ASX Announcement 27 October 2011

ASX: AKI www.africanironlimited.com

AFRICAN IRON LIMITED ABN: 24 123 972 814 Level 1, 2 Ord Street, West Perth WA 6005 P: +61 8 9211 0600 F: +61 8 9322 2631

JORC HEMATITE RESOURCE AT MAYOKO INCREASED 267% TO 121 MILLION TONNES

JORC mineral resource at Mayoko increased by 267% to 121 million tonnes.

Hematite DSO mineral resource increased by 33% to 44 million tonnes at 55% Fe.

Improved geological confidence from infill drilling enables 58% or 25 million tonnes of the DSO mineral resource to be classified as Indicated.

Maiden beneficiable DSO Inferred Mineral Resource of 77 million tonnes at 41% Fe. This mineral resource covers only Mount Lekoumou, approximately 28% or 1.8km

of the >6.5km of mineralised Mount Lekoumou to Mount Mipoundi strike. Maiden mineral resource at Mount Mipoundi expected end of March 2012. New mineral resource enables pre-feasibility study to be initiated with results to be

released in mid-2012.

Australian based iron ore development company, African Iron Limited (ASX: AKI) (“African Iron” or the “Company”) is pleased to announce a 121 million tonne (“Mt”) JORC mineral resource update (“2011 Resource Update”) at its 92% owned Mayoko Iron Ore Project, located in the Republic of Congo, West Africa (“Mayoko” or “Mayoko Project”) (refer Figure 1). The 2011 Resource Update represents an increase in tonnage of 267% over the initial Mayoko resource of 33Mt announced in May 2008. The Mayoko mineral resource now comprises an Indicated and Inferred hematite direct shipping ore (“DSO”) component of 44Mt at 55% Fe (“DSO Resource”) and an Inferred beneficiable DSO (“bDSO”) component of 77Mt at 41% Fe (“bDSO Resource”) (refer to Table 1). Improved geological confidence as a result of infill drilling has resulted in 58% of the DSO Resource being classified as Indicated (25Mt at 55% Fe). Based on sighter metallurgical testwork completed to date, this material will readily produce a saleable lump and fines product through simple screen scalping of ultra fines to remove silica, and crushing and screening. Scalped fines will subsequently be treated in the bDSO circuit. A similar scalping process is used at the Frances Creek hematite iron ore mine located 200km south of Darwin. The bDSO Resource represents iron enriched banded iron formation (“BIF”) above fresh magnetite bearing BIF. Sighter metallurgical testwork has shown the bDSO material readily produces a saleable fines product with low levels of deleterious elements through crushing and screening followed by a combination of conventional dense media, and gravity separation. Background On 7 May 2008, an initial Inferred Mineral Resource of 33Mt at 56% Fe was announced at the Mayoko Project. This estimate was based on the data from 26 vertical diamond drill holes (988m) of a 38 hole drilling programme completed at Mayoko between 1974 and 1975.

For

per

sona

l use

onl

y

African Iron Limited ASX Announcement – 27 October 2011

ASX: AKI Page 2 of 8

In 2010, a further 18 diamond drill holes (MKDD001-018) were completed for an advance of 3,687m to confirm the strike and dip continuity, thickness and grade, of the iron mineralisation at Mayoko. On 23 February 2011, the Company commenced a comprehensive reverse circulation and diamond drilling programme designed to upgrade the DSO Resource and to define an initial bDSO Resource. As at 3 October 2011, a total of 22 diamond holes (1,503m) and 27 reverse circulation holes (1,811m) had been completed for inclusion in the 2011 Resource Update. This drilling was concentrated on the Mount Lekoumou prospect with future drilling to extend along strike to Mount Mipoundi (Figure 2). Mineral Resource Estimate The 2011 Resource Update comprises a global resource estimate of 121Mt at 46% Fe. This consists of an Indicated and Inferred hematite DSO Mineral Resource estimate of 44Mt at 55% Fe and an Inferred bDSO Mineral Resource estimate of 77Mt at 41% Fe. The mineral resources are detailed in Table 1. The 2011 Resource Update covers only Mount Lekoumou, approximately 28% or 1.8km of the known >6.5km of mineralised strike at Mount Lekoumou to Mount Mipoundi (Figure 2). Drilling with five drill rigs on site will now shift focus to the Mount Mipoundi area, to further increase the resource size. A resource update on the Mount Mipoundi area is expected by the end of March 2012. The 2011 Resource Update has been estimated using Ordinary Kriging within geological domains. The DSO Resource comprises both in-situ supergene enriched BIF and transported material within a >50% Fe envelope. The bDSO Resource primarily comprises enriched BIF above the base of weathering as well as supergene material that is outside the >50% Fe envelope (Figure 3 and 4). The 2011 Resource Update was prepared and classified by independent, international mining consultancy Golder Associates Pty Ltd (“Golder”) of Perth, Australia. The resources are reported in accordance with the guidelines of the 2004 edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (the JORC Code). A full copy of the Mineral Resource statement issued by Golder is attached to this announcement.

Table 1 – Mineral Resources at the Mayoko Project

Classification Material Type

Tonnes Grade (%)

(millions) Fe SiO2 Al2O3 P S LOI

Indicated DSO

In-situ BIF 14.4 54.4 14.2 2.6 0.13 0.04 3.8

Transported 10.8 55.2 10.4 4.7 0.09 0.04 5.0

Total 25.2 54.7 12.6 3.5 0.11 0.04 4.3

Inferred DSO

In-situ BIF 6.7 54.6 12.8 3.7 0.09 0.04 3.6

Transported 11.6 55.4 9.6 5.5 0.07 0.04 4.5

Total 18.3 55.1 10.8 4.8 0.08 0.04 4.1

Total DSO 43.5 54.9 11.8 4.0 0.10 0.04 4.2

Inferred bDSO

In-situ BIF 66.8 40.9 35.6 2.1 0.07 0.02 1.9

Transported 10.5 38.9 23.2 11.2 0.06 0.05 6.3

Total 77.3 40.6 33.9 3.4 0.07 0.03 2.5

Total DSO and bDSO 120.8 45.8 25.9 3.6 0.08 0.03 3.1

For

per

sona

l use

onl

y

African Iron Limited ASX Announcement – 27 October 2011

ASX: AKI Page 3 of 8

The 2011 Resource Update will underpin the commencement of a pre-feasibility study with a primary focus on early cash flow from mining DSO, and thereafter bDSO, material and the export of 5Mtpa of iron ore. African Iron’s independent, non-executive Chairman, Mr Ian Burston said “the 267% increase in Mayoko’s JORC resource will enable the Company to immediately commence a pre-feasibility study investigating the commencement of production by mid-2013 through the mining of DSO, and thereafter bDSO material, to generate early cash flow”. He further added “Shareholders can look forward to further resource growth and value creation in 2012 with only 28% of the known Mt Lekoumou to Mt Mipoundi mineralised strike drilled, and beyond 2012 with Mt Lekoumou to Mt Mipoundi representing only two of the known prospects contained within the Company’s 1000km2 Mayoko Exploration Licence”. Yours faithfully African Iron Limited Simon Youds Chief Executive Officer Competent Person Statement The information in this Release that relates to Exploration Results and Mineral Resources is based on information reviewed and compiled by Mr Patrick Vekemans, who is a Member of the Australian Institute of Geosciences. Mr Vekemans is a contractor to African Iron Limited and has sufficient experience which is relevant to the style of mineralisation and the type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 edition of the Australasian Code for Reporting of Exploration Results, Minerals Resources and Ore Reserves. Mr Vekemans consents to the inclusion in the Release of this information in the form and context in which it appears. For more information contact: Simon Youds Chief Executive Officer Tel: + 61 8 9211 0600 Australian Enquiries David Tasker Professional Public Relations Tel: + 61 8 9388 0944/ +61 (0) 433 112 936 UK Enquiries Emily Fenton / Jos Simson Tavistock Communications Tel: +44 (0) 207 920 3150 / +44 (0) 7788554035

For

per

sona

l use

onl

y

African Iron Limited ASX Announcement – 27 October 2011

ASX: AKI Page 4 of 8

For

per

sona

l use

onl

y

African Iron Limited ASX Announcement – 27 October 2011

ASX: AKI Page 5 of 8

F

or p

erso

nal u

se o

nly

African Iron Limited ASX Announcement – 27 October 2011

ASX: AKI Page 6 of 8

For

per

sona

l use

onl

y

African Iron Limited ASX Announcement – 27 October 2011

ASX: AKI Page 7 of 8

For

per

sona

l use

onl

y

African Iron Limited ASX Announcement – 27 October 2011

ASX: AKI Page 8 of 8

ABOUT AFRICAN IRON LIMITED African Iron Limited (ASX: AKI) (“African Iron”) is an Australian listed and domiciled iron ore development company working on the exploration and evaluation of two projects, located in the Republic of Congo (“RoC”) in central West Africa. The RoC is a stable, single party dominant republic in central West Africa (and should not be confused with the volatile Democratic Republic of Congo). The current government has been in power for more than ten years and was re-elected for an additional term of seven years following peaceful elections in 2009. African Iron’s projects are located in the Niari Prefecture approximately 300kms north-east of Pointe-Noire. African Iron’s key asset is its 92% interest in the Mayoko iron ore project (“Mayoko” or “Mayoko Project”) where the Company is currently completing a 30,000 metre resource definition drilling program, metallurgical testwork and infrastructure studies related to the production and export of a minimum of 5 million tonnes per annum of direct shipping lump and fines iron ore (“DSO”) by mid-2013. African Iron’s second iron ore opportunity is its 85% interest in the 944km2 Ngoubou-Ngoubou Authority to Prospect which lies to the north-northeast of, and is contiguous with, Mayoko. The Company is currently completing a reconnaissance exploration program prior to advancing the Authority to Prospect to an exclusive, Exploration Permit. The Mayoko Project represents a near term development opportunity in an emerging iron ore province in central West Africa. Unlike other iron ore projects in the region, it has excellent infrastructure endowment with a nearby underutilised, heavy haulage mineral railway passing within 2km of the main prospect at Mt Lekoumou and terminating at the port of Pointe-Noire on the Atlantic Ocean. Mayoko has an oxide cap comprising DSO and enriched hematite banded iron formation (“bDSO”), with underlying magnetite iron mineralisation. As at October 2011, Mayoko had an Indicated and Inferred DSO Mineral Resource estimate of 44Mt at 55% Fe and an Inferred bDSO Mineral Resource estimate of 77Mt at 41% Fe. Drilling is ongoing with further resource growth expected in 2012. The Company’s objective is to develop an initial 5Mtpa DSO operation at Mayoko by mid-2013 leveraging off the project’s proximity to existing rail and port infrastructure.

Competent Person Statement The information in this Release that relates to Exploration Results and Mineral Resources is based on information reviewed and compiled by Mr Patrick Vekemans, who is a Member of the Australian Institute of Geosciences. Mr Vekemans is a contractor to African Iron Limited and has sufficient experience which is relevant to the style of mineralisation and the type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 edition of the Australasian Code for Reporting of Exploration Results, Minerals Resources and Ore Reserves. Mr Vekemans consents to the inclusion in the Release of this information in the form and context in which it appears.

For

per

sona

l use

onl

y

For

per

sona

l use

onl

y

For

per

sona

l use

onl

y

For

per

sona

l use

onl

y

For

per

sona

l use

onl

y