Report and Financial Statements - responsibility reports · 2008-08-20 · penetrating the Maputo...

Company Registration No. 4232247

Report and Financial StatementsYEAR ENDED 31 MARCH 2007

Operations Review

CAMEC is primarily an African based exploration, mining, and production company that has enjoyed rapid growth. The Company is currently operating in the DRC, Mozambique, South Africa, Mali, Zimbabwe and Angola. The Company has a dedicated team of professionals who continue to manage the operational side of the business. It also prides itself in its employment and training of local people, which includes no less than 3,000 in the DRC alone. The Company would like to take this opportunity to thank all its employees, for without their hard work the Company would not have achieved such a rapid pace of growth.

THE DEMOCRATIC REPUBLIC OF THE CONGO (‘DRC’)’)

Luita Copper/Cobalt Project:

In the DRC our fl agship copper cobalt SX/EW Luita plant is contributing signifi cantly to revenues. We have invested US$ 150 million building the plant as well as other facilities including a pilot sulphuric acid plant in Kambove that has 1,000 tonne per month acid production capacity. We have also assembled a signifi cant mining fl eet of 250 earth moving machines and now employ 3,000 people.

Luita was designed on a modular basis allowing the Company to bring forward production and cash fl ow. It will be fully funded from existing CAMEC resources and operating cash fl ow. Unlike many of our peers we are in production, expanding and we are on track with our targets to have capacity to produce 40,000 tonnes annually of copper and 6,000 tonnes annually of cobalt by the end of March 2008 and 100,000 tonnes annually and 12,000 tonnes annually by the end of December 2008. This is fantastic progress considering the operational environment and diffi culties of advancing resource projects in the DRC.

We were confi dent in the prospectivity of the CAMEC concessions in the DRC and the work carried out by Gecamines with regards to resource quantifi cation. This puts the resources at a total resource estimate (non-JORC and non-43-101 compliant) of approximately 69,039,000 Mt grading 2.1 % Cu and 0.4% Co. Although this early data is not considered JORC compliant, we implemented our investment programme on the back of Gecamines, who we believe to be a highly professional operation. We have now recruited an independent technical advisor who is being retained to upgrade the Company’s existing historic resources to JORC and 43-101 status.

Exploration:

Following the completion of a high resolution airborne geophysical survey over licenses 467 and 469, physical exploration commenced to follow-up the anomalies identifi ed. Two geologists and a fi eld technician were mobilised and equipped to commence the programme.

CENTRAL AFRICAN MINING & EXPLORATION

The exploration philosophy was categorised as follows:

• Priority 1: To ensure a continuous feed of ore resources to the production plant. This is achieved by conducting exploration work on the previously mined ore bodies;• Priority 2: To evaluate the historical waste rock dumps as a brown fi elds project;• Priority 3: To evaluate the airborne anomalies, as green fi eld projects.

Kakanda (467)

On mine exploration involved data capturing and the establishment of a suitable geological database. Together with this database and the results of the airborne survey, the geologists have established suitable on-mine targets which are being confi rmed with follow-up drilling and resource defi nition.

Grids have been established on priority near-mine airborne anomalies, and controlled soil sampling surveys carried out. Further drill targets will be evaluated upon completion of the survey.

GeoQuest, a geological consulting fi rm, has commenced the evaluation of the rock dumps at Kakanda. CSA-Finore Australia will be signing off on the resource, and the exercise should be completed by year-end.

Menda (469)

Various prospective target areas were identifi ed by the aerial survey. An exploration camp has been established, and grid-controlled geochemical soil surveys are in progress. Geological mapping and target defi nition, followed by diamond core drilling will follow before year end.

Moba

The Moba concession is located in the north eastern section of the country. The area is vast and a regional helicopter-assisted stream sampling programme was completed. The results of this survey are awaited, and will identify prospective areas for further evaluation.

Two advanced gold targets that were previously mined were identifi ed during the survey. These will be mapped and drilled in due course.

Trucking / Logistics:

CAMEC’s subsidiary, Sabot Management Limited (‘Sabot’), provides transport and logistics services throughout Southern and Central Africa. Activities include the cross border haulage, throughout the region, of food aid, cobalt, copper, coal, glass, fertilizer, tobacco, salt, fl our and general cargo.

Operations ReviewOperations Review

In order to facilitate the movement of cargo in the region, Sabot has an infrastructure in place in the following countries:• Cargo Carriers International Hauliers (Private) Limited – Zimbabwe• SABOT SA (Pty) Limited – South Africa• SABOT Zambia Limited – Zambia• SABOT Malawi Limited – Malawi• AFP Services S.P.R.L – DRC

The above companies offer support facilities in Johannesburg, Mussina, Beitbridge, Harare, Chirundu, Lusaka, Kitwe, Kasumbalesa, Lilongwe, Lubumbashi, Likasi and Kakanda.

In July 2006, a large injection of capital was made into the business resulting in the acquisition of 201 Volvo trucks and 240 AFRIT trailers to complement the existing fl eet, which has increased to 450 trucks and trailers and has been operating at 100% capacity. Southern Africa, as a region, is growing with an increasing demand for fast and effi cient road transport solutions, all of which will lead to the growth of Sabot Management Limited.

MOZAMBIQUE

Coal:

The coal fi elds of the Tete Province, Mozambique, have long been recognised but development has been stifl ed by economic and political circumstance. The various sub-basins that make up the Karoo stratigraphy occupy an area stretching over 350 km from Cahora Bassa Lake to the Malawi border. The best known of these is the Moatize basin, where mining has historically taken place, principally on the Chipanga seam. Reserves of the Moatize sub-basin are estimated at 2.4 billion tonnes. A further 3.8 billion tonnes of coal have been estimated in two of the remaining sub-basins (the Mucanha-Vusi and Ncondezi sub-basins) and there are estimates that the coalfi eld is one of the largest unexplored coal provinces on the planet.

The awarding of an exploration and exploitation contract to CVRD, by the Mozambique government, has lead to CVRD proposing a mine plan in the Moatize area that envisages large scale exploitation of the coal to fuel a local thermal power station, and export of coking coal via rail and ship. The probability that the power plant will provide a local market for coal, and that infrastructure will be upgraded to facilitate export, has inspired CAMEC to conduct coal exploration in the area. The company currently controls almost 381,000 ha of prime exploration licences spanning several of the regional Karoo sub-basins.

Coal occurs primarily in the “Productive Series” rocks within the lower part of the Ecca Group. Comparisons are made with the South African Karoo stratigraphy although the Mozambique coals were deposited in more tectonically active basins and variations can therefore be expected. The coal structures were deposited in a cold climate following a period of glaciation.

Exploration work, started in 2005, has included aerial photo and satellite image interpretation, an extensive airborne geophysical survey, mapping (at times helicopter-assisted), percussion and diamond drilling (111 boreholes). Given the amount of ground controlled by CAMEC the philosophy to date has been to assess the relative merits of the various concessions and identify the most prospective areas prior to committing to resource defi nition.

The coals encountered to date on the CAMEC licences appear to be fairly typical of the region, with thick intervals (up to 60 m) of inter-banded coal and non-coal lithologies. The scale of this inter-banding results in non-selective samples having fairly high raw ash contents so that benefi ciation through washing is a requirement. Dolerite sills cause burning of the coal in some places but are known to vary in thickness and abundance along strike, so that areas that have been extensively burned can still be prospective along strike.

The estimation of the potential recoverable resources identifi ed to date on the concessions that have been drilled (842L, 876L, 877L) is just under 200 Mt. This is based only on fi rst phase diamond drilling and many areas of those concessions remain open for further drill testing.

18 concessions remain to be drill tested and exploration there can be considered to be early stage, but in highly prospective terrain with fi rm fi eld and historic indications that substantial coal resources will be identifi ed. Of particular note are the concessions on the north side of Cahora Bassa Lake. Previous work here by two parties in the 1960s to 1980s involved signifi cant amounts of drilling and resulted in the estimation of a 3.6 billion tonne resource. CAMEC concessions cover a large part of this resource, and will be evaluated in due course.

Agriculture:

The agricultural operation is going from strength to strength and we were pleased with the visible support from Armando Guebuza, the President of Mozambique, who opened our new facility at Chimoio. I believe this emphasises our growing reputation of delivering on our promises and contributing benefi cially to the countries that we operate in.

During the past year DECA has again expanded signifi cantly with the construction of a further 9 x 1,000 ton silos, a 1,000 sq m warehouse for grain storage and a new continuous fl ow maize dryer. Storage capacity now stands at 25,000 tonnes on site. As of today we have doubled the amount of grain purchased last year and have a current stock of 23,000 tonnes. Additionally, two adjoining properties were purchased to facilitate the expansion programme giving DECA a further 8 hectares of land and buildings comprising of houses, warehouses, workshops etc. The total land holding now stands at circa16 hectares. Milling continues on a 24 hour basis and a second mill has been ordered which is due for installation in September. This will increase DECA’s capacity to 200 tonnes maize meal and 50 tonnes cattle feed per day. Demand is currently exceeding supply and DECA maize meal, which is now rated the best in the country, is currently penetrating the Maputo market as well as being available throughout central and southern Mozambique. DECA’s grower base exceeds 300,000 farmers and currently employs over 250 people. The company has injected over US$ 3 million into the local economy buying maize, which is a substantial uplift for the local communities and economy. Going forward, it is the intention of the Board to expand the operation into two other provinces next year and by replicating the installations at Chimoio.

SOUTH AFRICA

Fluospar:

RSG Global (Pty) Ltd (“RSG Global”) has prepared an updated grade estimation on the Doornhoek Fluorspar Project located in the Marico District of the Northwest Province South Africa. As a result of work conducted, a SAMREC compliant Inferred Mineral Resource is reported as follows:

Cut-Off Grade Tonnage (Mt) Grade (CaF2%)20% CaF2 14,83 20.9

Eight envelopes within the Mottled Marker – Lower Chert package were constructed utilising a cut-off of 20% CaF2 a minimum average width of 2m and incorporating various aspects of the geological interpretation. The estimate, using 100x100x3m blocks, was undertaken into the deterministically constructed grade envelopes utilising Ordinary Kriging and Inverse Distance Weighting. The resource categorisation has been based on the robustness of the various data sources available, confi dence of the geological interpretation, variography and various estimation service variables (e.g. distance to data, etc).

The mineralisation is considered stratiform and restricted to broad shallow-dipping (4˚) sedimentary packages, making the deposit easily amenable to low-cost mechanised mining methods at depths no deeper than 90m below surface.

Prior to the estimate, RSG Global completed the drilling of 20 twin drill holes, allowing it to comply with the guidelines of the South African Code for Reporting of Mineral Resources (SAMREC code).

The exploration programme is progressing to the next stage in defi ning an indicated and measured resource as the scoping study will be completed and various plant design options will be reviewed. Commencement of a mining right application is planned within the next year.

Coal:

CAMEC have secured a 74% interest in prospecting rights covering over 20,000 hectares of prospective coal properties in South Africa. The properties are located within the Waterberg, Soutpansberg and Springbok fl ats coalfi elds, and based on historical drilling and literature studies, have potential to host in excess of 130 million tons of coal. The details are summarised below:

The adjoining farms Tilburg 145 LQ and Vaalkoppies 187 LQ are located 40km north northeast of Ellisras in the Limpopo Province. They are serviced by a good secondary road to Ellisras, and are approximately 60 km from the Grootgeluk siding, the main siding for the Grootgeluk Coal Mine where Exarro Resources operate a large open pit coal mining and processing facility.

The farms Tilburg and Vaalkoppies are underlain by a sequence of Karoo rocks, with coal seams 4 – 7 of the Grootegeluk Formation developed on the farms. Vaalkoppies is located down-dip and to the south of Tilburg. Anglo American has drilled one hole on Tilburg and six on Vaalkoppies.

Drill results indicated that several coal seams were intersected on the farm Vaalkoppies and Tilburg at depths varying between 10m and 150m below surface. The cumulative thickness of coal seams on the property varies between 4m and 32m, and consequently a very signifi cant coal resource, in excess of 100mil tons, is possible at fairly shallow depths below the surface. The drill results gave an average yield of 45% with a CV of 25.

Confi rmatory drilling is planned on these farms for the near future.

CENTRAL AFRICAN MINING & EXPLORATIONCENTRAL AFRICAN MINING & EXPLORATION

Operations ReviewOperations Review

The farm Ellenboogfontein 162 LQ is located 35km north of Ellisras in the Limpopo Province. It adjoins the Mokolo River, and is 40 km by tarred road from the Grootgeluk siding, the main siding for the Grootgeluk Coal Mine. The entire farm is underlain by Karoo Sequence rocks. The property was drilled by Gold Fields in 1976 to 1980, and again from 1983 to 1985. The results and geological information on past drilling remains to be traced, but an in house report prepared for AFC indicates that the property contains a signifi cant coal resource. From the literature, coal zones in the area are reported to be thick, with coking coal potential throughout. CAMEC will attempt to procure the results of past drilling, and also test the coal potential of the farm by drilling.

The farms Weltevreden 235 LR and Dwars-In-Den-Weg 351 MR overlie a Karoo outlier in the Mokopane District of the Limpopo Province located adjacent to the town Tolwe. These farms are situated on the western edge of the Soutpansberg coal fi eld. They are serviced by a tarred road and are located approximately 150 km from the nearest rail siding at Mokopane.

Prof. Robb from The Witwatersrand University Geology Department prepared an in-house report for AFC in the 1990s, and reported that this farm consists of a complete, but unattenuated, sequence of Karoo sediments. At the base of the Karoo Sequence towards the west of Weltevreden, as well as on the property itself, a sequence of Ecca Group shales occur which contain a number of coal seams. The farm was the object of an exploration exercise by Trans Natal who drilled three holes on the farm, all of which intercepted coal at various depths. Prof. Robb concluded that this farm contains a signifi cant coal resource which needed to be tested, but CAMEC were unable to trace the results of past drilling, and plan to test the potential of the property by drilling additional boreholes.

The farms Doornfontein 669 KS and Kromdraai 626 KR are situated approximately 25 km west northwest of Marble Hall in the Limpopo Province. The farms are serviced by a tarred road from Marble Hall to Settlers, and are 10km from the Nutfi eld rail siding.

Trans Natal Coal drilled the property in 1980 followed by Anglo American in 1981 and again in 1994. Anglo American drilled twelve holes on the farm Doornfontein and fi ve on the farm Kromdraai. The farm Doornfontein is entirely underlain by coal bearing horizons of the Karoo Supergroup. Coal outcrops on the adjoining property are on the up-dip side of Doornfontein.

Historical drilling information was obtained from the Council for Geoscience with permission from Anglo American. Twelve boreholes have been drilled on the farm Doornfontein to an average depth of 106 metres. The results of this drilling indicate two coal seams, approximately 1.5m apart, with an average thickness of 0.8m for the top, and 1.26m for the bottom coal seam. The coal has good coking potential with a relatively high calorifi c value at an average of 24.4.

In the event of the entire farm being underlain by coking coal with an average thickness of 1.26m, an inferred resource of 29 million tons could be present on this property alone. CAMEC plan to evaluate the property in further detail.

Kromdraai borders Doornfontein on the western side. Five holes were drilled by Anglo American during 1980-1983. The coal seam varies in thickness from 0.51 - 2.1m at an average depth of 212m below surface. The coal has good coking potential with a relatively high calorifi c value above 24. Further confi rmatory drilling is planned.

Platinum

CAMEC has secured a 44.5% interest in Pfula Investments Limited (“Pfula”) which owns the rights to 51% and 40% respectively of the Inkosi and Imbasa Platinum Group Element (“PGE”) projects, located on the western limb of the Bushveld Complex in South Africa. The combined inferred resource estimate for the two projects was 38.8 million ounces 4E, i.e. platinum, palladium, rhodium and gold translating into 8.1 million ounces 4E attributable to CAMEC. The project area is contiguous to Impala Platinum which gained control of the area through the acquisition of African Platinum Plc.

MALI

In Mali CAMEC has a Joint Venture Agreement with Mali Mining House (‘MMH’) for the exploration and development of licence areas covering a total of 4,000 sq km. These have been divided into three project areas: the 300 sq km Falea Project in south west Mali on the Senegal and Guinea border, where CAMEC’s geological team has already identifi ed over 20 large deposits; the 2,500 sq km Bamako West Project; and the 1,200 sq km Sikasso North Project. The Company is conducting extensive exploration work and believes that the potential for having a producing operation in the country is increasing daily. Geophysical studies have also indicated that the licence areas are prospective for copper and uranium.

The combined resource of Mali and neighbouring Guinea is amongst the largest in the world. Whilst Guinea has benefi ted from its location on the Atlantic coast, to develop its resources and become the world’s second largest producer (17 million tons a year bauxite) after Australia, the Mali resources, for want of infrastructure have remained relatively untouched. With the current demand for aluminium, exploration activity in Guinea has increased dramatically with major mining companies such as BHP Billiton, Mitsubishi and CVRD having established exploration rights to signifi cant areas of highly prospective ground. Guinea has reached a point where available areas prospective of bauxite in signifi cant tonnages do not exist and Mali is becoming increasingly prominent.

In January 2006, CAMEC completed an interpretation of satellite imagery to determine the extent of bauxite mineralisation in Mali and Northern Guinea. This exercise highlighted that the potential for low grade tonnage was signifi cantly larger than that revealed by previous studies, which only examined high grade white bauxite possibilities. Subsequently its Malian JV with Mali Mining House SA (80% CAMEC 20 % MMH) was granted exploration rights to 4,100 square km of highly prospective land in the Falea, Bamako west and Sikasso North regions of Mali. In October 2006, a conceptual study analysing the potential of an alumina industry in Mali was completed by Butty, Herinckx and Partners (BH&P) specialist in the bauxite alumina industry. This study positively reinforced CAMEC’s view of potential with particular reference to the Falea licence in the South Western corner of Mali, on the Guinea Senegal border, because of its proximity (60km to the SE) to the Faleme iron ore project in Senegal (a JV between Mittal and Miferso). Evidently infrastructure developments required to transport 14 million tonnes of iron ore per year will have a signifi cant potential impact on the viability of a site based alumina refi nery.

Earlier satellite interpretations by CAMEC had highlighted 20 plus bauxitic plateaux covering 75 sq km within the 474 sq km Falea exploration licence. Previous exploration by the French aluminium company Pechiney and BRGM undertaken during the years 1959 and 1960 highlighted the potential for 120 million tonnes (using a cut off of 45% Total Al 203) at 47.5% Total Al 203 and 3.6% Si 02 on the Sitadina and Komassi plateaux in the SE of the permits, based on a drilling programme operated on a nominal 400 m x 400 m grid. Such an estimate is based on a total area of 10.14 sq km whilst the actual area of the two aforementioned plateaux established from satellite imagery is 29 sq km, indicating the greater tonnage potential offered by Sitadina and Komassi alone.

The BH&P conceptual study highlighted a minimum resource requirement of 500 million tonnes to justify a site based alumina refi nery with a feed of 9 million tonnes per annum of bauxite at 42% Total Al 203 and less than 2% Si 02 to produce 3 million tonnes of alumina per annum. The SI 02 is important as the reactive components impacts on sodium hydroxide consumption (the leach media in a standard Bayer process) and therefore the cost of production.

The Mali based team initiated a fi rst phase exploration programme consisting of low frequency pitting to establish the general resource tonnage and quality potential of the Falea permits. Whilst the numbers of results are still outstanding results to date have generally been positive. An initial resource estimate is planned to be completed by end 2007. Planning for a drilling programme to commence early 2008 is already underway.

The Falea resource occurs within a tableau zone at the bottom of a sedimentary sequence of neo-protozoiac age (the Kania sequence), unusually deposited on the paleo - Protozoiac Birimian lithologies. The deposit is blind, that is, does not outcrop at surface, with the top of the main zone of mineralisation occurring about 250m below surface. However the Kania sequence has been seen to outcrop in the lower elevation valleys within CAMEC’s Falea permit. The Company has completed a screen sediment sampling programme of the Falea permit with samples sent to ACME laboratories in Vancouver for 36 elements ICP-MS analysis. The results are awaited.

ZIMBABWE

CAMEC remains active in Zimbabwe and retains a head offi ce in the capital, Harare, and is focussed on both exploration and production. The primary exploration focus is on gold, tantalite and cassiterite with a number of licences across the country having already been accumulated. On the production side, the Company is mining and milling gold in the Midlands Gold belt, and tantalite and cassiterite in the Mtoko region. Tin, which is processed to ingot form and refi ned into solder white tin concentrate, is exported to China. With this small established presence, the management believes that it has a strong foothold in the country and positioned to take advantage of any economic upturn.

28 August 2007

CENTRAL AFRICAN MINING & EXPLORATION CENTRAL AFRICAN MINING & EXPLORATION

Central African Mining & Exploration Company plc

REPORT AND FINANCIAL STATEMENTS

Year ended 31 March 2007

Company Registration No. 4232247

REPORT AND FINANCIAL STATEMENTS

CONTENTS

11 Offi cers and Advisers 13 Chairman’s Statement 15 Pictorial Review 17 Democratic Rebublic of Congo 43 Deca, Mozambique 59 Transport & Logistics - Sabot 65 Other Activities 69 Financial Statements 70 Directors’ Report 73 Corporate Governance Statement 75 Directors’ Responsibilities in the Preparation of Financial Statements

76 Independent Auditors’ Report to the Members of Central African Mining & Exploration Company Plc 77 Consolidated Profi t and Loss Account 78 Consolidated Statement of Total Recognised Gains and Losses 79 Consolidated Balance Sheet 80 Company Balance Sheet 81 Consolidated Cash Flow Statement 82 Accounting Policies 85 Notes to the Financial Statements

8 9

Offi cers and Advisers

DIRECTORS

Philippe Edmonds MA (Cantab) Chairman

Andrew Groves Managing Director and Chief Executive

Russell Grant B.Sc (Hons) (Royal School of Mines) Operations Director

Christopher Chapple MA (Oxon) Chief Development Offi cer

John Anthony B.Com, LIB (Hons) MBA Non-Executive Director


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SECRETARY

Philip Enoch MA (Oxon)

REGISTERED OFFICE

Millennium Bridge House

2 Lambeth Hill

London EC4V 4AJ

AUDITORS

Baker Tilly UK Audit LLP

Chartered Accountants

2 Bloomsbury Street

London WC1B 3ST

SOLICITORS

Salans

Millennium Bridge House

2 Lambeth Hill

London EC4V 4AJ

BANKERS

National Westminster Bank plc

Mid-Town Commercial Banking

2 Waterhouse Square

138-142 Holborn

London EC1N 2TH

REGISTRARS

Capita Registrars

The Registry

34 Beckenham Road

Beckenham

Kent BR3 4TU

NOMINATED ADVISER AND BROKER

Seymour Pierce Limited

Bucklersbury House

3 Queen Victoria Street

London EC4N 8EL

10 Report & Financial Statements | 11

Chairman’s statement

I am very pleased to report another year of exceptional development for CAMEC. This has been a transformational year for your company where we have rapidly expanded and built on our position as a pan-African fully integrated exploration, mining and production company. I can report today that we have achieved strong revenue growth for the period with a turnover of £69.5m (2006: £11.0m) and that the signifi cant investment in our fl agship Luita SX/EW facility is starting to reap dividends, as it is now producing both copper cathode and cobalt concentrate. Acquisitions, including BOSS Mining and SABOT, have been instrumental in our growth and in this vein we are now making a full offer for Canadian listed Katanga Mining Ltd, which again has the potential to dramatically enhance our position, by building the Company into one of the leading producers of copper in the Democratic Republic of the Congo (‘DRC’) and potentially the world’s largest producer of cobalt.

Operationally, much of our focus has been related to CAMEC’s investment in the Luita SX/EW plant, which is now contributing to revenues. The Company’s strategy has been to focus on the rapid development of production, rather than near term profi tability. As a result the plant has been designed on a modular basis to expedite production, allowing us to take immediate and growing advantage, as modules are added, of the present high metal prices. The Luita plant is in the process of being completed on schedule and within budget. In addition, its modular design and the reinvestment of early stage cash fl ow means that the plant is fully funded from existing CAMEC resources and operating cash fl ow. The project development is on track to achieve our targets of annual production capacity of 40,000 tonnes of copper and 6,000 tonnes of cobalt by end of March 2008 and 100,000 tonnes copper and 12,000 tonnes cobalt by December 2008.

The progress we have made this year, particularly in the DRC, underlines our commitment to investing signifi cantly in the countries in which we operate and refl ects our core strategy of seeking fi rst mover advantage in attractive markets. We continue to focus on identifying new opportunities where the Company can implement appropriate investment programmes


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are aggressively pursuing development programmes at our fl uorspar and coal projects in South Africa while our investment in the Pfula platinum project, on the Bushveld complex in South Africa and alongside Impala Platinum, gives us a signifi cant attributable platinum resource base. In Mozambique we continue to develop our coal and agricultural operations. Notably, there now seems to be a global interest in Mozambique coal, as highlighted by recent merger and acquisition activity, while the market at large is also starting to focus on agricultural operations. In Mali, we are advancing our bauxite licence areas with a comprehensive exploration programme. Across the region new opportunities are constantly being reviewed as we seek to continue to expand on CAMEC’s position as a pan-African exploration, mining and production company with a broad and exciting portfolio of investment assets.

Control of logistics is crucial to our operational success and we have accordingly raised our number of Volvo trucks and trailers in SABOT to 450, to ensure that we continue to reap the strategic and logistical benefi ts that we derive from owning that business in support of our regional growth.

The strategic development of our assets has contributed to our fi nancial performance and I am pleased to report a pre tax profi t of £15.7m (2006: £1.1m loss) on turnover of £69.5m (2006: £11.0m). This is despite an amortization of goodwill charge of £3.5 million.

It is a testament to the whole CAMEC team that we have achieved this fi nancial performance, while at the same time constructing, in 12 months, a state of the art 500,000 sq ft copper cobalt SX/EW facility in the DRC which is already producing copper cathode, and also dealing with the suspension of operations by our joint venture partner on the Mukondo concession area. With regards to the immediate future, our rapid production growth and installation of additional SX/EW modules at Luita as well as the development of the mines at Disele and Kababankola should drive fi nancial growth in the coming year. In addition, management is confi dent that its continued efforts to achieve a resolution to the


PICTORIAL GUIDE TO CAMEC OPERATIONS

14 | Report & Financial Statements


Report & Financial Statements | 15

Mukondo situation will be successful and, if so, this will contribute to the Company’s fi nancial performance in the second half of this year.

I am also pleased to announce that later today we will be issuing our Offer Document for Canadian listed Katanga Mining Ltd. This will contain a more comprehensive review of CAMEC’s activities as well as a detailed explanation of the terms of the transaction. The Board is confi dent that it will obtain the support required to ensure the deal is concluded. Consultancy fi rm, Behre Dohlbere, has produced a 43-101 compliant Technical Report on the DRC mineral properties for the purpose of the offer. The combined businesses of CAMEC and Katanga will create a leading copper cobalt company with growing production as well as quantifi ed and increasing resources. Management believes that the deal will create signifi cant value for both companies’ shareholders through the realisation of fi nancial and operational synergies. The combined group should achieve a higher valuation rating than either company alone. The new entity will also be well placed to exploit any attractive value creating opportunities that may arise from further consolidation amongst copper cobalt producers in the DRC and elsewhere.

We have made a number of key appointments recently in order to strengthen the Board. Chris Chapple joined us as Chief Development Offi cer in May and Andrew Burns is set to join shortly as Chief Financial Offi cer. Both bring broad ranging experiences of assisting in the development of growth companies and will be great contributors to CAMEC going forward. With our dramatic growth over the last fi ve years we realise the need to continue to broaden and strengthen the Company’s management team to ensure that we maximise the value of our portfolio.

CAMEC has an exciting future. The Company is well positioned to take advantage of the immense resource opportunities on the African continent through its experience and on the ground operational presence. In addition, we feel our strategy of identifying opportunities early has positioned us at the forefront of market trends both on the development and corporate consolidation fronts.

Finally I would like to thank all of our staff for their tremendous efforts and our shareholders for their continued support and I look forward to the Company achieving its objectives of continued operational and fi nancial growth.

Phil EdmondsChairman

28 August 2007

Chairman’s statement

DEMOCRATIC REPUBLIC OF CONGO


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Bagged cobalt ore ready to dispatch

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Aerial view of the modular Luita facility in operation and under expansion in June 07

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Aerial view of the modular Luita facility

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D.E.C.A MOZAMBIQUE


D.E.C.A offi cial opening ceremony by the president of Mozambique Armando Guebuza

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D.E.C.A truck transporting grain

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D.E.C.A silos

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Bagged unprocessed grain

53

5554

D.E.C.A workers on site

5756

D.E.C.A workers on site

TRANSPORT & LOGISTICS- SABOT


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SABOT truck

62

SABOT trucks at the Zimbabwe depot

63

OTHER ACTIVITIES


67

Mining engineers inspecting old mine shaft on Doornhoek

Coal underlying fi eld camp L871

66

Pitting exploration sampling at Sitadina Plateau, using a hydraulic hammer to dig in a very hard duricrust.

FINANCIAL STATEMENTS



The directors submit their report and the fi nancial statements of Central African Mining & Exploration Company plc for the year ended

31 March 2007.

PRINCIPAL ACTIVITIESThe principal activity of the Group during the year was that of a fully integrated exploration, mining and trading group focused on Central

and Southern Africa with the main revenue stream arising from cobalt sales in the Democratic Republic of the Congo.

PERFORMANCE AND PROSPECTSA review of the group’s performance, key performance indicators and prospects is given in the Chairman’s Statement on pages 13 to 14. A review of the risks and uncertainties impacting on the Group’s long term performance is included in the Corporate Governance Statement on pages 73 to 74.

DIVIDENDSThe directors do not recommend a dividend for the year (2006: £Nil).

DIRECTORSThe following directors have held offi ce during the period:

PH Edmonds AS Groves R Hassim (resigned 1 March 2007)RC Grant JG Anthony

CJC Chapple was appointed as a director on 16 May 2007.

DIRECTORS’ INTERESTS IN SHARES, OPTIONS AND WARRANTSDirectors’ interests in the shares of the company, including family interests, were as follows: Ordinary shares Ordinary shares of 0.1p each of 0.1p each 31 March 2007 1 April 2006

PH Edmonds 48,122,564 48,122,564AS Groves 37,622,564 37,622,564R Hassim - 3,000,000R Grant 22,678,234 22,978,234JG Anthony 2,700,000 2,700,000

There have been no changes in the share interests of any of the above directors, between 1 April 2007 and 21 August 2007.

Directors’ Report Directors’ Report

70 | Report & Financial Statements Report & Financial Statements | 71

The directors held no share options and warrants as at 31 March 2007 (2006: Nil).

No share options or share warrants were granted or waived during the year.

CJC Chapple was granted 5m share options on 16 May 2007 at an exercise price of 50p per option. 2.5m of the options are exercisable in tranches from 16 May 2008 up to 15 May 2015 and 2.5m of the options are exercisable in tranches from the later of 16 May 2010 and the date when the share price of the company fi rst reaches £1 in the fi ve year period to 16 May 2015.

The market price of the shares at 1 April 2006 and 31 March 2007 was 60.50p and 56.75p respectively and the average during the year ended 31 March 2007 was 57.00p.

SUBSTANTIAL SHAREHOLDINGS

Other than the directors’ interests shown above, the company has been notifi ed of the following substantial interests as at 21 August 2007. Number of Percentage of ordinary shares issued share of 0.1p each capital

Lehman Brothers International (Europe) Limited 110,813,472 9.02%Mr R B Rowan 92,538,133 7.53%Harvest View Limited 90,926,134 7.40%Credit Suisse Securities (Europe) Limited 78,291,304 6.37%The Capital Group Companies Inc 74,251,569 6.04%UBS AG 54,839,362 4.46%Massachusetts Mutual Life Insurance Company 61,863,000 5.04%Northsound Capital LLC 44,561,825 3.63%

CREDITOR PAYMENT POLICY

The company policy, which is also applied by the group, is to ensure that, in the absence of dispute, all suppliers are dealt with in accordance with its standard payment practice whereby all outstanding trade accounts are settled within the term agreed with the supplier at the time of the supply or otherwise 30 days from receipt of the relevant invoice. Trade creditor days for the group based on creditors at 31 March 2007 were 14 days (31 March 2006: 9 days).

POST BALANCE SHEET EVENTS

On 12 April 2007 the company entered into pre-bid agreements with certain shareholders of OmegaCorp Limited (“OmegaCorp”) in connection with a proposed takeover bid for the entire issued share capital of OmegaCorp Limited. Under these agreements, the company was entitled to acquire at its option in aggregate 9,480,000 OmegaCorp shares. On 24 April 2007 the company acquired these 9,480,000 OmegaCorp shares in consideration for the issue of 9,480,000 new ordinary shares. The company subsequently announced its withdrawal from this bid on 13 June 2007 (as a number of bid conditions which the company regarded as commercially fundamental to its bid had been breached) and thereafter sold its shares in OmegaCorp through the market.

On 27 April 2007, and 4 May 2007 CAMEC entered into agreements with various shareholders of Katanga Mining Limited (“Katanga”) to acquire, in aggregate, 9,917,800 shares in Katanga for an aggregate consideration of the payment of CAN$8,622,500 and US$23,466,426 in cash and the allotment and issue of 90,375,215 ordinary shares. On 18 May 2007, 90,375,215 ordinary shares were issued as part consideration for the acquisition of the Katanga shares.



Directors’ Report Corporate Governance Statement

On 15 June 2007, the company entered into a US$60,000,000 Credit Facility Agreement (the “Facility”) with Credit Suisse International (“CSI”). Under the terms of the Facility the company must repay the loans in full on the fi nal maturity date (18 June 2009). The company drew down US$25 million under the Facility on 18 June 2007 and US$35 million on 13 July 2007. As consideration for the grant of the Credit Facility, the company granted warrants to subscribe for 12,000,000 ordinary shares at 55 pence per ordinary share to CSI.

A number of changes to the UK Corporation tax system were announced in the March 2007 Budget Statement and are expected to be enacted in the 2007 and 2008 Finance Acts. The changes had not been substantively enacted at the balance sheet date and, therefore, are not included in these fi nancial statements. The effect of the changes to be enacted in the Finance Act 2007 would be to reduce the deferred tax liability provided at 31 March 2007 by £417,000. This decrease in deferred tax would increase profi t for the year by £417,000. This decrease in deferred tax is due to the reduction in the corporation tax rate from 30 per cent to 28 per cent with effect from 1 April 2008. The other changes to be enacted would have no further effects on the deferred tax provided at 31 March 2007.

THIRD PARTY INDEMNITY PROVISION FOR DIRECTORS

Qualifying third party indemnity provision was in place for the benefi t of all directors of the company.

FINANCIAL INSTRUMENTS

The risk exposure of the group and how the group addresses this is detailed in note 27 of the fi nancial statements.

AUDITORS

The directors, having been notifi ed of the cessation of the partnership known as Baker Tilly, resolved that Baker Tilly UK Audit LLP be appointed as successor auditor with effect from 1 April 2007, in accordance with the provisions of the Companies Act 1989 s26(5). Baker Tilly UK Audit LLP has indicated its willingness to continue in offi ce.

STATEMENT AS TO DISCLOSURE OF INFORMATION TO AUDITORS

The directors who were in offi ce on the date of approval of these fi nancial statements have confi rmed that, as far as they are aware, there is no relevant audit information of which the auditors are unaware. Each of the directors have confi rmed that they have taken all the steps that they ought to have taken as directors in order to make themselves aware of any relevant audit information and to establish that it has been communicated to the auditors.

By order of the board

PM EnochCompany Secretary

28 August 2007

The Board of Directors are accountable to the company’s shareholders for good corporate governance and the directors support the Combined Code as far as it is appropriate to the Group’s stage of development.

Set out below is a summary of how, at 31 March 2007, the company was dealing with corporate governance issues.

THE BOARD OF DIRECTORS

The Company was led and controlled by a Board comprising three executive directors and a non-executive director from 1 March 2007 when R Hassim resigned as director. Since 31 March 2007, a fourth executive director has been appointed.

There are no matters specifi cally reserved to the Board for its decision, but no decision of any consequence is made other than by the directors. There is no separate Nomination Committee due to the current size of the Board and any new directors are appointed by the whole Board.

There is no agreed formal procedure for the directors to take independent professional advice at the Group’s expense.

All directors submit themselves for re-election at the Annual General Meeting at regular intervals. There are no specifi c terms of appointment for non-executive directors.

DIRECTORS’ REMUNERATION

The Chairman and Chief Executive are responsible for the consideration and approval of the terms of service, remuneration, bonuses, share options and other benefi ts of the other directors and they, in turn, are responsible for theirs. All decisions are made after giving due consideration to the size and nature of the business and the importance of retaining and motivating management.

PH Edmonds and AS Groves both have service contracts with the company. RC Grant does not have a service contract with the company. CJC Chapple, who was appointed after 31 March 2007, also has a service contract with the company. The contracts can be terminated by the company on giving twelve months’ notice and by the relevant director on six months’ notice.

There are no formal bonus schemes in force.

Details of the remuneration of each director are set out in note 6 to the fi nancial statements.

ACCOUNTABILITY AND AUDIT

The Company has not yet established an Audit Committee. The Chairman and Chief Executive are responsible for reviewing the scope and results of the audit, its cost effectiveness and the independence and objectivity of the auditors. A formal statement of independence is received from the external auditor each year.

RELATIONS WITH SHAREHOLDERS

The Chairman is the Company’s principal spokesperson with investors, fund managers, the press and other interested parties. At the Annual General Meeting, private investors are given the opportunity to question the Board.

INTERNAL CONTROL

The Board acknowledges its responsibility for establishing and monitoring the Group’s systems of internal control. Although no system of internal control can provide absolute assurance against material misstatement or loss, the company is in the process of reviewing its internal control systems in the light of the recent rapid expansion of the Group’s business activities.



Directors’ Responsibilities In The Preparation Of Financial Statements

Corporate Governance Statement

The key procedures that have already been established and which are designed to provide effective control are as follows:

Management Structure – The Board meets regularly to discuss all issues affecting the Group.

Investment Appraisal – The Group has a clearly defi ned framework for investment appraisal and approval is required from the executive directors in respect of all material investments.

The Board reviews the effectiveness of the systems of internal control having regard to the major business risks. The Board has taken steps to rectify the control defi ciencies which have come to light during the year. No weakness in internal control has resulted in any material losses, contingencies or uncertainties which would require disclosure as recommended by the guidance for directors on reporting on internal fi nancial control.

GOING CONCERN

Having made appropriate enquiries and having examined the major areas which could affect the Group’s fi nancial position, the directors are satisfi ed that the Group has adequate resources to continue in operation for the foreseeable future. For this reason, they consider it appropriate to adopt the going concern basis in preparing the fi nancial statements.

RISKS AND UNCERTAINTIES

There are a number of risks and uncertainties facing the Group, principally the following:

The Group conducts its operations in other jurisdictions than its reporting currency and therefore is subject to fl uctuations in exchange rates.

The activities of the Group are subject to fl uctuations in demand for prices and minerals, which are volatile and cannot be controlled.

While the Group believes that its operations are currently in substantial compliance with all relevant material environmental and health and safety laws and regulations, there can be no assurance that new laws and regulations, or amendments to or stringent enforcement of, existing laws and regulations will not be introduced, which could have a material adverse impact on the Group.

Any changes in the laws of countries in which the Group carries on business relating to mining could materially affect the rights and title to the interests held there by the Group.

The successful exploration and development of mineral properties is speculative and subject to a number of uncertainties. The available resources and reserves may be signifi cantly lower than estimated.

African territories experience varying degrees of political instability. There can be no assurance that political stability will continue in those countries where the Group currently has, or in future will have, operations. In the event of political instability or changes in government policies in those countries where the Group operates, the operations and fi nancial condition of the Group could be adversely affected.

The law in some of the countries in which the Group operates is not rigorously enforced. Corruption, mismanagement and misappropriation are accordingly often widespread in such countries, and diffi cult or impossible to prevent.

Some of the countries in which the Group operates maintain strict controls on access to foreign currency and the repatriation of funds.

The geographic locations of the Group’s operations can present logistical diffi culties in the installation, operation and maintenance of equipment related to the activities of the business. Any interruption to the working status of such equipment could have a material adverse affect on the business, fi nancial condition and results of operations of the Group.

The Board recognises that the Group is constructing and owns assets in certain African countries where there is no fully developed system of insurance. The Group is taking steps to ensure that there is suffi cient insurance cover for these assets where such insurance can be obtained at commercially acceptable rates of premium.

The directors are responsible for preparing the Annual Report and the fi nancial statements in accordance with applicable law and regulations.

Company law requires the directors to prepare fi nancial statements for each fi nancial year. Under that law the directors have elected to prepare the fi nancial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). The fi nancial statements are required by law to give a true and fair view of the state of affairs of the company and the group and of the profi t or loss of the group for that period. In preparing those fi nancial statements, the directors are required to: a. select suitable accounting policies and then apply them consistently; b. make judgements and estimates that are reasonable and prudent; c. state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained

in the fi nancial statements; d. prepare the fi nancial statements on the going concern basis unless it is inappropriate to presume that the company will continue in

business. The directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the fi nancial position of the company and to enable them to ensure that the fi nancial statements comply with the requirements of the Companies Act 1985. They are also responsible for safeguarding the assets of the group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The directors are responsible for the maintenance and integrity of the corporate and fi nancial information included on the company’s website. Legislation in the United Kingdom governing the preparation and dissemination of fi nancial statements may differ from legislation in other jurisdictions.



Consolidated Profi t and Loss AccountFor the Year Ended 31 March 2007

Independent Auditors’ Report To The Members Of Central African Mining & Exploration Company PLC

We have audited the fi nancial statements on pages 77 to 109.

This report is made solely to the company’s members, as a body, in accordance with section 235 of the Companies Act 1985. 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

The directors’ responsibilities for preparing the Annual Report and the fi nancial statements in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice) are set out in the Statement of Directors’ Responsibilities.

Our responsibility is to audit the fi nancial statements in accordance with relevant legal and regulatory requirements and International Standards on Auditing (UK and Ireland).

We report to you our opinion as to whether the fi nancial statements give a true and fair view and are properly prepared in accordance with the Companies Act 1985. We also report to you whether in our opinion the information given in the Directors’ Report is consistent with the fi nancial statements. The information given in the Directors’ Report includes that specifi c information presented in the Chairman’s Statement and the Corporate Governance Statement that is cross referenced from the Performance and Prospects section in the Directors’ Report.

In addition, we report to you if, in our opinion, the company has not kept proper accounting records, if we have not received all the information and explanations we require for our audit, or if information specifi ed by law regarding directors’ remuneration and other transactions is not disclosed.

We read other information contained in the Annual Report, and consider whether it is consistent with the audited fi nancial statements. This other information comprises only the Chairman’s Statement and the Corporate Governance Statement. We consider the implications for our report if we become aware of any apparent misstatements or material inconsistencies with the fi nancial statements. Our responsibilities do not extend to any other information.

Basis of audit opinion

We conducted our audit in accordance with International Standards on Auditing (UK and Ireland) issued by the Auditing Practices Board. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the fi nancial statements. It also includes an assessment of the signifi cant estimates and judgements made by the directors in the preparation of the fi nancial statements, and of whether the accounting policies are appropriate to the group’s and the company’s circumstances, consistently applied and adequately disclosed.

We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide us with suffi cient evidence to give reasonable assurance that the fi nancial statements are free from material misstatement, whether caused by fraud or other irregularity or error. In forming our opinion we also evaluated the overall adequacy of the presentation of information in the fi nancial statements.

Opinion

In our opinion − the fi nancial statements give a true and fair view, in accordance with United Kingdom Generally Accepted Accounting Practice, of

the state of the group’s and parent company’s affairs at 31 March 2007 and of the group’s profi t for the year then ended and have been properly prepared in accordance with the Companies Act 1985; and

− the information given in the Directors’ Report is consistent with the fi nancial statements.

BAKER TILLY UK AUDIT LLPRegistered AuditorChartered Accountants2 Bloomsbury StreetLondon WC1B 3ST

28 August 2007

2007 2006 Continuing 2007 2007 Total operations Acquisitions Total Continuing Notes £’000 £’000 £’000 £’000

TURNOVER 1 52,363 17,106 69,469 11,044 Cost of sales (30,646) (7,977) (38,623) (8,300) GROSS PROFIT 21,717 9,129 30,846 2,744 Operating expenses 2 (12,385) (6,370) (18,755) (3,695) Impairment of development costs 11 (285) - (285) (605) Impairment of tangible assets 12 (1,369) - (1,369) - OPERATING PROFIT/(LOSS) 7,678 2,759 10,437 (1,556) Share of operating profi t of associated undertaking - - - 1 PROFIT/(LOSS) BEFORE INTEREST 7,678 2,759 10,437 (1,555) Interest receivable and similar income 3 5,461 475 Interest payable 4 (223) (47) PROFIT/(LOSS) ON ORDINARY ACTIVITIES BEFORE TAXATION 5 15,675 (1,127) Taxation 7 (8,174) (690) PROFIT/(LOSS) ON ORDINARY ACTIVITIES AFTER TAXATION 7,501 (1,817) Minority interests (150) (398) PROFIT/(LOSS) FOR THE FINANCIAL YEAR 22 7,351 (2,215) EARNINGS/(LOSS) PER SHARE Basic earnings/(loss) per share 8 0.676p (0.363p)Diluted earnings/(loss) per share 8 0.673p (0.363p)



2007 2006 £’000 £’000

Profi t/(loss) for the fi nancial year 7,351 (2,215) Exchange rate adjustments on foreign currency net investments, net of taxation (5,640) (123) Total recognised gains and losses for the year 1,711 (2,338)

Consolidated Statement Of Total Recognised Gains And LossesFor the Year Ended 31 March 2007

Notes Restated 2007 2006 £’000 £’000

FIXED ASSETS Intangible assets:

Goodwill 9 2,480 68,629Negative goodwill 10 (3,409) -Development costs 11 112,578 1,934

111,649 70,563 Tangible assets 12 89,471 16,232Investments 13 36,131 1,673 237,251 88,468 CURRENT ASSETS Stocks 14 11,217 1,655Debtors 15 23,263 6,258Cash at bank and in hand 13,072 34,249 47,552 42,162 CREDITORS: Amounts falling due within one year 16 (16,810) (8,172) NET CURRENT ASSETS 30,742 33,990 TOTAL ASSETS LESS CURRENT LIABILITIES 267,993 122,458 PROVISIONS FOR LIABILITIES 17 (8,496) (689) NET ASSETS 259,497 121,769 CAPITAL AND RESERVES Called up share capital 19 1,128 981Share premium account 20 229,500 118,664Share option reserve 21 577 -Merger reserve (199) (199)Profi t and loss account 22 3,636 1,925 EQUITY SHAREHOLDERS’ FUNDS 23 234,642 121,371 Minority interests 24,855 398 TOTAL CAPITAL EMPLOYED 259,497 121,769 Approved and authorised for issue by the board on 28 August 2007

PH Edmonds Director

Consolidated Balance Sheet31 March 2007



Notes Restated 2007 2006 £’000 £’000 £’000 £’000

FIXED ASSETS Tangible assets 12 200 6,105Investments 13 230,314 86,613 230,514 92,718 CURRENT ASSETS Stocks 14 494 896Debtors: 15 - amounts falling due within one year 11,373 1,793 - amounts falling due after more than one year - 504 11,373 2,297Cash at bank and in hand 7,529 33,805 19,396 36,998 CREDITORS: Amounts falling due within one year 16 (13,574) (7,372) NET CURRENT ASSETS 5,822 26,926 TOTAL ASSETS LESS CURRENT LIABILITIES 236,336 122,344 PROVISIONS FOR LIABILITIES 17 (1,070) - NET ASSETS 235,266 122,344 CAPITAL AND RESERVES Called up share capital 19 1,128 981Share premium account 20 229,500 118,664Share option reserve 21 577 -Profi t and loss account 22 4,061 2,699 EQUITY SHAREHOLDERS’ FUNDS 23 235,266 122,344

Approved and authorised for issue by the board on 28 August 2007

PH Edmonds Director

Company Balance Sheet31 March 2007

Notes 2007 2006 £’000 £’000

Cash outfl ow from operating activities 24a (1,023) (5,774) Returns on investments and servicing of fi nance 24b 3,053 475 Capital expenditure and fi nancial investment 24b (105,126) (15,688) Acquisitions and disposals 24b (17,079) (8,090) CASH OUTFLOW BEFORE USE OF LIQUID RESOURCES AND FINANCING (120,175) (29,077) Management of liquid resources 24b 16,500 (15,500) Financing 24b 99,363 53,754 (DECREASE)/INCREASE IN CASH IN THE YEAR (4,312) 9,177

RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET FUNDS

2007 2006 £’000 £’000

(Decrease)/increase in cash in the year (4,312) 9,177 Cash (infl ow)/outfl ow from (decrease)/increase in liquid resources (16,500) 15,500 Cash outfl ow from repayment of loan 14 - Change in net funds resulting from cash fl ows (20,798) 24,677 Exchange rate adjustments (365) (359) MOVEMENT IN NET FUNDS IN THE YEAR (21,163) 24,318 NET FUNDS AT 1 APRIL 2006 34,235 9,917 NET FUNDS AT 31 MARCH 2007 24c 13,072 34,235

Consolidated Cash Flow StatementFor The Year Ended 31 March 2007



BASIS OF ACCOUNTING

The fi nancial statements have been prepared under the historical cost convention and in accordance with applicable accounting standards. The accounting polices are consistent with those used in prior years except with regard to share based payments, which are now accounted for in accordance with FRS20. The comparative numbers have not needed to be restated.

BASIS OF CONSOLIDATION

The consolidated fi nancial statements incorporate those of Central African Mining & Exploration Company plc and all of its subsidiary undertakings for the year. Subsidiaries acquired during the year are consolidated using the acquisition method. Their results are incorporated from the date that control passes. The difference between the cost of acquisition of shares in subsidiaries and the fair value of the separable net assets acquired is capitalised as goodwill.

ASSOCIATED UNDERTAKINGS

Undertakings in which the group has a participating interest of not less than 20% in the voting capital and over which it exerts signifi cant infl uence are defi ned as associated undertakings. The fi nancial statements include the appropriate share of the results and reserves of these undertakings, up to the date of disposal where relevant, based on audited fi nancial statements to 31 March.

STOCKS

Stocks are valued at the lower of cost and net realisable value.

FOREIGN CURRENCIES

Assets and liabilities denominated in foreign currencies are translated at the rate of exchange ruling at the balance sheet date. Transactions in foreign currencies are recorded at the rate ruling at the date of the transaction. All differences are taken to the profi t and loss account.

Assets, liabilities, and results of overseas subsidiaries are translated at the rate ruling at the balance sheet date. Exchange differences arising are dealt with through reserves.

In countries in which a very high rate of infl ation exists, the Group adjusts the local currency fi nancial statements to refl ect current price levels before the translation process is undertaken and includes any gain or loss in the net monetary position through the profi t and loss account.

DEVELOPMENT COSTS

Costs relating to the acquisition, exploration and development of mineral properties are carried as intangible assets until it is determined that there are commercially exploitable reserves at which time such costs are transferred to tangible fi xed assets to be amortised over the expected productive life of the asset. The directors periodically review the intangible assets for impairment and, where a project is abandoned or is considered not to be economically viable, the related costs are written off.

GOODWILL

Goodwill representing the excess of the purchase price of the subsidiary compared with the fair value of net assets acquired is capitalised and written off evenly over the period of its useful economic life.

NEGATIVE GOODWILL

Negative goodwill representing the excess of the fair value of net assets acquired compared with the purchase price of the subsidiary is capitalised. This goodwill, as it relates to non-monetary assets, will be recognised in the profi t and loss account in the periods in which the non-monetary assets are recovered, whether through depreciation or disposal.

Accounting Policies Accounting Policies

TANGIBLE FIXED ASSETS

Tangible fi xed assets are stated at historical cost.

Depreciation is provided on all tangible fi xed assets at rates calculated to write each asset down to its estimated residual value evenly over its expected useful life as follows:-

Buildings 5-10% straight linePlant and machinery 20-25% straight lineAircraft 20% straight lineMotor vehicles 14-20% straight lineOffi ce furniture and equipment 17-50% straight lineAssets in course of construction Nil

Buildings and plant in respect of mining operations is depreciated over the shorter of its useful economic life or the life of the mine.

DEFERRED TAXATION

Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date where transactions or events that result in an obligation to pay more tax in the future or a right to pay less tax in the future have occurred at the balance sheet date. Timing differences are differences between the Group’s taxable profi ts and its results as stated in the fi nancial statements that arise from the inclusion of gains and losses in tax assessments in periods different from those in which they are recognised in the fi nancial statements.

Deferred tax is recognised in respect of the retained earnings of overseas subsidiaries and associates only to the extent that, at the balance sheet date, dividends have been accrued as receivable or a binding agreement to distribute past earnings in future has been entered into by the subsidiary or associate.

Deferred tax is measured at the average tax rates that are expected to apply in the periods in which timing differences are expected to reverse, based on tax rates and laws that have been enacted or substantially enacted by the balance sheet date. Deferred tax is measured on a non-discounted basis.

LEASED ASSETS

All leases are operating leases and the annual rentals are charged to profi t and loss on a straight line basis over the lease term.

INVESTMENTS

Investments are stated at cost. Provision is made for any impairment in the value of investments.

INCOME RECOGNITION

Turnover from the sale of goods is recognised when persuasive evidence, usually in the form of an executed sales agreement, of an arrangement exists indicating that there is a transfer of risks and rewards to the customer, no further work or processing is required by the Group, the quantity and quality of the goods has been determined with reasonable accuracy, the price is fi xed or determinable, and collectibility is reasonably assured. This is generally when title passes.

SHARE BASED PAYMENTS

The Group has applied the requirements of FRS 20 Share-based payments. In accordance with the transitional provisions, FRS 20 has been applied to all grants of equity instruments after 7 November 2002 that were unvested as of 1 April 2006.

The Group issues equity-settled share-based options to certain employees. Equity-settled share-based options are measured at fair value at the date of grant. The fair value is expensed on a straight-line basis over the vesting period, based on the Group’s estimate of shares that will eventually vest.

The fair value is measured by use of Binomial Lattice option pricing model. The expected life used in the model has been adjusted, based on management’s best estimate, for the effect of non-transferability, exercise restrictions, and behavioural considerations.



1 TURNOVER, PROFIT/(LOSS) ON ORDINARY ACTIVITIES BEFORE TAXATION AND SEGMENTAL REPORTING 2007 2006 The geographical analysis of turnover is as follows: £’000 £’000

China 49,785 9,774 Central & Southern Africa 18,969 964 The Netherlands 623 - United Kingdom 92 151 USA - 155 69,469 11,044 The following table summarises the group’s turnover, profi t/(loss) before taxation and net assets by business segment: Profi t/(loss) before Turnover taxation Net assets 2007 2006 2007 2006 2007 2006 Class of business £’000 £’000 £’000 £’000 £’000 £’000

Copper/cobalt - trading 49,785 9,431 17,404 1,614 3,471 70,162 - exploration/production 409 94 (5,150) (592) 162,261 14,990 Coal - - (379) (205) 299 1,407 Other minerals 919 1,287 (1,475) (1,388) 16,507 2,573 Transport 17,098 - 1,500 - 27,515 - Agriculture 892 80 (568) (81) 7,183 2,069 Head offi ce/other 366 152 4,343 (475) 42,261 30,568 69,469 11,044 15,675 (1,127) 259,497 121,769

2 OPERATING EXPENSES 2007 2006 £’000 £’000

Head offi ce overheads 2,846 1,134 Pre-production costs and overseas overheads 12,350 1,398 Exploration costs 37 586 Amortisation of goodwill 3,798 577 Amortisation of negative goodwill (276) - 18,755 3,695

Accounting Policies Notes To The Financial StatementsFor The Year Ended 31 March 2007

COMPARATIVES

The group has re-categorised an overseas taxation provision of £658,000 to deferred taxation to properly refl ect its nature and the company has re-categorised the amount of £15,662,000 due from overseas subsidiaries as investments because these loans are considered to be long term funding.



3 INTEREST RECEIVABLE AND SIMILAR INCOME 2007 2006 £’000 £’000

Bank interest receivable 2,276 400 Other interest receivable 1,240 75 Exchange rate gains 1,945 - 5,461 475

4 INTEREST PAYABLE 2007 2006 £’000 £’000

Other interest 223 47

This charge represents the unwinding of discount relating to fair value adjustments in respect of the deferred cash consideration.

5 PROFIT/(LOSS) ON ORDINARY ACTIVITIES BEFORE TAXATION 2007 2006 £’000 £’000

Profi t/(loss) on ordinary activities before taxation is stated after charging/(crediting): Depreciation and amounts written off tangible fi xed assets 2,095 105 Impairment of tangible fi xed assets 1,369 - Loss on sale of tangible fi xed assets 63 4 Amortisation of goodwill 3,798 577 Amortisation of negative goodwill (276) - Operating lease rentals: Land and buildings 161 121 Foreign exchange gain (1,945) (33) Hyperinfl ation adjustment (19) (169) Auditors’ remuneration for audit services (see next page) 415 46

Notes To The Financial StatementsFor The Year Ended 31 March 2007


5 PROFIT/(LOSS) ON ORDINARY ACTIVITIES BEFORE TAXATION (continued)

Amounts payable to Baker Tilly UK Audit LLP and their associates in respect of both audit and non-audit services.

2007 2006 £’000 £’000

Audit services - UK statutory audit of parent and consolidated accounts 415 46 - other services 242 93 Further assurance services - 13 Tax services - compliance services 60 5 - advisory services 25 15 Other services - Corporate fi nance transaction - 20 - Company secretarial - 5 - Other 7 15 749 212 2007 2006 £’000 £’000

Comprising - audit services 657 139 - non-audit services Company and UK subsidiaries 85 44 Other subsidiaries 7 29 749 212




6 EMPLOYEES The average monthly number of employees employed by the group during the year was:

2007 2006 No. No.

Offi ce and management 9 9 Operational 1,420 197 1,429 206

2007 2006 £’000 £’000 Staff costs:

Wages and salaries 3,106 453 Social security costs 35 116 3,141 569

DIRECTORS’ REMUNERATION 2007 2006 £’000 £’000

Emoluments for directors’ services 236 109 Gains on exercise of share options and warrants - 2,351 236 2,460

6 EMPLOYEES (continued)

DIRECTORS’ REMUNERATION (continued)

2007 2006 £’000 £’000 Highest paid directors: PH Edmonds - Emoluments 100 - AS Groves - Emoluments 100 - RC Grant - Emoluments - 36 Share options and warrant gains - 1,055 200 1,091 Other directors: RC Grant - Emoluments 36 - PH Edmonds - Emoluments - 37 Share option gains - 390 36 427 AS Groves - Emoluments - 36 Share option gains - 390 - 426 R Hassim - Share option and warrant gains - 321 - 321 JG Anthony - Share option gains - 195 - 195 36 1,369

No directors are accruing retirement benefi ts (2006: £Nil)

CENTRAL AFRICAN MINING & EXPLORATIONCENTRAL AFRICAN MINING & EXPLORATION





7 TAXATION Restated 2007 2006 £’000 £’000

Current tax: UK corporation tax on profi ts of the year 1,769 - UK corporation tax overprovided in previous periods (566) - Foreign tax 224 - Current tax charge for the year 1,427 - Deferred tax - origination and reversal of timing differences 6,747 690 Tax charge for year 8,174 690 Factors affecting tax charge for year:

Profi t/(loss) on ordinary activities before tax 15,675 (1,127) Profi t/(loss) on ordinary activities multiplied by standard rate of UK corporation tax of 30% (2006: 30%) 4,703 (338) Effects of: Expenses not deductible for tax purposes (mainly amortisation of goodwill) 1,136 435 Income not taxable (mainly profi ts of overseas subsidiaries taxable on a remittance basis) (6,270) (892) Unrelieved tax losses not utilised 5,715 824 Difference between depreciation and capital allowances (3,028) 3 Lower overseas tax rates (22) - Other timing differences (241) (32) UK corporation tax overprovided in previous periods (566) - Current tax charge for year 1,427 -

Factors that may affect the group’s tax charge in the future:

The Group and Company has not recognised deferred tax assets in respect of unrelieved tax losses carried forward of £17,020,000 (2006: £4,077,044) and £1,272,082 (2006: £2,562,633) respectively as there is currently insuffi cient evidence that the asset will be recoverable in the foreseeable future.

8 EARNINGS/(LOSS) PER ORDINARY SHARE

Basic earnings per share (2006: Basic and diluted loss per share) is calculated by reference to the Group profi t (2006: loss) for the fi nancial year and the weighted average number of shares in issue during the year of 1,088,090,386 (2006: 610,037,610).

At 31 March 2007 14,850,000 (2006: 15,700,000) share options and 4,000,000 (2006: 6,000,000) share warrants over ordinary shares of the company had been granted and not exercised (see note 19). These share options and share warrants have not been included in the calculation of diluted loss per share for 2006 because they were anti-dilutive.

Diluted earnings per share for 2007 is calculated by reference to the Group profi t for the fi nancial year and on a weighted average number of shares of 1,091,797,404. The number of shares used to calculate diluted earnings per share is as follows:

2007 2006 No. of shares No. of shares

Weighted average number of shares 1,088,090,386 610,037,610 Dilutive effect of options and warrants 3,707,018 - 1,091,797,404 610,037,610 Details of share issues since 31 March 2007 are given in note 26.

9 INTANGIBLE FIXED ASSETS – GOODWILL Goodwill on consolidation

£’000

GROUP Cost 1 April 2006 69,206 Exchange rate adjustment (134) Additions 16,273 Acquisition of Boss Mining Sprl (82,865) 31 March 2007 2,480 Amortisation 1 April 2006 577 Charged in the year 3,798 Acquisition of Boss Mining Sprl (4,375) 31 March 2007 - Net book value 31 March 2007 2,480 31 March 2006 68,629

Following the acquisition of an 80% interest in Boss Mining Sprl (“Boss”), the goodwill that arose in the previous and current year on the acquisition of International Metal Factors (BVI) Limited (“IMF”) and Majestic Metals Trading (BVI) Limited (“MMT”) has been offset against the negative goodwill that results from the Boss acquisition (see note 13d). The goodwill that has been offset arose as a result of the Congo Resources Joint Venture arrangements between IMF and MMT and Boss and represented the value of the right held by the Joint Venture to acquire the output from mining licences owned by Boss. The negative goodwill arises from the acquisition fair value of the licence assets owned by Boss and consequently is now offset against the goodwill that previously arose following the disbanding of the Joint Venture arrangements post acquisition.





10 INTANGIBLE FIXED ASSETS – NEGATIVE GOODWILL Negative goodwill on consolidation GROUP £’000

Cost 1 April 2006 - Additions (see note 13 (c)) (3,685) 31 March 2007 (3,685) Amortisation 1 April 2006 - Released to profi t and loss account 276 31 March 2007 276 Net book value 31 March 2007 (3,409)

11 INTANGIBLE FIXED ASSETS – DEVELOPMENT COSTS GROUP £’000

Cost 1 April 2006 5,145 Exchange rate adjustment (87) Hyperinfl ation adjustment 2 Acquisition of subsidiary undertakings 106,628 Additions 3,839 Share option charge 547 31 March 2007 116,074 Provision for diminution in value 1 April 2006 3,211 Impairment charge for the year 285 31 March 2007 3,496 Net book value 31 March 2007 112,578 31 March 2006 1,934

12 TANGIBLE FIXED ASSETS

Assets in Offi ce course of Motor Plant & Furniture & Payments Buildings construction Vehicles Machinery Aircraft Equipment on account Total GROUP £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000

Cost 1 April 2006 1,086 303 1,566 7,532 - 336 6,070 16,893 Reclassifi cation - 853 255 - - - (1,108) - Exchange rate adjustment (396) (302) (500) (1,135) - (66) - (2,399) Hyperinfl ation adjustment 21 30 17 25 - 3 - 96 Acquisition of subsidiary undertakings 1,427 18 4,180 4,551 - 14 - 10,190 Additions 5,026 39,238 17,413 6,796 4,807 614 - 73,894 Disposals - - (151) (6) - - (4,962) (5,119)

31 March 2007 7,164 40,140 22,780 17,763 4,807 901 - 93,555

Depreciation 1 April 2006 35 - 304 228 - 94 - 661 Reclassifi cation - - - 26 - (26) - - Exchange rate adjustment (21) - (44) (55) - (10) - (130) Charged in the year 22 - 758 945 189 181 - 2,095 Impairment - 29 - 1,340 - - - 1,369 Depreciation capitalised - - 76 16 - 1 - 93 Disposals - - (4) - - - - (4) 31 March 2007 36 29 1,090 2,500 189 240 - 4,084

Net book value 31 March 2007 7,128 40,111 21,690 15,263 4,618 661 - 89,471

31 March 2006 1,051 303 1,262 7,304 - 242 6,070 16,232





12 TANGIBLE FIXED ASSETS (continued) Offi ce Motor Plant & Furniture & Payments COMPANY vehicles Machinery Equipment on account Total £’000 £’000 £’000 £’000 £’000

Cost 1 April 2006 33 39 28 6,070 6,170 Transfers to subsidiary undertakings - - - (1,108) (1,108) Additions - - 197 - 197 Disposals - - - (4,962) (4,962) 31 March 2007 33 39 225 - 297

Depreciation 1 April 2006 19 32 14 - 65 Charged in the year 6 7 19 - 32 31 March 2007 25 39 33 - 97

Net book value 31 March 2007 8 - 192 - 200 31 March 2006 14 7 14 6,070 6,105

13 INVESTMENTS Shares in Investment unlisted GROUP in joint associated Listed Unlisted venture undertaking investments investments Total £’000 £’000 £’000 £’000 £’000

Cost/net book value 1 April 2006 - 28 1,645 - 1,673 Additions 893 - 26,029 7,548 34,470 Exchange rate adjustment (5) (7) - - (12) 31 March 2007 888 21 27,674 7,548 36,131

Pfula Investments Limited, which represents the unlisted investment above, is not treated as an associated undertaking despite the group’s 44.5% interest as the company has no representative on its Board and does not exert signifi cant infl uence over this investment.

The investment in joint venture represents the group’s 50% interest in the ordinary share capital of Mukondo Mining Sprl, a company incorporated in the DR Congo. The company has not traded since acquisition. The net book value at 31 March 2007 of the investment in joint venture comprises:

£’000 Share of gross assets 2,336 Share of liabilities (1,448) 888

13 INVESTMENTS (continued)

The shares in the unlisted associated undertaking investments represents the group’s 50% interest in the ordinary share capital of Earth Centre Investments (Pty) Limited, a company incorporated in Namibia. The company has not traded in the year. The net book value at 31 March 2007 of the associated undertaking comprises:

£’000

Share of fi xed assets 51 Share of current assets 1 Share of liabilities - due within one year (4) - due after one year (27) Share of net assets 21

Loans to Shares in subsidiary subsidiary Listed Unlisted undertakings undertakings investments investments Total COMPANY £’000 £’000 £’000 £’000 £’000

Cost 1 April 2006 (restated) 17,023 72,029 1,645 - 90,697 Additions 88,783 24,106 26,029 7,548 146,466 31 March 2007 105,806 96,135 27,674 7,548 237,163

Provision for diminution in value 1 April 2006 (restated) 1,361 2,723 - - 4,084 Charged in the year 2,745 20 - - 2,765 31 March 2007 4,106 2,743 - - 6,849

Net book value 31 March 2007 101,700 93,392 27,674 7,548 230,314

31 March 2006 15,662 69,306 1,645 - 86,613

a) Acquisition of Congo Resources Joint Venture

With effect from 1 April 2006, the company purchased the remaining 25% interest in Congo Resources Joint Venture for a total cash consideration of £13,792,592. The interest was acquired through the purchase of the entire issued share capital of Majestic Metal Trading (BVI) Limited. No assets or liabilities were acquired and consequently there are no fair value adjustments. The amount paid represents goodwill and the purchase consideration consisted of cash.






b) Acquisition of SA Fluorite (Pty) Limited (formerly Nelesco 346 Pty) Limited

On 14 April 2006 the company purchased 51% of the called up ordinary share capital of SA Fluorite (Pty) Limited (formerly Nelesco 346 (Pty) Limited), for a total consideration of £5,437,995. Analysis of the acquisition: Net assets at date of acquisition:

Book Fair Value Fair Value Value Adjustments to Group £’000 £’000 £’000

Intangible assets - development costs - 10,663 10,663 Minority interests - (5,225) (5,225) Net assets - 5,438 5,438 Discharged by: Issue of shares at 60p 3,085 Cash 1,338 Deferred contingent cash consideration 1,270 Less discounting of deferred cash consideration (255) 1,015 5,438

Fair value adjustments relate to the inherent value of the exploration rights which the company owns.

The deferred contingent cash consideration is payable upon the production of a bankable feasibility study in relation to the SA Fluorite (Pty) Limited’s exploration rights. This is expected to be achieved in the next fi ve years

c) Acquisition of Sabot Management Holdings Limited and Sabot Management Limited

On 24 July 2006 the company purchased the whole of the issued share capital of Sabot Management Holdings Limited and Sabot Management Limited for a total cash consideration of £1,977,957.

Analysis of the acquisition:Net assets at date of acquisition:


Tangible fi xed assets 4,440 1,039 5,479 Stocks 393 - 393 Debtors 167 - 167 Cash 50 - 50 Creditors due within one year (426) - (426) Net assets 4,624 1,039 5,663 Negative goodwill on consolidation (3,685) 1,978 Discharged by: Cash 1,978


c) Acquisition of Sabot Management Holdings Limited and Sabot Management Limited (contiinued)

Fair value adjustments relate to the valuation of vehicles acquired at the acquisition date.

Reliable fi nancial information is not available for periods prior to acquisition and consequently it is not practicable to state the profi t after tax and minority interest for the acquired entity in respect of the period from the beginning of the entity’s fi nancial year to the date of acquisition and in respect of its previous fi nancial year.

d) Acquisition of Boss Mining Sprl

On 1 March 2007 the company acquired an 80% interest in Boss Mining Sprl for a total cash consideration of £31,511. Analysis of the acquisition:Net assets at date of acquisition:


Intangible assets - development costs - 95,965 95,965 Tangible fi xed assets 4,711 - 4,711 Investments 893 - 893 Debtors 945 - 945 Cash 11 - 11 Creditors due within one year (3,527) - (3,527) Provisions for liabilities and charges (846) - (846) Minority interests (437) (19,193) (19,630) Net assets 1,750 76,772 78,522 Offset against goodwill on consolidation (note 9) (78,490) 32 Discharged by: Cash 32

Fair value adjustments relate to the inherent value of the concession rights which the company owns.

The acquisition fair value on the concession has been restricted to the amount which creates negative goodwill to offset fully the IMF and MMT positive goodwill, as the consideration paid for the IMF and MMT acquisitions in the previous period represents the purchase price of the concessions (see note 9).

Reliable fi nancial information is not available for periods prior to acquisition and consequently it is not practicable to state the profi t after tax and minority interest for the acquired entity in respect of the period from the beginning of the entity’s fi nancial year to the date of acquisition and in respect of its previous fi nancial year.

e) Acquisition of Desenvolvemento E Comercializacao Agricola Lda (‘DECA’)

On 27 March 2007 the company purchased a further 25% interest in DECA taking its total interest to 75%. The total consideration was £2,480,000. The company has provided fi nance in respect of the losses of DECA, notwithstanding the existence of minority interests in that company. Accordingly the results of DECA are consolidated in full. The consideration was paid in respect of goodwill and consisted of the issue of 4,000,000 shares at 62p.




f) Listed investments represent the following: Market Cost Cost value 1 April 2006 Additions 31 March 2007 31 March 2007 £’000 £’000 £’000 £’000

Central African Gold Plc 200 1,000 1,200 3,111 White Nile Limited 1,205 1,500 2,705 21,084 Dominion Energy Plc 240 - 240 450 Katanga Mining Limited - 21,625 21,625 41,568 AIM Resources Limited - 1,904 1,904 1,956 1,645 26,029 27,674 68,169 g) At 31 March 2007, the company held more than 20 per cent of the equity of the following principal undertakings: Subsidiary undertakings Class of Proportion Country of Nature of business Holding Held Incorporation

DIRECT: Camec Congo Sprl Ordinary 100% DR Congo Mineral exploration Exploracoes Mineiras de Mocambique Ltda Ordinary 100% Mozambique Mineral trading International Metal Factors Limited Ordinary 100% British Virgin Islands Investment in Joint Venture Majestic Metals Trading Limited Ordinary 100% British Virgin Islands Investment in Joint Venture Sabot Management Limited Ordinary 100% Seychelles Transport Sabot Management Holdings Limited Ordinary 100% British Virgin Islands Holding company Boss Mining Sprl Ordinary 80% DR Congo Mining and exploration Gough Aviation (Pty) Limited Ordinary 100% South Africa Aviation Chartering Moba Mining Sprl Ordinary 100% DR Congo Mineral exploration SA Fluorite (Pty) Limited Ordinary 51% South Africa Mineral exploration Camec Marketing Limited Ordinary 100% Ireland Copper/cobalt trading

INDIRECT: Casmin SPRL Ordinary 100% DR Congo Cobalt carbonate plant Desenvolvemento E Comercializacao Agricola Lda Ordinary 75% Mozambique Agriculture investment Indirect: Associated undertaking Earth Centre Investments (Pty) Limited Ordinary 50% Namibia Property Investment

Indirect: Joint venture undertaking Mukondo Mining Sprl Ordinary 50% DR Congo Mining and exploration

The company has provided fi nance in respect of 100% of the losses of all loss making overseas entities, notwithstanding the existence of minority interests in those companies. Accordingly, the results of these companies have been consolidated in full.



14 STOCKS Group Company

2007 2006 2007 2006 £’000 £’000 £’000 £’000

Goods for resale 11,217 1,655 494 896

15 DEBTORS Restated Group Company 2007 2006 2007 2006 £’000 £’000 £’000 £’000

Due within one year: Trade debtors 9,564 2,484 166 - Loan 546 - 546 - Assets in the course of disposal - 850 - - Other debtors 13,112 2,359 10,656 1,788 Prepayments and accrued income 41 61 5 5 23,263 5,754 11,373 1,793 Due in more than one year: Loan - 504 - 504 - 504 - 504 Total debtors 23,263 6,258 11,373 2,297

Included within other debtors for the Group and the Company is £9m (2006: £Nil) owed from an entity controlled by Mr M C Rautenbach (see note 25).

16 CREDITORS Restated Group Company Amounts falling due within one year 2007 2006 2007 2006 £’000 £’000 £’000 £’000

Loan - 14 - 14 Trade creditors 5,166 634 203 133 Payments on account 4,647 - - - Amounts owed to group undertakings - - 7,659 - Deferred purchase consideration 3,175 6,170 3,175 6,170 UK corporation tax 2,031 566 2,031 566 Overseas taxation 224 - - - Other taxes and social security - 420 - 420 Other creditors 758 124 55 29 Accruals and deferred income 809 244 451 40 16,810 8,172 13,574 7,372

The liability in respect of the deferred purchase consideration is the subject of a charge over the share capital of International Metal Factors Limited. This charge will be released upon settlement of the outstanding consideration.







17 PROVISIONS FOR LIABILITIES Deferred Deferred purchase Rehabilitation taxation consideration of land Total £’000 £’000 £’000 £’000

Group 1 April 2006 (restated) 689 - - 689 Acquisition of subsidiary undertaking 548 1,270 298 2,116 Transfer from profi t and loss account 5,878 - 19 5,897 Discounting of contingent purchase consideration - (255) - (255) Unwinding of discount for the period - 55 - 55 Exchange rate adjustment (6) - - (6) 31 March 2007 7,109 1,070 317 8,496

Further details regarding the contingent purchase consideration are given in note 13b.

The rehabilitation of land provision is based on a fi xed percentage of the turnover from mined product in the local country as required under local law. The Group has insuffi cient data to reliably estimate the full cost of the rehabilitation of such active mines over and above this provision and so has not provided the full cost that the Group may incur on withdrawal from such sites in the future.

An analysis of the deferred tax liability is shown below: Restated 2007 2006 £’000 £’000

Unrelieved taxation losses (395) - Accelerated capital allowances 1,628 - Overseas profi ts to be repatriated to UK 6,746 689 Other timing differences (870) - 7,109 689

Deferred purchase consideration Company £’000

1 April 2006 - Acquisition of subsidiary undertaking 1,270 Discounting (255) Unwinding of discount for the period 55 31 March 2007 1,070

18 SHARE BASED PAYMENTS

Equity –settled share option plan

The Group plan provides for a grant price equal to the average quoted market price of the group shares on the date of grant. The vesting period is generally 1 year. If options remain unexercised after a period of 10 years from the date of grant, the options expire. Furthermore, options are forfeited if the employee leaves the Group before the options vest.

2007 Weighted 2006 Weighted Options average Options average Number exercise price Number exercise price

Outstanding at 1 April 15,700,000 7.61p 33,300,000 3.03pExercised during the year (850,000) 2.47p (17,600,000) 2.98p

Outstanding at 31 March 14,850,000 7.90p 15,700,000 7.61p Exercisable at 31 March 14,850,000 7.90p 4,700,000 2p The weighted average share price at the date of exercise for share options exercised during the year was 2.47p (2006: 2.98p). The options outstanding at 31 March 2007 had a weighted average exercise price of 7.90p (2006: 7.61p) and a weighted average remaining contractual life of 4.05 years (2006: 5.02 years).

The weighted average fair value of options granted in the year using the Binomial Lattice option pricing model was 5.24p (2006: 5.24p). The inputs into the Binomial Lattice model are as follows:

2007 2006

Weighted average price 10.25p 10.25pWeighted average exercise price 10p 10pExpected volatility 70% 70%Expected life 3.5 years 3.5 yearsRisk free rate 4.48% 4.48%Expected dividends Nil Nil Expected volatility was determined by calculating the historical volatility of the Group’s share price over the previous 1.5 years. The expected life used in the model has been adjusted, based on management’s best estimate, for the effects of non-transferability, exercise restrictions, and behavioural considerations.







19 SHARE CAPITAL Group and Company 2007 2006 £’000 £’000

Authorised: 1,500,000,000 (2006: 1,000,000,000 ordinary shares of 0.1p each) 1,500 1,000

Allotted, issued and fully paid: 1,128,332,817 (2006: 981,262,167) ordinary shares of 0.1p each 1,128 981

In May and June 2006, the company placed 125,000,000 ordinary shares of 0.1p each at 80p raising gross cash proceeds of £100,000,000 to provide funds for capital projects and to signifi cantly increase the group’s activities in Central and Southern Africa.

On 17 August 2006 the company issued 5,141,650 ordinary shares of 0.1p each at 60p as part consideration for the acquisition of a 51% interest in SA Fluorite (Pty) Limited (see note 13).

On 23 January 2007 the company issued 79,000 ordinary shares of 0.1p each at 52.05p as consideration for the acquisition of coal concessions.

On 30 March 2007 the company issued 10,000,000 ordinary shares of 0.1p each at 60p as part consideration for the acquisition of an investment in Pfula Investments Limited.

On 30 March 2007 the company issued 4,000,000 ordinary shares of 0.1p each at 62p as consideration for the acquisition of a further 25% interest in Desenvolvemento E Commercializacao Agricola Lda (see note 13).

During the year the company issued a further 2,850,000 ordinary shares of 0.1p each raising gross cash proceeds of £361,000 as a result of the exercising of options and warrants as follows:

Number Issue Gross cash of shares Price proceeds

Options 17 August 2006 500,000 2p 10,000 30 March 2007 300,000 2p 6,000 30 March 2007 50,000 10p 5,000

Warrants 17 August 2006 2,000,000 17p 340,000

2,850,000 361,000

19 SHARE CAPITAL (continued)

Share options and warrants At 31 March 2007 the following share options over ordinary shares of the Company had been granted and not exercised:

Date of grant Number of shares Exercise Price Option Exercise Period

23 May 2003 3,900,000 2p 23 May 2005 to 22 May 2010 19 October 2005 10,950,000 10p 19 October 2006 to 19 October 2011 At 31 March 2007 the following warrants over ordinary shares of the Company had been granted and not exercised:

Date of grant Number of shares Exercise Price Warrant exercise period

16 January 2006 2,000,000 17p 16 January 2006 to 16 January 2011 7 February 2006 2,000,000 30p 7 February 2006 to 7 February 2011

20 SHARE PREMIUM ACCOUNT Group and Company 2007 2006 £’000 £’000

1 April 2006 118,664 10,417 Premium on shares issued during the year 111,820 109,392 Share issue costs (984) (1,145) 31 March 2007 229,500 118,664







21 SHARE OPTION RESERVE Group & Company 2007 £’000

1 April 2006 - Share option charge for the year 577 31 March 2007 577

22 PROFIT AND LOSS ACCOUNT Group Company 2007 2006 2007 2006 £’000 £’000 £’000 £’000

1 April 2006 1,925 4,263 2,699 4,267 Profi t/(loss) for the fi nancial year 7,351 (2,215) 1,362 (1,568) Exchange rate adjustments net of taxation (5,640) (123) - - 31 March 2007 3,636 1,925 4,061 2,699

In accordance with s230 of the Companies Act 1985, the Company has not presented its own profi t and loss account.

23 RECONCILIATION OF MOVEMENT IN SHAREHOLDERS’ FUNDS Group Company 2007 2006 2007 2006 £’000 £’000 £’000 £’000

Profi t/(loss) for the fi nancial year 7,351 (2,215) 1,362 (1,568) Issue of shares 111,967 109,891 111,967 109,891 Issue costs (984) (1,145) (984) (1,145) Exchange rate adjustments (5,640) (123) - - Share option charge 577 - 577 - Net addition to shareholders’ funds 113,271 106,408 112,922 107,178 Opening shareholders’ funds 121,371 14,963 122,344 15,166 Closing shareholders’ funds 234,642 121,371 235,266 122,344

24 CASH FLOWS 2007 2006 £’000 £’000

a Reconciliation of operating profi t/(loss) to net cash outfl ow from operating activities Operating profi t/(loss) 10,437 (1,556) Impairment of development costs 285 605 Impairment of tangible assets 1,369 - Amortisation of goodwill 3,798 577 Amortisation of negative goodwill (276) - Depreciation 2,095 105 Loss on sale of tangible fi xed assets 63 4 Share based payment charge 30 - Increase in stocks (9,169) (570) Increase in debtors (12,631) (5,508) Increase in creditors 2,976 569 Net cash outfl ow from operating activities (1,023) (5,774)

b Analysis of cash fl ows for headings netted in the cash fl ow Returns on investments and servicing of fi nance Interest received 3,516 475 Dividends paid to minority interest (463) - Net cash infl ow from returns on investments and servicing of fi nance 3,053 475 Capital expenditure and fi nancial investment Purchase of intangible fi xed assets (3,839) (1,445) Purchase of tangible fi xed assets (73,801) (13,947) Purchase of investments (27,576) (440) Sale of tangible fi xed assets 90 144 Net cash outfl ow from capital expenditure and fi nancial investment (105,126) (15,688) Acquisitions and disposals Purchase of subsidiary undertaking (17,140) (8,090) Cash acquired with subsidiaries 61 - Net cash outfl ow in respect of purchase of subsidiary undertakings (17,079) (8,090) Management of liquid resources Decrease/(increase) in cash deposited on short term deposit 16,500 (15,500) Net cash infl ow/(outfl ow) from management of liquid resources 16,500 (15,500) Financing Proceeds from issue of share capital 100,361 54,899 Share issue costs (984) (1,145) Repayment of loan (14) - Net cash infl ow from fi nancing 99,363 53,754






24 CASH FLOWS (continued)

c Analysis of net funds Exchange 1 April rate 2006 Cashfl ow adjustment 31 March 2007 £’000 £’000 £’000 £’000

Cash at bank and in hand 10,749 (4,312) (365) 6,072 Cash on deposit 23,500 (16,500) - 7,000 Other loan (14) 14 - - Total 34,235 (20,798) (365) 13,072

The acquisitions during the year contributed £3,115,000 to the Group’s net operating cash fl ow, received £53,000 in respect of return on investments and servicing of fi nance and paid £65,971,000 in respect of capital expenditure and fi nancial investment.

25 RELATED PARTY TRANSACTIONS

As at 31 March 2006 the Company owed the sum of £14,469 to Meldform Metals Limited a company with which RC Grant, a director of the Company, was connected. That sum was repaid during the year ended 31 March 2007.

PH Edmonds and AS Groves, directors of the Company, were directors of Central African Gold plc until 30 June 2006. As at 31 March 2006 Central African Gold plc owed the Company £231,604 which was repaid to the Company during the year ended 31 March 2007.

PH Edmonds and AS Groves are also directors of White Nile Limited. As at 31 March 2006 White Nile owed the Company £72,802. Part of this sum was repaid during the year to 31 March 2007 at which date White Nile Limited owed the Company £42,855. This balance has subsequently been settled in full post year end.

As at 31 March 2006 PH Edmonds and RC Grant, directors of the Company, each owed the Company £159,900 in respect of PAYE and NI on share option gains realised in that year. These sums were repaid to the Company during the year ended 31 March 2007.

The Company’s offi ces are at 18 Park Street, London W1Y 4HH. These premises are rented by the company from Mayfair UK (Properties) Limited (“Mayfair”) a company controlled by PH Edmonds and AS Groves, director of the company. The company paid £181,043 (2006: £Nil) in respect of rent in the year. Mayfair holds a fi ve year lease in the premises and has granted the company a two year lease at the same rent as paid by Mayfair.

During the year, the company acquired the remaining 25% interest in the Congo Resources Joint Venture through the purchase of Majestic Metal Trading Limited (see note 13a), acquired 100% of Sabot Management Limited and Sabot Management Holdings Limited which market transport and logistic services throughout Central and Southern Africa (see note 13c) and exercised its option to acquire, for a nominal sum, 80% of the share capital of Boss Mining Sprl which holds mining concessions in the DRC (see note 13d) from entities in which Mr MC Rautenbach then held a controlling interest. Following these transactions, Mr Rautenbach took on a key role in managing these operations to ensure a successful integration into the group’s operations.

During the year, the group purchased services and assets amounting to £19,202,003 from companies in which Mr Rautenbach and his family continue to have a controlling interest. At 31 March 2007 the group was owed £13,872,613 (2006: £Nil) by these companies and the company owed £3,175,000 (2006: £6,170,000) to Harvest View Limited, a company controlled by Mr Rautenbach, in respect of deferred purchase consideration (see note 16). At 31 March 2007 Harvest View Limited held an interest in 90,926,134 shares in the company and continued to hold those shares as at 21 August 2007.


26 POST BALANCE SHEET EVENTS

On 12 April 2007 the company entered into pre-bid agreements with certain shareholders of OmegaCorp Limited (“OmegaCorp”) in connection with a proposed takeover bid for the entire issued share capital of OmegaCorp Limited. Under these agreements, the company was entitled to acquire at its option in aggregate 9,480,000 OmegaCorp shares. On 24 April 2007 the company acquired these 9,480,000 OmegaCorp shares in consideration for the issue of 9,480,000 new ordinary shares. The company subsequently announced its withdrawal from this bid on 13 June 2007 (as a number of bid conditions which the company regarded as commercially fundamental to its bid had been breached) and thereafter sold its shares in OmegaCorp through the market.

On 27 April 2007, and 4 May 2007 CAMEC entered into agreements with various shareholders of Katanga Mining Limited (“Katanga”) to acquire, in aggregate, 9,917,800 shares in Katanga for an aggregate consideration of the payment of CAN$8,622,500 and US$23,466,426 in cash and the allotment and issue of 90,375,215 ordinary shares. On 18 May 2007, 90,375,215 ordinary shares were issued as part consideration for the acquisition of the Katanga shares.

On 15 June 2007, the company entered into a US$60,000,000 Credit Facility Agreement (the “Facility”) with Credit Suisse International (“CSI”). Under the terms of the Facility the company must repay the loans in full on the fi nal maturity date (18 June 2009). The company drew down US$25 million under the Facility on 18 June 2007 and US$35 million on 13 July 2007. As consideration for the grant of the Credit Facility, the company granted warrants to subscribe for 12,000,000 ordinary shares at 55 pence per ordinary share to CSI.

A number of changes to the UK Corporation tax system were announced in the March 2007 Budget Statement and are expected to be enacted in the 2007 and 2008 Finance Acts. The changes had not been substantively enacted at the balance sheet date and, therefore, are not included in these fi nancial statements. The effect of the changes to be enacted in the Finance Act 2007 would be to reduce the deferred tax liability provided at 31 March 2007 by £417,000. This decrease in deferred tax would increase profi t for the year by £417,000. This decrease in deferred tax is due to the reduction in the corporation tax rate from 30 per cent to 28 per cent with effect from 1 April 2008. The other changes to be enacted would have no further effects on the deferred tax provided at 31 March 2007.

27 FINANCIAL INSTRUMENTS

The group’s fi nancial instruments comprise cash and deferred purchase consideration. The group has various other fi nancial instruments, such as trade debtors and trade creditors, that arise directly from its operations and which have not been included in the following disclosures.

The main risks arising from the group’s fi nancial instruments are foreign exchange risks, interest rate risks and liquidity risk. The policies for managing these risks are regularly reviewed and agreed by the Board.

It is, and has been throughout the period under review, the group’s policy that no trading in fi nancial instruments should be undertaken.

Foreign exchange risk The functional currencies of the Group are Sterling, US dollars, Euros, Namibian dollars, Mozambique Meticais, South African Rand, Democratic Republic of Congo francs and Zimbabwe dollars. The Group does not hedge against the effects of movement in exchange rates. The risks are monitored by the Board on a regular basis.

Interest rate risk The group’s policy on interest rate management is agreed at Board level and is reviewed on an ongoing basis.







27 FINANCIAL INSTRUMENTS (continued)

Interest rate profi le of fi nancial assets The interest rate risk profi le of the Group’s fi nancial assets as at 31 March 2007 was:

Fixed Floating 2007 2006 Rate Rate Total Total £’000 £’000 £’000 £’000

Sterling 7,000 529 7,529 33,753 US Dollars - 1,341 1,341 147 Euros - 3,155 3,155 - Namibian dollars - 1 1 2 South African rand - 310 310 92 Zimbabwe dollars - 3 3 17 Mozambique meticais - 733 733 238 7,000 6,072 13,072 34,249 Of which: Cash at bank and in hand 7,000 6,072 13,072 34,249

The fi xed rate sterling deposit at 31 March 2007 is a short term deposit and earns interest at 4.59%. The weighted average period for which fi xed rate sterling deposits were placed was 3 days.

Floating rate instant access deposits in Sterling earn interest at prevailing bank rates.

Interest rate profi le of fi nancial liabilitiesThe interest rate risk of the Group’s fi nancial liabilities as at 31 March 2007 was:

Non- interest 2007 2006 bearing Total Total £’000 £’000 £’000

Other loan – Sterling - - 14 Deferred purchase consideration 3,175 3,175 6,170 Sterling liabilities 3,175 3,175 6,184 The company has no other committed borrowing facilities.

Maturity of fi nancial liabilitiesThe maturity profi le of the carrying amount of the Group’s fi nancial liabilities, other than short-term creditors, at 31 March 2007 was as follows:

Other Deferred 2007 2006 loan consideration Total Total £’000 £’000 £’000 £’000

Within one year - 3,175 3,175 6,184

27 FINANCIAL INSTRUMENTS (continued)

Liquidity riskIt is the group’s policy to fi nance its business by means of internally generated funds and external share capital. Facilities are regularly reviewed by the Board.

Fair valueThere is no material difference between the fair value of borrowings and other fi nancial instruments and their book value at the balance sheet date.

28 COMMITMENTS UNDER OPERATING LEASES

As at 31 March 2007 the group and company had annual commitments under operating leases in respect of land and buildings as follows:

2007 2006 £’000 £’000

Operating leases which expire: Within one year - 82 Within 1 to 2 years 22 -

29 CAPITAL COMMITMENTS Group Company 2007 2006 2007 2006 £’000 £’000 £’000 £’000

Capital expenditure contracted for but not provided in the fi nancial statements 28,373 139 - 139





Notes Notes



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Notes

Central African Mining & Exploration Company plc18 Park Street, London W1K 2HQ

Tel: +44 (0)203 205 1400 Fax: +44 (0)203 205 1414Tel: +44 (0)845 108 6060 Fax: +44 (0)845 108 0606

Email: [email protected]

MALI

ZAMBIA

DRC

MALAWI

MOZAMBIQUE

SOUTH AFRICA

ZIMBABWE

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