22 August 2013

African Mining and Exploration Plc ('AME' or 'the Company')

Strategic sale of West Africa subsidiary and Board Change

African Mining and Exploration plc (AIM: AME), is pleased to announce the conditional sale to AIM listed Alecto Minerals Plc ('Alecto') of its subsidiary, AME West Africa Ltd ('AME West Africa'), for £1.25m in new Alecto shares.  AME West Africa holds, through its subsidiary Caracal Gold Mali SARL, six prospective exploration permits in Mali, including the 207 sq km Kossanto Gold Project.

The Company is also pleased to announce that David Archer, currently a non-executive director, will be appointed CEO of AME with immediate effect, replacing Mark Jones who will step down from the board of AME to join the board of Alecto as CEO.

Highlights

·    Strategic deal with Alecto to sell subsidiary AME West Africa for 108,695,652 new shares in Alecto, priced at 1.15p, with an aggregate value of £1.25 million

·    AME will also make a further £500,000 cash investment in Alecto:

o £250,000 through subscribing for 21,739,130 new Alecto shares at 1.15p per share; and

o £250,000 through subscribing for 12 month Alecto convertible loan notes.

·    Following completion of the transaction, AME will hold in aggregate 130,434,783 Alecto shares, representing 26.7% of Alecto's issued share capital.

·    Transaction enables AME to maintain significant exposure to these highly prospective gold licences whilst eliminating funding requirements

·    AME to retain an existing net smelter royalty of 1% on the first 300,000 ounces gold produced from AME West Africa's licence areas payable in cash

·    Alecto has an extensive portfolio of gold exploration projects in Ethiopia and an Iron-Oxide-Copper-Gold ('IOCG') exploration project in Mauritania, as well as a number of strategic alliances

·    AME retains a portfolio of wholly-owned prospective assets, including the 250 sq km Karan Gold Project in southern Mali

·    Active investment strategyin place to further develop the business and build shareholder value through strategic acquisitions

·    Strong Board and management team with proven experience in developing resource assets globally

o Mark Jones will step down as CEO, effective immediately; it is intended that he will join the board of Alecto as CEO in order to continue the development of the Kossanto Gold Project 

o In line with strategic development, David Archer, current non-executive director, is appointed CEO of AME with immediate effect

AME's incoming CEO David Archer said, "Having recently delineated a maiden JORC compliant resource at the Kossanto Gold Project, the Board felt it strategically practical and financially beneficial to divest a number of its Malian assets.  The transaction allows AME to retain exposure to the AME West Africa's Malian gold projects, eliminates the associated funding requirements and contingent obligations to Electrum and provides AME with exposure to Alecto's exciting Ethiopian and Mauritanian projects.  Having a solid cornerstone investor in Mr Fahad Al-Tamimi, Alecto is also in a strong position to be able to further develop the Malian gold projects, enabling AME to focus on expanding its resources portfolio with new investment opportunities."

''With an experienced Board and management team, I am confident that we are well placed to further expand our portfolio of resources projects at what is a very opportune time in the commodities' cycle''.

"Finally, I would like to take this opportunity to thank Mark Jones and our AME West Africa team for all their hard work and dedication to the Company, which has resulted in a very active year for AME.  I wish them well for the future and look forward to updating shareholders in due course on our future developments as we continue to establish ourselves as a multi-commodity exploration and development company."

Further Information

Details of the Agreement

AME has signed a conditional agreement with Alecto to sell its subsidiary AME West Africa, which, through Caracal Gold Mali SARL, holds six exploration permits in Mali.  The consideration payable to AME for AME West Africa will be 108,695,652 Alecto shares priced at 1.15p, having an aggregate value of £1.25 million.  AME will also retain an existing net smelter royalty of 1% on the first 300,000 ounces gold produced from the AME West Africa permits.  Alecto will also assume the contingent obligations to make deferred consideration payments to Electrum Ltd, the previous owners of the AME West Africa projects. 

Under the terms of the agreement AME is able to retain exposure to the prospectivity of the licence areas held by AME West Africa, including the Kossanto Gold Project, which currently has a JORC Inferred Resource of 2.35 million tonnes @1.42 g/t for 107,000 ounces at a cut off grade of 0.5 g/t Au, whilst avoiding costly expenditure costs to further develop the projects.  

In addition, AME has agreed to make a £500,000 strategic cash investment in Alecto through a £250,000 placing of new shares at a price of 1.15p  and a £250,000 placing of 12 month Alecto convertible loan notes (the 'Loan Notes'). The Loan Notes are convertible at either party's option at a price of 1.15p per share and will bear interest of 7%, payable at expiry or conversion.  The Loan Notes may not be converted into shares if such conversion would lead to AME holding more than 29.9% of Alecto.  This investment will further ensure AME retains an indirect strategic interest in AME West Africa's licence areas.

Completion of the agreement is subject to the satisfaction of certain conditions.  These include Alecto holding a general meeting of its shareholders to approve an increase in its share capital, the disapplication of pre-emption rights and the allotment of shares for non-cash consideration.  Alecto has already received an irrevocable undertaking by Fahad Al Tamimi, Alecto's cornerstone investor who currently holds 100,051,000 shares representing 27.9% of Alecto, to vote in favour of the resolutions.  In addition, the directors of Alecto who hold shares representing 4.25% of Alecto have also committed to vote in favour of the resolutions.  This general meeting is expected to be held before the end of September 2013 and completion of the transaction is expected very shortly thereafter.

Substantial transaction

The sale of AME West Africa Ltd constitutes a substantial transaction under AIM Rule 12.  As at 31 December 2012, the reported carrying value of AME West Africa was £568,227.  Since then, the carrying value of AME West Africa increased to £991,653 as at 30 June 2013 (unaudited).  No further disclosures are required under Schedule Four of the AIM Rules.

Current Portfolio of Assets

Following completion of the sale of AME West Africa, AME will continue to hold a prospective portfolio of wholly owned assets in Mali.   This includes the 250 sq km Karan Gold Project, located in southern Mali, 90km from Bamako.  Exploration of the project is still in the early stages, but work to date and artisanal workings in the area suggest that the licence area could host significant gold mineralisation.  Structural interpretation of the regional geophysics indicates the presence of a complex and prospective NNW striking shear zone, cross cut by E-W structures within the licence area.  Furthermore, in 2010, artisanal pit sampling results returned highs of 83.2 g/t Au, 36.6 g/t Au, 21.5 g/t Au.  Similarly, a 12,400m reverse circulation ('RC') drilling programme conducted in 2011 generated intercepts of 17m @ 1.03g/t Au, 9m @ 1.17g/t Au and 1m @ 11.75g/t Au.   However, although the RC drilling successfully intercepted gold mineralisation at three of the main targets, re-interpretation of the local and regional geophysics suggests that the RC drilling may have missed the crosscutting East-West structures so there remains a significant potential to increase the resource potential.

The Company also holds the 16 sq km Diatissan project, which has returned trench results of up to 8.34 g/t Au. 

AME plans to conduct a strategic review of its portfolio in order to determine the best action to take for the benefit of shareholders.

Information on Alecto

Alecto (AIM: ALO) is an African focussed, AIM listed resource exploration and development company with a portfolio of highly prospective gold and base metal assets in Mauritania and Ethiopia.  As at 31 December 2012, Alecto's net assets were £3.56m and its loss for the year ended 31 December 2012 was £1.1m.  As at close of markets on 21 August 2013, Alecto's market capitalisation was £4.0m.

Alecto has built an exciting resource portfolio across highly prospective but previously under-explored regions of Africa.  In Ethiopia the Alecto owns two gold projects: the 945 sq km Wayu Boda Gold Project, located in the highly prospective central-southern Adola greenstone belt in southern Ethiopia; and the 1,953 sq km Aysid-Metekel exploration licence is in north western Ethiopia.

In May 2013, Alecto and Centamin plc ('Centamin'), the Arabian-Nubian Shield mining company listed in the FTSE 250, entered into a non-binding heads of terms agreement in relation to a proposed joint venture between the two companies and if progressed, both Alecto and Centamin have determined that Wayu Boda should be nominated as a JV Project which will accelerate the project's development.   This project has extensive artisanal workings and rock chip samples have returned grades of up to 47.4 g/t of gold.  Additionally, Wayu Boda is 24km south of the privately owned National Mining Corporations 'Dawa' discovery, which has recently undergone a primary economic assessment by independent consultants Venmyn and is reported to contain reserves of over 17Moz of gold (Addis Fortune. 2012).   

In Mauritania, the Company has a tenement position of 1,828 sq km in the mineral rich Mauritanide belt of Mauritania.  The 613 sq km Wad Amour licence is currently considered the most prospective, and during the fourth quarter of 2012 Alecto further demonstrated the potential of the Chiron target through geophysical and geochemical sampling and trenching programmes.  Previous Alecto work at the Chiron target identified anomalous copper values with strike lengths over 800m.

Board Change

In line with this strategic review, current Non-Executive Director David Archer will be appointed CEO of AME with immediate effect. David has held executive and non-executive roles in a number of listed companies and has been actively involved in the international resources industry for over 30 years.  He is the former Managing Director of Hillgrove Resources Limited and Chairman of Crusader Resources Limited and Caravel Resources Limited.  He is a barrister (non-practising) of the Supreme Court of New South Wales (Australia) and was the founder and former Executive Chairman of PowerTel Limited and founder and Deputy Chairman of Savage Resources Limited.  He was a director of Eastern Star Gas Limited from 2006 to 2009.  Qualifications include, B.Ec., Dip. Laws (BAB); and is a Fellow of the Australasian Institute of Mining and Metallurgy.  As CEO, David will receive no additional fees and benefits over the nominal GBP1 per annum fee he was entitled to as non-executive director of AME.

Concurrently, Mark Jones will step down as CEO with immediate effect, and leave the Board on 30 September 2013.  It is planned that he will join the Board of Alecto as CEO to continue his valued stewardship of the Kossanto Gold Project.  In order to minimise cash expenditure upon termination of his contract with AME, Mark has agreed to waive the right to 25% of his contractual entitlements as provided under his contract with AME that was put in place at the time of AME's IPO in 2010.  His remaining contractual entitlements will be satisfied primarily through the issue of 2,666,667 new ordinary shares in AME and through the issue of 1,575,000 share options over ordinary shares in AME with an exercise price of 4.62p and an exercise period of five years from the date of grant with the balance payable in cash.  An application to admit these new ordinary shares to AIM will be made around the end of September 2013.

**Ends**

For further information please visit www.ameplc.co.uk or contact: