warrants Total comprehensive expense for the year Share-based payments At 31 December 2010 issue of share capital fundraising costs Exercise of warrants total comprehensive expense for the year Share-based payments At 31 December 2011 The following describes the nature and purpose of each reserve within owners’ equity: reserve Description and purpose Share capital Amounts subscribed for share capital at nominal value. Share premium Amounts subscribed for share capital in excess of nominal value. Warrant reserve Fair value of the warrants issued. Merger reserve Amounts resulting from acquisitions under common control. Foreign currency reserve Gains/losses arising on retranslating the net assets of Group operations into Pound Sterling. Share-based payment reserve Represents the accumulated balance of share-based payment charges recognised in respect of share options granted by African Mining and Exploration Plc, less transfers to retained losses in respect of options exercised. Retained earnings Cumulative net gains and losses recognised in the consolidated statement of comprehensive income. The notes form part of these financial statements. 16 AfricAn Mining & ExplorAtion plc — ANNUAL REPORT AND FINANCIAL STATEMENTS 2011 21272-04 09/05/2012 Proof 4 coMpAny StAtEMEnt of chAngES in EQuity for the year ended 31 December 2011 Share capital £ Share premium £ Warrant reserve £ – – 708,115 4,000,000 (570,439) – – – – 500,000 – 208,115 – – – Share- based payment reserve £ retained earnings £ Merger reserve £ total equity £ – – – – – – – – (208,115) – – – 5,208,115 (570,439) – – – (451,911) – (451,911) – – – – 708,115 3,429,561 134,018 1,559,670 8,468 – – – – – 708,115 – – (128,615) – 67,771 67,771 – – – – – (660,026) – – 128,615 (82,188) – (82,188) 67,771 (82,188) 4,171,348 – 1,693,688 8,468 – – – – – – – 842,133 4,997,699 – – 579,500 – (1,165,949) 339,362 – 407,133 (1,697,360) – (1,165,949) 339,362 – (82,188) 5,046,917 At 1 January 2010 Issue of share capital Fundraising costs Bonus issue of warrants Total comprehensive expense for the year Acquisition under common control Share-based payments At 31 December 2010 issue of share capital fund raising costs Exercise of warrants total comprehensive expense for the year Share-based payments At 31 December 2011 The following describes the nature and purpose of each reserve within owners’ equity: reserve Description and purpose Share capital Amounts subscribed for share capital at nominal value. Share premium Amounts subscribed for share capital in excess of nominal value. Merger reserve Amounts resulting from acquisitions under common control. Warrant reserve Fair value of the warrants issued. Share-based payment reserve Represents the accumulated balance of share-based payment charges recognised in respect of share options granted by African Mining and Exploration Plc, less transfers to retained losses in respect of options exercised. Retained earnings Cumulative net gains and losses recognised in the consolidated statement of comprehensive income. The notes form part of these financial statements. AfricAn Mining & ExplorAtion plc — ANNUAL REPORT AND FINANCIAL STATEMENTS 2011 17 21272-04 09/05/2012 Proof 4AGM InformationGovernanceBusiness ReviewFinancial Statements conSoliDAtED StAtEMEnt of cASh floWS for the year ended 31 December 2011 cash flows used in operating activities Loss for the year Depreciation and amortisation charges Share-based payment reserve charge Shares issued in lieu of payment to extinguish liabilities Finance income cash flow from operating activities before changes in working capital Decrease/(increase) in trade and other receivables (Decrease)/increase in trade and other payables Net cash used in operating activities cash flow used in investing activities Purchase of intangible fixed assets Purchase of tangible fixed assets Interest received Net cash from investing activities cash flow from financing activities Amount repaid to Directors Issue of IPO shares net of costs Issue of other shares Exercise of warrants Net cash from financing activities (Decrease)/increase in cash and cash equivalents cash and cash equivalents at beginning of year Exchange differences cash and cash equivalents at end of year 2011 £ 2010 £ (1,510,852) 19,690 339,362 86,000 (19,445) (1,085,245) 28,968 (154,946) (1,211,223) (920,476) (165,085) 19,445 (1,066,116) – – – 1,607,688 1,607,688 (669,651) 4,004,606 43,519 3,378,474 (759,775) 3,363 67,771 169,737 (2,090) (520,994) (78,820) 114,844 (484,970) (68,010) (40,480) 2,090 (106,400) (10,599) 4,429,561 168,053 – 4,587,015 3,995,645 4,294 4,667 4,004,606 18 AfricAn Mining & ExplorAtion plc — ANNUAL REPORT AND FINANCIAL STATEMENTS 2011 21272-04 09/05/2012 Proof 4 coMpAny StAtEMEnt of cASh floWS for the year ended 31 December 2011 cash flows used in operating activities Loss for the year Depreciation and amortisation charges Share-based payment reserve charge Shares issued in lieu of payment to extinguish liabilities Finance income cash flow from operating activities before changes in working capital Increase in trade and other receivables (Decrease)/increase in trade and other payables net cash used in operating activities cash flow used in investing activities Investment in subsidiaries Purchase of intangible fixed assets Interest received Net cash from investing activities cash flow from financing activities Issue of IPO shares net of costs Exercise of warrants Net cash from financing activities (Decrease)/increase in cash and cash equivalents cash and cash equivalents at beginning of year cash and cash equivalents at end of year 2011 £ 2010 £ (1,165,949) 2,667 339,362 86,000 (19,445) (757,365) (1,333,145) (149,572) (2,240,082) (1,300) (11,640) 19,445 6,505 (451,911) – 67,771 – (2,090) (386,230) (272,859) 228,432 (430,657) – – 2,090 2,090 – 1,607,688 1,607,688 (625,889) 4,000,994 3,375,105 4,429,561 – 4,429,561 4,000,994 – 4,000,994 AfricAn Mining & ExplorAtion plc — ANNUAL REPORT AND FINANCIAL STATEMENTS 2011 19 21272-04 09/05/2012 Proof 4AGM InformationGovernanceBusiness ReviewFinancial Statements notES to thE conSoliDA tED finAnciAl StAtEMEntS for the year ended 31 December 2011 1. Accounting policiES Basis of preparation These financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the EU and IFRIC interpretations and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS. The financial statements have been prepared under the historical cost convention. The consolidated financial statements have been prepared by the merger method of accounting on the historical cost basis except, as explained in the accounting policies below. Historical cost is generally based on the consideration given in exchange for assets. The principal accounting policies are set out below. presentational and functional currency The functional currency of the Company is Pound Sterling. Each entity in the Group determines its own functional currency and items included in the Financial Statements of each entity are measured using that functional currency. The presentational currency of the Group is Pound Sterling. going concern The financial statements have been prepared on a going concern basis. The Board consider that the Group has sufficient cash resources to enable it to continue with the planned exploration projects. Basis of consolidation The Group accounts consolidate the accounts of African Mining and Exploration Plc and its foreign subsidiaries, as set out below. The foreign subsidiaries have been consolidated in accordance with IFRS 3, and IAS 21 “The effects of Foreign Exchange Rates.” Inter-Company transactions and balances between Group companies are eliminated in full. Business combinations Accounting for the Company’s acquisition of the controlling interest in New Mines Holdings Limited The Company’s controlling interest in its directly held, wholly owned subsidiary, New Mines Holdings Limited was acquired in the prior year through a transaction under common control, as defined in IFRS 3 Business Combinations. The Directors note that transactions under common control are outside the scope of IFRS 3 and that there is no guidance elsewhere in IFRS covering such transactions. IFRS contain specific guidance to be followed where a transaction falls outside the scope of IFRS. This guidance is included at paragraphs 10 to 12 of IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors. This requires, inter alia, that where IFRS does not include guidance for a particular issue, the Directors may also consider the most recent pronouncements of other standard setting bodies that use a similar conceptual framework to develop accounting standards. In this regard, it is noted that United Kingdom Financial Accounting Standards Board (ASB) has issued an accounting standard covering business combinations (FRS 6) that is similar in a number of respects to IFRS 3. FRS 6 (and US GAAP) does include guidance for accounting for group reconstructions of this nature. Having considered the requirements of IAS 8 and the related UK and US guidance the transaction by which the Company acquired its controlling interest in New Mines Holding Ltd has been accounted for on a merger or pooling of interest basis as if both entities had always been combined. Consequently, the corresponding figures for the prior year reflect the results of the combined entities. The combination has been accounted for using book values, with no fair value adjustments made nor goodwill created. 20 AfricAn Mining & ExplorAtion plc — ANNUAL REPORT AND FINANCIAL STATEMENTS 2011 21272-04 09/05/2012 Proof 4 notES to thE conSoliDA tED finAnciAl StAtEMEntS 1. Accounting policiES continued foreign currencies Transactions in foreign currencies are initially recorded in the functional currency by applying spot exchange rate ruling at the date of transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the functional currency rate of exchange ruling at the balance sheet date. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using exchange rates as at the dates of the initial transactions. Non-monetary items measured at the fair value in a foreign currency are translated using exchange rates at the date when the fair value was determined. The income statements of individual Group companies with functional currencies other than Pound Sterling are translated into Pound Sterling at the average rate for the period and the balance sheet translated at the rate of exchange ruling on the balance sheet date. Exchange differences which arise from retranslation of the opening net assets and results of such subsidiary undertakings are taken to reserves. On disposal of such entities, the deferred cumulative amount recognised in equity relating to that particular operation is recognised in income statement. intangible Assets Deferred development costs Once a licence has been obtained, all costs associated with mineral property development and investments are capitalised on a project-by-project basis pending determination of the feasibility of the project. Costs incurred include appropriate technical and administrative expenses but not general overheads. If a mining property development project is successful, the related expenditures will be amortised over the estimated life of the commercial ore reserves on a unit of production basis. Where a licence is relinquished, a project is abandoned, or is considered to be of no further commercial value to the African Mining and Exploration Group, the related costs will be written off. Unevaluated mineral properties are assessed at reporting date for impairment in accordance with the policy set out below. If commercial reserves are developed, the related deferred development and exploration costs are then reclassified as development and production assets within property, plant and equipment. Mineral properties Mineral properties are recorded at cost less amortisation and provision for diminution in value. Amortisation will be over the estimated life of the commercial ore reserves on a unit of production basis. Other intangible assets Other intangibles are recorded at cost less amortisation and provision for diminution in value. Amortisation is calculated to write off the cost of each asset over its estimated useful life of 3 years. property, plant and Equipment Tangible non-current assets used in exploration and evaluation are classified within tangible non-current assets as property, plant and equipment. To the extent that such tangible assets are consumed in exploration and evaluation the amount reflecting that consumption is recorded as part of the cost of the intangible asset. AfricAn Mining & ExplorAtion plc — ANNUAL REPORT AND FINANCIAL STATEMENTS 2011 21 21272-04 09/05/2012 Proof 4AGM InformationGovernanceBusiness ReviewFinancial Statements notES to thE conSoliDA tED finAnciAl StAtEMEntS continued 1. Accounting policiES continued Depletion is provided on Gold mining assets in production using the unit of production method; based on proven and probable reserves, applied to the sum of the total capitalised exploration, evaluation and development costs, together with estimated future development costs at current prices. Depreciation on assets not in production is provided at the following annual rates in order to write off the cost less estimated residual value of each asset over its estimated useful life. Plant & Equipment 4–10 years Office Equipment Motor Vehicles 4 years 4 years financial instruments Financial assets and financial liabilities are recognised in the Group’s statement of financial position when the Group becomes a party to the contractual provisions of the instrument. financial Assets Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are initially recognised at fair value plus transaction costs that are directly attributable to their acquisition or issue, and are subsequently carried at amortised cost using the effective interest rate method, less provision for impairment. Impairment provisions are recognised when there is objective evidence (such as significant financial difficulties on the part of the counterparty or default or significant delay in payment) that the African Mining and Exploration Group will be unable to collect all of the amounts due under the terms receivable, the amount of such a provision being the differences between the net carrying amount and the present value of the future expected cash flows associated with the impaired receivable. For receivables, which are reported net, such provisions are recorded in a separate allowance account with the loss being recognised within administrative expenses in the statement of comprehensive income. On confirmation that the receivable will not be collectable, the gross carrying value of the asset is written off against the associated provision. The African Mining and Exploration Group’s loan and receivables comprise other receivables and cash and cash equivalents in the consolidated statement of financial position. Cash and cash equivalents comprise cash in hand and balances held with banks. Cash equivalents are short term, highly liquid accounts that are readily converted to known amounts of cash. There is no significant difference between carrying value and fair value of loans and receivables. financial liabilities Other liabilities Other liabilities consist of trade and other payables, which are initially recognised at fair value and subsequently carried at amortised cost, using the effective interest method. There is no significant difference between the carrying value and fair value of other liabilities. 22 AfricAn Mining & ExplorAtion plc — ANNUAL REPORT AND FINANCIAL STATEMENTS 2011 21272-04 09/05/2012 Proof 4 notES to thE conSoliDA tED finAnciAl StAtEMEntS 1. Accounting policiES continued taxation Current taxes are based on the results shown in the financial statements and are calculated according to local tax rules, using tax rates enacted or substantially enacted by the balance sheet date. Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date. A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which temporary differences can be utilised. operating leases Rentals payable under operating leases are charged to income on a straight-line basis over the term of the relevant lease. Share-based payments Where equity settled share options are awarded to employees, the fair value of the options at the date of grant is charged to the consolidated income statement over the vesting period. Non-market vesting conditions are taken into account by adjusting the number of equity instruments expected to vest at each balance sheet date so that, ultimately, the cumulative amount recognised over the vesting period is based on the number of options that eventually vest. Market vesting conditions are factored into the fair value of the options granted. As long as all other vesting conditions are satisfied, a charge is made irrespective of whether the market vesting conditions are satisfied. The cumulative expense is not adjusted for failure to achieve a market vesting condition. Where the terms and conditions of options are modified before they vest, the increase in the fair value of the options, measured immediately before and after the modification, is also charged to the consolidated income statement over the remaining vesting period. Where equity instruments are granted to persons other than employees, the consolidated income statement is charged with the fair value of goods and services received. Key Accounting Estimates and Judgements The preparation of financial information in conformity with IFRS requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities at the date of financial information and the reported amounts of expenses during the reporting periods. Although these estimates are based on management’s best knowledge of the amounts, event or actions, actual results ultimately may differ from those estimates. The key accounting estimates and judgements are set out below: (a) Carrying value of mineral properties and development costs The African Mining and Exploration Group assesses at each reporting period whether there is any indication that these assets may be impaired. If such indication exists, the Group estimates the recoverable amount of the asset. In the early stages of exploration an indication of impairment may arise from drilling and assay results or from management’s decision to terminate the project. The recoverable amount is assessed by reference to the higher of ‘value in use’, where a project is still expected to be developed into production (being the new present value of expected future cash flows of the relevant cash generating unit) and ‘fair value less cost to sell’. As at 31 December 2011 there is no indication of impairment in respect of the mineral properties and development costs set out in Note 9. AfricAn Mining & ExplorAtion plc — ANNUAL REPORT AND FINANCIAL STATEMENTS 2011 23 21272-04 09/05/2012 Proof 4AGM InformationGovernanceBusiness ReviewFinancial Statements notES to thE conSoliDA tED finAnciAl StAtEMEntS continued 1. Accounting policiES continued (b) Deferred development costs The African Mining and Exploration Group has to apply judgement in determining whether exploration and evaluation expenditure should be capitalised within intangible assets as deferred development costs or expensed. The African Mining and Exploration Group has a policy of capitalising all deferred development costs (as set out above). Management therefore exercises judgement based on the results of economic evaluations, prefeasibility or feasibility studies in determining whether it is appropriate to continue to carry these costs as an intangible asset or whether they should be impaired. The total value of deferred development costs capitalised as at each of the reporting dates is set out in Note 9. (c) Share-based payments In determining the fair value of share-based payments made during the period, a number of assumptions have been made by management. The details of these assumptions are set out in Note 20. Accounting Developments During 2011 The International Accounting Standards Board (IASB) issued various amendments and revisions to International Financial Reporting Standards and IFRIC interpretations. The amendments and revisions were applicable for the year ended 31 December 2011 but did not result in any material changes to the financial statements of the Group or Company. Accounting Developments not yet Adopted Various new standards and amendments have been issued by the IASB up to the date of this report which are not applicable until future periods and some have not yet been endorsed by the European Union. The Directors do not expect these will have a material impact on the financial statements of the Group or Company. 2. SEgMEntAl rEporting The Group complies with IFRS 8 Operating Segments, which requires operating segments to be identified on the basis of internal reports about components of the Group that are regularly reviewed by the chief operating decision maker, which the Company considers to be the Board of Directors. In the opinion of the Directors, the operations of the Group comprise one class of business, being the exploration primarily of gold in West Africa. 3. EMployEES AnD DirE ctorS The average monthly number of employees during the year was as follows: Operational Non-operational Staff costs (excluding Directors) Salaries Social security Share-based payment expense (see Note 20) 24 AfricAn Mining & ExplorAtion plc — ANNUAL REPORT AND FINANCIAL STATEMENTS 2011 2011 2010 20 8 28 11 8 19 2011 £ 2010 £ 183,752 11,220 32,758 227,730 107,094 1,175 7,140 115,409 21272-04 09/05/2012 Proof 4 notES to thE conSoliDA tED finAnciAl StAtEMEntS 3. EMployEES AnD DirE ctorS continued Directors’ remuneration Salaries Social security Share-based payment expense (see Note 20) 2011 £ 2010 £ 259,439 10,030 306,604 576,073 85,012 5,194 60,631 150,837 The Directors are considered to be the key management of the Group. Details of Directors’ remuneration and the highest paid Director are disclosed in the Report of the Directors. No Directors accrued pension benefits during any of the periods presented. 4. finAncE incoME Deposit account interest 5. loSS BEforE incoME t Ax The loss before income tax is stated after charging/(crediting): Depreciation and amortisation Auditors’ remuneration: – Statutory audit of the Group financial statements – Tax advice – Other services Foreign exchange differences Fundraising costs Operating lease payments Share-based payments charge 2011 £ 2010 £ 19,445 2,090 2011 £ 2010 £ 19,690 3,363 24,500 7,500 4,032 47,775 – 27,577 339,362 26,243 – 69,000 27,726 116,977 – 237,508 AfricAn Mining & ExplorAtion plc — ANNUAL REPORT AND FINANCIAL STATEMENTS 2011 25 21272-04 09/05/2012 Proof 4AGM InformationGovernanceBusiness ReviewFinancial Statements notES to thE conSoliDA tED finAnciAl StAtEMEntS continued 6. incoME tAx Analysis of the tax charge No liability to UK corporation tax arose on ordinary activities for the year ended 31 December 2011 nor for the year ended 31 December 2010. factors Affecting the tax charge The reasons for the difference between the actual tax charge for the year and the standard rate of corporation tax in the United Kingdom applied to the result for the year are as follows: Loss on ordinary activities before tax Loss on ordinary activities multiplied by the standard rate of corporation tax in the UK of 26.5% (2010: 28%) Effects of: Expenses not deductible for tax purposes Tax losses carried forward Total income tax 2011 £ 2010 £ (1,510,852) (759,775) (400,376) (212,737) 1,067 399,309 – 40,082 172,655 – Deferred tax The Group has carried forward losses amounting to £2,673,844 as at 31 December 2011 (2010: £1,167,018). As the timing and extent of taxable profits are uncertain, the deferred tax asset arising on these losses has not been recognised in the financial statements. 7. loSS of pArEnt coMpAny As permitted by Section 408 of the Companies Act 2006, the profit and loss account of the parent Company is not presented as part of these financial statements. The parent Company’s loss for the financial year was £1,165,949 (2010: £525,386). 8. EArningS pEr ShArE Basic earnings per share is calculated by dividing the earnings attributable to ordinary Shareholders by the weighted average number of ordinary shares outstanding during the period. Diluted earnings per share is calculated using the weighted average number of shares adjusted to assume the conversion of all dilutive potential ordinary shares. In accordance with IAS 33 as the Group is reporting a loss for both this and the preceding year the share options are not considered dilutive because the exercise of share options would have the effect of reducing the loss per share. 26 AfricAn Mining & ExplorAtion plc — ANNUAL REPORT AND FINANCIAL STATEMENTS 2011 21272-04 09/05/2012 Proof 4 notES to thE conSoliDA tED finAnciAl StAtEMEntS 8. EArningS pEr ShArE continued Reconciliations are set out below. Basic loss per share Losses attributable to ordinary Shareholders Weighted average number of shares Loss per share 9. INTANGIBLE ASSETS (Group) cost At 1 January 2010 Additions Exchange differences At 1 January 2011 Additions Exchange differences At 31 December 2011 Amortisation At 1 January 2011 Charge for the year Exchange differences At 31 December 2011 net book value At 31 December 2011 At 31 December 2010 2011 £ 2010 £ (1,510,852) (759,775) 82,124,728 26,390,952 0.0288 0.0184 Exploration and evaluation £ 222,133 68,010 (8,260) 281,883 908,836 (32,132) 1,158,587 – – – – other £ – – – – 11,640 – 11,640 – 2,667 – 2,667 total £ 222,133 68,010 (8,260) 281,883 920,476 (32,132) 1,170,227 – 2,667 – 2,667 1,158,587 281,883 8,973 – 1,167,560 281,883 AfricAn Mining & ExplorAtion plc — ANNUAL REPORT AND FINANCIAL STATEMENTS 2011 27 21272-04 09/05/2012 Proof 4AGM InformationGovernanceBusiness ReviewFinancial Statements notES to thE conSoliDA tED finAnciAl StAtEMEntS 9. intAngiBlE ASSEtS (company) continued cost At 1 January 2011 Additions At 31 December 2011 Amortisation At 1 January 2011 Charge for the year At 31 December 2011 net book value At 31 December 2011 At 31 December 2010 other £ – 11,640 11,640 – 2,667 2,667 8,973 – 10. PROPERTY, PLANT AND EQUIPMENT (Group) plant and machinery £ Motor vehicles £ office equipment £ cost At 1 January 2010 Additions At 1 January 2011 Additions Exchange differences At 31 December 2011 Depreciation At 1 January 2010 Charge for year At 1 January 2011 Charge for year Exchange differences At 31 December 2011 net book value At 31 December 2011 At 31 December 2010 – – – 162,282 (5,519) 156,763 – – – 5,950 (202) 5,748 151,015 – – 40,480 40,480 – (877) 39,603 – 2,231 2,231 9,587 (268) 11,550 28,053 38,249 28 AfricAn Mining & ExplorAtion plc — ANNUAL REPORT AND FINANCIAL STATEMENTS 2011 total £ – 11,640 11,640 – 2,667 2,667 8,973 – total £ 4,748 40,480 45,228 165,085 (6,817) 203,496 980 3,363 4,343 17,023 (596) 20,770 4,748 – 4,748 2,803 (421) 7,130 980 1,132 2,112 1,486 (126) 3,472 3,658 2,636 182,726 40,885 21272-04 09/05/2012 Proof 4 notES to thE conSoliDA tED finAnciAl StAtEMEntS 11. INVESTMENTS (Company) At 1 January 2011 Additions At 31 December 2011 Shares in Group undertakings £ 125,927 1,300 127,227 The addition in the year represents the investment in African Mining & Exploration Mali S.A.R.L. being 100% of share capital acquired. The Company had the following subsidiary undertakings, either directly or indirectly, at 31 December 2011, which have been included in the consolidated financial statements. Subsidiary country of incorporation nature of business class of share % holding New Mines Holdings Limited Tobon Tondo S.U.A.R.L. African Mining & Exploration Mali S.A.R.L. Société African Mining & Exploration Guinea S.A.R.L. St Kitts & Nevis Republic of Mali Mining & exploration Holding company Ordinary Ordinary 100% 100% Republic of Mali Mining & exploration Ordinary 100% Guinea Mining & exploration Ordinary 62% 12. trADE AnD othEr rE cEivABlES Non-current: Amounts due from subsidiaries Current: VAT recoverable Other receivables group company 2010 £ 2011 £ 2010 £ – – 1,559,066 1,559,066 201,094 201,094 2011 £ – – 21,233 28,648 49,881 61,773 17,076 78,849 20,410 26,528 46,938 61,773 9,992 71,765 AfricAn Mining & ExplorAtion plc — ANNUAL REPORT AND FINANCIAL STATEMENTS 2011 29 21272-04 09/05/2012 Proof 4AGM InformationGovernanceBusiness ReviewFinancial Statements notES to thE conSoliDA tED finAnciAl StAtEMEntS 13. cASh AnD cASh EQuivAlEntS continued group company 2011 £ 2010 £ 2011 £ 2010 £ Cash at bank and in hand 3,378,474 4,004,606 3,375,105 4,000,994 14. ShArE cApitAl Allotted, issued and fully paid At beginning of year Issued during year Other issue Exercise of warrants IPO issue At end of year 2011 2010 £0.01 ordinary shares number £0.01 ordinary shares number £ £ 70,811,500 708,115 12,361,500 123,615 540,299 12,861,507 – 84,213,306 5,403 128,615 8,450,000 – – 50,000,000 842,133 70,811,500 84,500 – 500,000 708,115 During the year 540,299 shares were issued to extinguish liabilities of £86,000 and 12,861,507 shares were issued in exchange for each ‘2010 Warrants’ exercised for a total consideration of £1,607,688. Refer to Note 20 for details of unissued warrants. 15. trADE AnD othEr pAyABlES Current: Trade creditors Other creditors Accruals and deferred income group company 2011 £ 16,234 9,646 45,504 71,384 2010 £ 164,978 11,260 58,560 234,798 2011 £ 15,242 9,646 45,504 70,392 2010 £ 164,229 11,260 52,943 228,432 30 AfricAn Mining & ExplorAtion plc — ANNUAL REPORT AND FINANCIAL STATEMENTS 2011 21272-04 09/05/2012 Proof 4 notES to thE conSoliDA tED finAnciAl StAtEMEntS 16. finAnciAl inS truMEnt S financial instruments – risk Management In common with all other businesses, the Group is exposed to risks that arise from its use of financial instruments. This note describes the Group’s objectives, policies and processes for managing those risks and the methods used to measure them. Further quantitative information in respect of these risks is presented throughout these financial statements. There have been no substantive changes in the Group’s exposure to financial instrument risks, its objectives, policies and processes for managing those risks or the methods used to measure them from previous periods unless otherwise stated in this note. Principal Financial Instruments The principal financial instruments used by the Group, from which financial instrument risk arises, are as follows: – trade and other receivables – cash at bank – trade and other payables Trade and other payables fall due for payment within 3 months from the balance sheet date. The Group has sufficient funding in place to meet its operational commitments and is not exposed to any liquidity risk. The Group’s policy is to ensure that it will always have sufficient cash to allow it to meet its liabilities when they become due. To achieve this aim, it seeks to maintain cash balances (or agreed facilities) to meet expected requirements for a period of at least 45 days. The Board receives rolling 12-month cash flow projections on a quarterly basis as well as information regarding cash balances. At the balance sheet date, these projections indicated that the Group expected to have sufficient liquid resources to meet its obligations under all reasonably expected circumstances. Foreign Exchange Risk The Group is exposed through its operations to foreign exchange risk which arises because the Group has overseas operations located in West Africa whose functional currency is CFA. The Group’s net assets arising from overseas operations are exposed to currency risk resulting in gains or losses on retranslation into Pound Sterling. Foreign exchange risk also arises when individual Group entities enter into transactions denominated in a currency other than their functional currency. The Group’s policy is, where possible, to allow Group entities to settle liabilities denominated in their functional currency (primarily Euro, CFA or Pound Sterling) with the cash generated from their own operations in that currency. Where Group entities have liabilities denominated in a currency other than their functional currency (and have insufficient reserves of that currency to settle them) cash already denominated in that currency will, where possible, be transferred from elsewhere within the Group. To mitigate the risk of the CFA/Euro expenditure in Mali, the Group holds cash in a Euro denominated bank account, sufficient to meet committed expenditure and other liabilities. The CFA has a permanent fixed exchange rate with Euro. AfricAn Mining & ExplorAtion plc — ANNUAL REPORT AND FINANCIAL STATEMENTS 2011 31 21272-04 09/05/2012 Proof 4AGM InformationGovernanceBusiness ReviewFinancial Statements notES to thE conSoliDA tED finAnciAl StAtEMEntS continued 16. finAnciAl inS truMEnt S continued As at 31 December 2011 and 31 December 2010, the currency exposure of the Group was as follows: At 31 December 2011 cash and cash equivalents other receivables trade and other payables At 31 December 2010 Cash and cash equivalents Other receivables Trade and other payables gBp £ 3,311,488 46,938 70,391 Euro £ 63,616 – 47 2,659,164 71,765 176,238 1,341,830 7,084 – cfA £ 2,092 2,943 946 3,612 – – gnf £ total £ 1,278 – – 3,378,474 49,881 71,384 – – – 4,004,606 78,849 176,238 Capital disclosures The Group’s objectives when maintaining capital are: – to safeguard the entity’s ability to continue as a going concern, so that it can continue to provide returns for Shareholders and benefits for other stakeholders, and – to provide an adequate return to Shareholders by pricing products and services commensurately with the level of risk. The Company currently does not have any debt. 17. contingEnt liABilitiES Details of contingent liabilities where the probability of future payments/receipts is not considered remote are set out below, as well as details of contingent liabilities, which although considered remote, the Directors consider should be disclosed. The Directors are of the opinion that provisions are not required in respect of these matters, as it is not probable that a future sacrifice of economic benefits will be required or the amount is not capable of reliable measurement. Deferred consideration payable for strategic investment in future mining and exploration projects The above amounts relate to the following contingent liabilities: 2011 £ 2010 £ 1,492,389 3,688,091 On commercial discovery or commencement of mining operations, a fee of $50,000 and $1,312,000 will be payable to the Mali Government, for the Diatissan and Karan licence areas respectively. In order to meet the terms of the exploration licences the Group is committed to spend, before March 2014, 1,136,000,000 CFA (£1,451,251), the balance outstanding at 31 December 2011 was 478,304,720 CFA (£848,995). The licences can be surrendered to the Mali Government and these costs would not need to be incurred. 32 AfricAn Mining & ExplorAtion plc — ANNUAL REPORT AND FINANCIAL STATEMENTS 2011 21272-04 09/05/2012 Proof 4 notES to thE conSoliDA tED finAnciAl StAtEMEntS 18. rElAtED pArty DiScloSurES Details of Directors’ remuneration are given in Note 3. During the year £1,950 (2010: £350) was paid to Mr Scott Jones (son of Mark Jones) for website development and maintenance of which £nil (2010: £350) remained unpaid and £150,048 (2010: £37,512) was payable to J Cubed Ventures Ltd (Company controlled by Mark Jones) for consultancy fees of which £12,504 (2010: £29,384) remained unpaid. The amounts payable to J Cubed Ventures Ltd have been included in the Directors’ remuneration in Note 3. 19. opErAting lEASE coMMitMEnt S No later than 1 year Later than 1 year and no later than 5 years Later than 5 years 2011 £ 2010 £ 56,172 134,448 22,104 212,724 – – – – 20. ShArE optionS AnD WArrAnt S Upon admission to AIM, the Company issued 70,811,500 warrants, the ‘2010 Warrants’. Each warrant was issued as part of a share and warrant ‘unit’. Each 2010 Warrant entitles the 2010 warrant holder to subscribe for one Ordinary Share at 12.5 pence at any time from the date of Admission until the second anniversary of Admission. Full terms can be found on the admission document, page 105. During the year 12,861,507 shares were issued in exchange for each ‘2010 warrant’ exercised leaving 57,949,993 unexercised ‘2010 warrants’ at 31 December 2011. In addition to the share and warrant units issued as part of the admission to AIM, African Mining and Exploration Plc also operates an approved share option plan for Directors and employees. On 22 October 2010 and 7 March 2011, the Company issued share options and warrants to Directors, Non-Executive Directors and employees of the Company as follows: AfricAn Mining & ExplorAtion plc — ANNUAL REPORT AND FINANCIAL STATEMENTS 2011 33 21272-04 09/05/2012 Proof 4AGM InformationGovernanceBusiness ReviewFinancial Statements notES to thE conSoliDA tED finAnciAl StAtEMEntS continued 20. ShArE optionS AnD WArrAnt S continued part A Share and Warrant options options at 1 Jan 2011 options granted during the year forfeited during the year options at 31 Dec 2011 Exercise price Date of the grant first date of exercise final date of exercise 2,000,000 3,000,000 1,000,000 6,000,000 Shares – Directors M J Churchouse M C Jones Shares – Others Total Warrants – Directors M J Churchouse 2,000,000 3,000,000 M C Jones Warrants – Others 1,000,000 6,000,000 Total – – (2,000,000) – 3,000,000 – 700,000 (500,000) 200,000 200,000 (2,500,000) 3,700,000 10p 22/10/10 21/10/11 21/10/15 10p 22/10/10 21/10/11 21/10/15 10p 22/10/10 21/10/11 21/10/15 – – (2,000,000) – 3,000,000 – 500,000 – – (2,500,000) 3,500,000 (500,000) 12.5p 22/10/10 21/10/11 21/10/15 12.5p 22/10/10 21/10/11 21/10/15 12.5p 22/10/10 21/10/11 21/10/15 part B Share and Warrant options options at 1 Jan 2011 options granted during the year options at 31 Dec 2011 Exercise price Date of the grant first date of exercise final date of exercise Shares – non-Executive Directors D D Chikohora S D Oke R A Williams Total Warrants – non-Executive Directors D D Chikohora S D Oke Total 600,000 750,000 – 1,350,000 600,000 750,000 1,350,000 600,000 – 750,000 – 500,000 500,000 500,000 1,850,000 600,000 – 750,000 – – 1,350,000 10p 22/10/10 21/10/11 21/10/15 10p 22/10/10 21/10/11 21/10/15 16.1p 07/03/11 07/03/11 06/03/16 12.5p 22/10/10 21/10/11 21/10/15 12.5p 22/10/10 21/10/11 21/10/15 The terms of the two option plans are as follows: part A – options Each of the Directors and key employees were granted 1 option and 1 warrant to purchase the above number of shares at the time of IPO. Issues in 2011 were granted for options only. 34 AfricAn Mining & ExplorAtion plc — ANNUAL REPORT AND FINANCIAL STATEMENTS 2011 21272-04 09/05/2012 Proof 4 notES to thE conSoliDA tED finAnciAl StAtEMEntS 20. ShArE optionS AnD WArrAnt S continued The options may not be exercised before the satisfaction of the non-market performance conditions listed below. performance conditions: As to 20% of the shares under this option – the completion of the Karan Scoping Study. As to 30% of the shares under this option – the confirmation of a JORC Inferred Resource. As to 50% of the shares under this option – the confirmation of a JORC MC-1 Inferred Resource of at least 500,000 troy ounces of gold. part B – options Each of the Non-Executive Directors were granted 1 option and 1 warrant to purchase the above number of shares at the time of IPO. Issues in 2011 were granted for options only. There are no performance conditions attached to option under this plan, instead the following conditions apply to options under this plan: Share options a) not more than one-third of the number of shares under this option may be acquired prior to the first anniversary of Admission. b) not more than two-thirds of the number of shares under this option may be acquired before the second anniversary of Admission. Warrant options The warrants under this option plan may not be exercised before either the 2010 Warrants have all been exercised or may no longer be exercised. All of the options and warrants attract a share-based payment charge under IFRS 2. The share-based payment charge for options and warrants related to Directors, Non-Executive Directors and employees have been calculated using a Black–Scholes Model and using the following parameters: Stock asset price Option strike price Maturity (years) Risk-free interest rate Volatility Option (fair value) 2010 issue Share options 2010 issue Warrant options 2011 issue Share options £0.10 £0.10 5 2.5% 95% £0.0730 £0.10 £0.125 5 2.5% 95% £0.0698 £0.1038 – £0.1612 £0.1038 – £0.1612 5 2.5% 95% £0.0757 – £0.1176 This fair value is the cost that is charged to the Statement of Comprehensive Income and is spread over the expected vesting period which, for non-market vesting conditions (as noted above), is revised at each period end. AfricAn Mining & ExplorAtion plc — ANNUAL REPORT AND FINANCIAL STATEMENTS 2011 35 21272-04 09/05/2012 Proof 4AGM InformationGovernanceBusiness ReviewFinancial Statements noticE of AnnuAl gEnErAl MEEting Notice is hereby given that the Annual General Meeting of African Mining & Exploration Plc (‘the Company’) will be held at the offices of the Company’s Solicitors, Memery Crystal LLP, 44 Southampton Buildings, London, WC2A 1AP on 15 June 2012 at 11:00 a.m. for the purpose of considering and, if thought fit, passing the following resolutions which will be proposed as ordinary resolutions in the cases of resolutions 1-4 and as a special resolution in the case of resolution 5. orDinAry BuSinESS 1 To receive the report of the Directors and the audited financial statements of the Company for the year ended 31 December 2011. 2 To re-elect as a Director of the Company, Mark Christopher Jones, who retires by rotation under the articles of association of the Company and, being eligible, offers himself for re-election. 3 To reappoint BDO LLP as auditors of the Company to act until the conclusion of the next Annual General Meeting and to authorise the Directors to determine the remuneration of the auditors. orDinAry rESolution 4 That in substitution for all existing and unexercised authorities, the Directors of the Company be and they are hereby generally and unconditionally authorised for the purpose of section 551 of the Companies Act 2006 (‘the Act’) to exercise all or any of the powers of the Company to allot equity securities (within the meaning of Section 560 of the Act) up to a maximum nominal amount of £500,000 provided that this authority shall, unless previously revoked or varied by the Company in general meeting, expire on the earlier of the conclusion of the next Annual General Meeting of the Company or 15 months after the passing of this Resolution, unless renewed or extended prior to such time except that the Directors of the Company may before the expiry of such period make an offer or agreement which would or might require equity securities to be allotted after the expiry of such period and the Directors of the Company may allot relevant securities in pursuance of such offer or agreement as if the authority conferred hereby had not expired. SpEciAl rESolution 5 That in substitution for all existing and unexercised authorities and subject to the passing of the immediately preceding Resolution, the Directors of the Company be and they are hereby empowered pursuant to section 570 of the Act to allot equity securities (as defined in section 560 of the Act) pursuant to the authority conferred upon them by the preceding Resolution as if section 561(1) of the Act did not apply to any such allotment provided that the power conferred by the Resolution, unless previously revoked or varied by special resolution of the Company in general meeting, shall be limited: (a) arising from the exercise of options and warrants outstanding at the date of this resolution; (b) to the allotment of equity securities in connection with a rights issue in favour of ordinary Shareholders where the equity securities respectively attributable to the interest of all such Shareholders are proportionate (as nearly as may be) to the respective numbers of the ordinary shares held by them subject only to such exclusions or other arrangements as the Directors of the Company may consider appropriate to deal with fractional entitlements or legal and practical difficulties under the laws of, or the requirements of any recognised regulatory body in, any territory; (c) the grant of a right to subscribe for, or to convert any equity securities into Ordinary Shares otherwise than under sub-paragraph (a) above, up to a maximum aggregate nominal amount of £100,000; and 36 AfricAn Mining & ExplorAtion plc — ANNUAL REPORT AND FINANCIAL STATEMENTS 2011 21272-04 09/05/2012 Proof 4 noticE of AnnuAl gEnErAl MEEting (d) to the allotment (otherwise than pursuant to sub-paragraphs (a), (b) and (c) above) of equity securities up to an aggregate nominal amount of £168,427 (approximately 20% of the Company’s issued share capital) in respect of any other issues for cash consideration; and shall expire on the earlier of the date of the next Annual General Meeting of the Company or 15 months from the date of the passing of this Resolution save that the Company may before such expiry make an offer or agreement which would or might require equity securities to be allotted after such expiry and the Directors may allot equity securities in pursuance of such offer or agreement as if the power conferred hereby had not expired. If you are a registered holder of Ordinary Shares in the Company, whether or not you are able to attend the meeting, you may use the enclosed form of proxy to appoint one or more persons to attend and vote on a poll on your behalf. A proxy need not be a member of the Company. A form of proxy is provided. This may be sent by facsimile transfer to 01252 719 232 or by mail using the reply paid card to: The Company Secretary African Mining & Exploration Plc c/o Share Registrars Limited Suite E First Floor 9 Lion and Lamb Yard Farnham Surrey GU9 7LL In either case, the signed proxy must be received no later than 48 hours (excluding non-business days) before the time of the meeting, or any adjournment thereof. Registered Office: By order of the Board Third Floor 55 Gower Street London WC1E 6HQ Stephen ronaldson Company Secretary 4 May 2012 Registered in England and Wales Number: 07307107 AfricAn Mining & ExplorAtion plc — ANNUAL REPORT AND FINANCIAL STATEMENTS 2011 37 21272-04 09/05/2012 Proof 4GovernanceFinancial StatementsBusiness ReviewAGM Information noticE of AnnuAl gEnErAl MEEting continued notES to thE noticE of gEnErAl MEEting Entitlement to Attend and vote 1 Pursuant to Regulation 41 of the Uncertificated Securities Regulations 2001, the Company specifies that only those members registered on the Company’s register of members 48 hours before the time of the Meeting shall be entitled to attend and vote at the Meeting. Appointment of proxies 2 If you are a member of the Company at the time set out in Note 1 above, you are entitled to appoint a proxy to exercise all or any of your rights to attend, speak and vote at the Meeting and you should have received a proxy form with this notice of meeting. You can only appoint a proxy using the procedures set out in these notes and the notes to the proxy form. 3 A proxy does not need to be a member of the Company but must attend the Meeting to represent you. Details of how to appoint the Chairman of the Meeting or another person as your proxy using the proxy form are set out in the notes to the proxy form. If you wish your proxy to speak on your behalf at the Meeting you will need to appoint your own choice of proxy (not the Chairman) and give your instructions directly to them. 4 You may appoint more than one proxy provided each proxy is appointed to exercise rights attached to different shares. You may not appoint more than one proxy to exercise rights attached to any one share. To appoint more than one proxy, please contact the registrars of the Company, Share Registrars Limited on 01252 821 390. 5 A vote withheld is not a vote in law, which means that the vote will not be counted in the calculation of votes for or against the resolution. If no voting indication is given, your proxy will vote or abstain from voting at his or her discretion. Your proxy will vote (or abstain from voting) as he or she thinks fit in relation to any other matter which is put before the Meeting. Appointment of proxy using hard copy proxy form 6 The notes to the proxy form explain how to direct your proxy how to vote on each resolution or withhold their vote. To appoint a proxy using the proxy form, the form must be: – Completed and signed; – Sent or delivered to Share Registrars Limited at Suite E, First Floor, 9 Lion and Lamb Yard, Farnham, Surrey GU9 7LL or by facsimile transmission to 01252 719 232; and – Received by Share Registrars Limited no later than 48 hours (excluding non-business days) prior to the Meeting. In the case of a member which is a company, the proxy form must be executed under its common seal or signed on its behalf by an officer of the company or an attorney for the company. Any power of attorney or any other authority under which the proxy form is signed (or a duly certified copy of such power or authority) must be included with the proxy form. 38 AfricAn Mining & ExplorAtion plc — ANNUAL REPORT AND FINANCIAL STATEMENTS 2011 21272-04 09/05/2012 Proof 4 noticE of AnnuAl gEnErAl MEEting Appointment of proxy by Joint Members 7 In the case of joint holders, where more than one of the joint holders purports to appoint a proxy, only the appointment submitted by the most senior holder will be accepted. Seniority is determined by the order in which the names of the joint holders appear in the Company’s register of members in respect of the joint holding (the first-named being the most senior). changing proxy instructions 8 To change your proxy instructions simply submit a new proxy appointment using the methods set out above. Note that the cut-off time for receipt of proxy appointments (see above) also apply in relation to amended instructions; any amended proxy appointment received after the relevant cut-off time will be disregarded. Where you have appointed a proxy using the hard-copy proxy form and would like to change the instructions using another hard-copy proxy form, please contact Share Registrars Limited on 01252 821 390. If you submit more than one valid proxy appointment, the appointment received last before the latest time for the receipt of proxies will take precedence. termination of proxy Appointments 9 In order to revoke a proxy instruction you will need to inform the Company using one of the following methods: By sending a signed hard copy notice clearly stating your intention to revoke your proxy appointment to Share Registrars Limited at Suite E, First Floor, 9 Lion and Lamb Yard, Farnham, Surrey GU9 7LL or by facsimile transmission to 01252 719 232. In the case of a member which is a company, the revocation notice must be executed under its common seal or signed on its behalf by an officer of the Company or an attorney for the Company. Any power of attorney or any other authority under which the revocation notice is signed (or a duly certified copy of such power or authority) must be included with the revocation notice. In either case, the revocation notice must be received by Share Registrars Limited no later than 48 hours (excluding non-business days) prior to the Meeting. If you attempt to revoke your proxy appointment but the revocation is received after the time specified then, subject to the paragraph directly below, your proxy appointment will remain valid. Appointment of a proxy does not preclude you from attending the Meeting and voting in person. If you have appointed a proxy and attend the Meeting in person, your proxy appointment will automatically be terminated. issued Shares and total voting rights 10 As at 4 May 2012, the Company’s issued share capital comprised 84,213,306 ordinary shares of £0.01 each. Each ordinary share carries the right to one vote at a general meeting of the Company and, therefore, the total number of voting rights in the Company as at 4 May 2012 is 84,213,306. communications with the company 11 Except as provided above, members who have general queries about the Meeting should telephone the Company Secretary, Dominic Traynor, on (020) 7580 6075 (no other methods of communication will be accepted). You may not use any electronic address provided either in this notice of general meeting; or any related documents (including the chairman’s letter and proxy form), to communicate with the Company for any purposes other than those expressly stated. AfricAn Mining & ExplorAtion plc — ANNUAL REPORT AND FINANCIAL STATEMENTS 2011 39 21272-04 09/05/2012 Proof 4GovernanceFinancial StatementsBusiness ReviewAGM Information noticE of AnnuAl gEnErAl MEEting continued crESt 12 CREST members who wish to appoint a proxy or proxies through the CREST electronic proxy appointment service may do so for the General Meeting and any adjournment(s) thereof by using the procedures described in the CREST Manual. CREST Personal Members or other CREST sponsored members, and those CREST members who have appointed a voting service provider(s) should refer to their CREST sponsor or voting service provider(s), who will be able to take the appropriate action on their behalf. In order for a proxy appointment or instruction made using the CREST service to be valid, the appropriate CREST message (a “CREST Proxy Instruction”) must be properly authenticated in accordance with Euroclear UK & Ireland Limited’s specifications and must contain the information required for such instructions, as described in the CREST Manual (available via euroclear.com/CREST). The message, regardless of whether it relates to the appointment of a proxy or to an amendment to the instruction given to a previously appointed proxy must, in order to be valid, be transmitted so as to be received by the issuer’s agent (ID: 7RA36) by the latest time(s) for receipt of proxy appointments specified above. For this purpose, the time of receipt will be taken to be the time (as determined by the timestamp applied to the message by the CREST Applications Host) from which the issuer’s agent is able to retrieve the message by enquiry to CREST in the manner prescribed by CREST. After this time, any change of Instructions to proxies appointed through CREST should be communicated to the appointee through other means. CREST members and, where applicable, their CREST sponsors or voting service providers should note that Euroclear UK & Ireland Limited does not make available special procedures in CREST for any particular messages. Normal system timings and limitations will therefore apply in relation to the input of CREST Proxy Instructions. It is the responsibility of the CREST member concerned to take (or, if the CREST member is a CREST personal member or sponsored member or has appointed a voting service provider(s), to procure that his or her CREST sponsor or voting service provider(s) take(s)) such action as shall be necessary to ensure that a message is transmitted by means of CREST by any particular time. In this connection, CREST members and, where applicable, their CREST sponsors or voting service providers are referred, in particular, to those sections of the CREST Manual concerning practical limitations of the CREST system and timings. The Company may treat as invalid a CREST Proxy Instruction in the circumstances set out in Regulation 35(5)(a) of the Uncertificated Securities Regulations 2001. 40 AfricAn Mining & ExplorAtion plc — ANNUAL REPORT AND FINANCIAL STATEMENTS 2011 21272-04 09/05/2012 Proof 4 Directors Secretary Registered Office Company InformatIon M C Jones D D Chikohora S D Oke R A Williams Executive Director Non-Executive Director Non-Executive Director Non-Executive Director S F Ronaldson 55 Gower Street London WC1E 6HQ Third Floor 55 Gower Street London WC1E 6HQ registered number 07307107 (England and Wales) auditors Bankers nominated advisors & Brokers Solicitors registrars BDO LLP Chartered Accountants & Statutory Auditors 55 Baker Street London W1U 7EU NatWest Bank Plc St James’ & Piccadilly Branch PO Box 2DG 208 Piccadilly London W1A 2DG Singer Capital Markets Limited 1 Hanover Street London W1S 1YZ Memery Crystal LLP 44 Southampton Buildings London WC2A 1AP Share Registrars 9 Lion & Lamb Yard Farnham Surrey GU9 7LL Website www.ameplc.co.uk Copyright ©African Mining and Exploration Plc 21272-04 09/05/2012 Proof 4 African Mining & Exploration Plc Second Floor 3 Shepherd Street London W1J 7HL www.ameplc.co.uk 21272-04 09/05/2012 Proof 4