Exploration Insights by Robert Tyerman

With gold testing highs, China bringing some currency relief and copper lately buoyant, mining markets have also taken heart from the good news being delivered by smaller players

This month brings a new resource estimate from African Aura, which has obtained encouraging drilling results from Liberia's New Liberty gold deposit. The AIM-quoted company, formerly Mano River Resources, says its new ‘Latiff’ zone in the New Liberty deposit has yielded intersections ranging from 4.64 grammes of gold per tonne of ore over 25 metres at 166 metres depth to 5.68 grammes a tonne over 18 metres at 70 metres depth.

London-based African Aura, which is also quoted on the Toronto Venture Exchange, previously indicated an estimated gold resource at New Liberty of 1.38 million oz at 3.18 grammes a tonne. Chief executive officer Luis da Silva says Latiff is open at depth and argues that the zone’s discovery ‘can only enhance New Liberty’s open-pit mining potential’, which would be notably cheaper than underground exploitation.

Best known for its 38.5 per cent holding in Liberia’s Putu iron ore project, holding an estimated 1 billion tonnes with 37 per cent iron ore, the company is interested in several other gold prospects in Liberia. It has a key stake in AIM-quoted gem producer Stellar Diamonds.

Recommended as Mano River at 10p on the initial Putu deal two years ago and more recently at 69.75p and 82.5p, African Aura shares have now reached 92p. There should be more to come for investors untroubled by the risks involved in Africa and mineral development.

Resource boost at African Eagle
African Eagle Resources has established a hefty increase in formally estimated inferred resources at its Dutwa nickel project in Tanzania from 350,000 tonnes to 806,000 tonnes at a grade of 0.88 per cent. With 30,000 tonnes of cobalt included, this rises to 845,000 tonnes of nickel equivalent at a grade of 0.92 per cent.

This overall increase in Dutwa’s estimated inferred resources arises from work on two deposits within the project, Ngasamo and Wamangola. The company says independent consultant Snowden is aiming to upgrade the resource estimate from the tentative ‘inferred’ category to the more confident ‘indicated’ definition.

Managing director Mark Parker hails the resource increase as a ‘significant step forward in our feasibility work at Dutwa’. Highlighted by Growth Company Investor last month at a depressed 4.13p, the shares now trade at 5.13p and should rally further if Dutwa’s drilling results continue to please.

A Pacific punt
Vatukoula Gold Mines upped production from Fiji by 46 per cent to 38,402 oz in the nine months to May. David Paxton, the company’s entrepreneurial chief executive officer, says technical problems in the South Pacific island nation prevented it from reaching its target output rate and suggests that gold production from the Vatukoula mine in the year to August is likely to come out at 54,000 to 55,000 oz, rather than a previously projected 60,000 oz.

However, he says the company remains confident of achieving its planned annual production rate of 100,000 oz during 2011. According to Vatukoula, cash costs before finance and investment were an average $679 an ounce over the whole nine months, against $927 a year earlier, though costs rose to $751 an ounce for the third quarter alone, up from $684 an oz a year earlier.

The company increased nine-month gold sales by 34.5 per cent to 35,391 oz. That helped it turn a £1.2 million net mine loss into net mine earnings of £7.3 million over the nine months.Citing an existing formally estimated gold resource of 4.3 million oz at ten grammes of gold per tonne of ore, Paxton says Vatukoula has £4 million in the bank and intends to embark on further exploration to increase that resource. Highlighted by Growth Company Investor last year at 1.1p, the shares now trade at 2.05p, down from a year’s high of 2.59p, and retain speculative potential.