UU intends to pay a 2010/11 DPS of 30p, which represents a 12.5% cut from the 2009/10E DPS of 34.3p. This is better than our expectation of a 20% DPS reduction and much better than the most bearish analysts who were expecting around a 40% reduction. UU has also stated that it expects to grow the dividend at RPI+2% p.a. from the 30p base.

UU believes that its capital structure is robust and expects Moody’s to maintain its current credit rating although S&P may assign a lower rating due to differing methodologies. Therefore there is no need to raise equity.

Trading from 1 October 2009 to 20 January 2010 is in line with expectations.

The shares continue to trade significantly ahead of our current 1015p risked NAV including exploration upside, although we think this is justified given the company’s track record, its opportunity set (particularly in the Equatorial Atlantic) which in all likelihood will continue to attract the attention of larger peers, and last but not least, its liquidity and size advantage over its UK peers. Next Wednesday’s trading statement (27th) will be important for sentiment given it should give an update on the drilling programme for 1H10, while we should also get a decision (probably today or tomorrow) from the Ugandan government on whether it will OK Tullow’s decision to pre-empt the Heritage disposal.

A total of 20,000,000 new common shares of the Company (the “New Shares”) will be underwritten at a price of 400 pence per share (the “Placing Price”).

In addition to the Placing and further to the conditional strategic agreement with China Railways Materials Commercial Corporation (“CRM”), announced by the Company on 6 January 2010 (the “CRM Agreement”), African Minerals has agreed to grant CRM an option, exercisable for 60 days from the date of this announcement, to subscribe in cash for up to 2.88 million new common shares at the Placing Price, representing approximately 14.4% of the Placing (the “CRM Option”). The CRM Option is being managed by Renaissance Capital Limited.

“We are pleased with the continued support that premier institutional investors in North America and the United Kingdom have given the Company, which is a further endorsement of the quality of the Tonkolili project and the executive management team we have assembled at AML.

The parties have agreed to negotiate an Investment Agreement in good faith, with a view to its execution by 31 March 2010. Meanwhile CRM will commence due diligence on AML and the Project, a process CRM has agreed to complete by 20 February 2010. Upon completion of the Investment Agreement, CRM will be entitled to one seat on the AML Board.

Extraordinary General Meeting resolutions as per notice of Extraordinary
General Meeting:

As a result of the passing of the first resolution above, the Company
announces that the listing on the Official List of the UK Listing Authority of
the ordinary shares of 2.5 pence in the capital of the Company will be
cancelled with effect from 8.00 a.m. on 22 January 2010.

The Wall Street firm, which reports its full-year results in a couple of hours’ time, is on the verge of deciding to introduce the bonus ceiling in order to reduce its exposure to the Bank Payroll Tax announced in the Chancellor’s Pre-Budget Report last month.

But my understanding is that a bonus cap (assuming Goldman does not reverse its current thinking) will constitute a number which while astronomical by the standards of what most of us earn in a typical year, will at Goldman represent an attempt to curb some of the astronomical payouts earned by hundreds of its London-based staff in a typical year.