African Minerals - Re: AMI Stream Log - Dear All, On Thursday, 27th...

Dear All, On Thursday, 27th November 2014, we activated the next stage in our Ebola protocol to level 4, requiring all non-essential workers and contractors to be demobilised from site. On Friday evening, 28th November 2014, several of our main contractors on site ceased operations, due to insufficient payment of outstanding invoices, effectively resulting in AML activating its Care and Maintenance Protocol until suitable financing can be secured. Demobilization of the workforce commenced on Saturday, 29th November 2014, commensurate with the Care and Maintenance Protocol, with on-site briefings to all staff and contractors. I would like to personally thank everyone for their efforts over the past week. We came together as an organization and moved our people and equipment safely and calmly ensuring the possibility of a fast restart. Although we cannot accurately determine when the project will operate again at this stage, all employees remain on full pay and benefits until otherwise advised. As you are aware, AML has been experiencing difficulties over the past few months with regards to the management and containment of Ebola in Sierra Leone and the down cycle in global iron ore pricing. Consequently, AML finds itself in a position where it must immediately conserve cash in order to maintain our current cash flow and viability of the company. Further to the market announcement on 20 November 2014, the Company announces that the $102m of restricted cash has yet to be released due to continued disagreements between AML and Shandong Iron and Steel Group (“SISG”). AML continues to use its best efforts to obtain SISG’s authorisation to release these funds, however, there remains no certainty of this, or of its timing. As previously announced, AML commenced a process to sell down a partial interest in its stake in the Tonkolili mine. AML is talking to several groups who have expressed strong interest, and discussions are being progressed as quickly as possible, though there is no certainty a transaction will be forthcoming. In the absence of sufficient working capital, AML has commenced a temporary controlled shut down of its operations in Sierra Leone. Without a significant injection of working capital, AML is unable to initiate the cost reduction strategies which would return the operations to cash flow positive status even at recent low iron ore prices. The business model of AML is robust even at low iron ore prices, and there is a strong belief that AML can continue to operate profitably once the cash position of the company is made certain. We hope that all employees and contractors are flexible and understanding of the situation and work with us to preserve our future by protecting all assets in Sierra Leone. Management is doing everything possible to procure the agreement of a funding solution between AML and SISG. The Company greatly appreciates the support shown by the Government of Sierra Leone, our suppliers and communities, and all our contractors during what we hope is only a temporary suspension of operations. We will keep you posted of all outcomes as they arise at your home address.