25 May 2012

Resource hike at Afferro

21/11/2011 Robert Tyerman

West African iron ore play Afferro Mining (AFF) has lifted estimated resources at Nkout in Cameroon 41 per cent to nearly two billion tonnes.

With indicated resources of 944 million tonnes at 32.7 per cent iron and inferred resources of 1.05 billion tonnes at 31.6 per cent iron, the AIM-quoted company has launched a 35,000-metre drilling programme there and expects a scoping study to be ready before the end of this year.

Headed by chief executive Luis da Silva, Afferro, a product of April's split between the gold and iron interests of the former African Aura Mining, says it is still talking to potential strategic investors. The company has 100 per cent of Nkout, which is near a proposed railway line to the coast and has hoisted its high-grade 'direct shipping ore' (DSO) content 70 per cent to 18.5 million tonnes, at 60.3 per cent iron.

Afferro also has 38.5 per cent of the Putu iron ore project in Liberia, holding an estimated indicated and inferred resource of 3.2 billion tonnes at 34.3 per cent iron, in partnership with Russia's Severstal steel group on a co-funding basis. The company says it expects a pre-feasibility study on Putu early in the second quarter of next year.

da Silva suggests production costs could come out a $40 a tonne at Putu and $22 a tonne at Nkout, against recent prices of more than $130 a tonne. Afferro is looking at several other prospects in Cameroon, including Ntem, which has 'promising magnetic targets.'

Having raised £15.5 million at 90p in July, the company had seen its shares, once nearly 180p earlier this year, fall to 44p on concern over future fnding and other issues. This seems overdone and, though clearly risk remains, a rally could be on the cards.

Tags: AIM market, Cameroon, Iron ore, Liberia, Luis da Silva, Severstal

Sector: Mining

Companies: Afferro Mining

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