According to Charles Kernot, mining analyst at Evolution Securities, the significant intersections at African Aura Mining’s (LON:AAAM) Nkout iron project ‘lays the foundations’ for a fourth major asset to add to company’s portfolio.
This morning African Aura reported significant widths of banded iron formations (BIF). To date the company has intersected 75m of hematite BIF and 195m of magnetite BIF after completing 950m of a 4,200m programme.
“The results suggest that there is a major iron-rich anomaly in the area and that further drilling will expand this significantly”, Kernot commented.
“We believe that it will be possible for African Aura to bring in a joint venture partner at a higher effective valuation, following completion of the drilling and an initial estimation of a resource.”
“Therefore we believe that there is still considerable upside potential.”
The Evolution analyst believes the company is in a strong position, and as such Kernot rates African Aura as a ‘buy’ with a 210p price target.
Ambrian Capital mining veteran Peter Davey said that “such large sections of is a definite positive, especially when one considers that grab sampling of the haematite at the site returned grades of up to 68% Fe”.
Davey also highlighted the infrastructure improvements in the area - thanks to Sundance Resource’s Mbalam mine development - and the rapid being made by African Aura on the ground. “Nkout will go from a stranded exploration project to a JORC resource on a rail line in under 12 months, and we think the share price should reflect this progress.”
“We expect a raft of news-flow to drive African Aura’s share price over the next few months on both its two iron ore prospects and gold property.”
“Of all the mining stocks on AIM, we think that this one has the best chance of doubling its market value in the next 12 months.”
Davey rates African Aura as a ‘buy’ with a 184p target.
Another prominent London-based mining expert, Fairfax Securities’ John Meyer said the drill results were ‘exciting’.
“African Aura has an exciting portfolio of projects including an iron ore JV with Severstal on its Putu project in Liberia and a 1.4moz resource at its Liberty project also in Liberia,” Meyer commented.
“West Africa is an increasingly exciting place for iron ore and gold projects, the company is exposed to all of these, as well as a 30% stake in Stellar Diamonds.”
According to Meyer the ongoing results from African Aura’s key projects ‘could see significant value evolve’ for its shareholders.
Another African resource play also attracted analyst attention, with news of a new joint venture in Namibia between North River Resources (LON:NRRP) and Extract Resources (ASX:EXT, TSX:EXT, NSX: EXT).
Both company’s are associated with Kalahari Minerals (LON:KAH), who are significant shareholders with more than 40% of each company.
North River and Extract will work together to develop three uranium exploration licences in Namibia, near Extract’s world-class mine development project - the Rössing South deposit on the Husab Uranium Project.
Ambrian’s Peter Davey sees North River as a ‘Speculative Buy’.
The analyst said the joint venture licenses “look like interesting prospects” and he expects Kalahari’s ‘considerable knowledge base’ to aid the exploration project.
In the Fairfax market report John Meyer examined ZincOx Resources (LSE:ZOX) and its first recycling project in Korea, following the company’s interim update.
“The development of this first project if successful should lead to further opportunities as it presents a highly effective way by which to treat what is effectively a toxic waste,” Meyer commented.
“The company is trading well below its cash of £42m at the end of June ... We look forward to further updates on the progress for the technology.”
WH Ireland analyst Tom Elder looked at Vatukoula Gold Mines (LON:VGM) and Goldplat (LON:GDP), both of which reported results yesterday.
Elder rates Vatukoula Gold as a ‘buy’ with a 4.46p target.
Yesterday, the company revealed that the Vatukoula mine in Fiji produced 21,107oz of gold making taking total FY2010 production to 59,658oz. The junior mining group continues to ramp up operations at the mine, towards its ultimate 100,000oz per annum target.
According to Tom Elder, the consistent rise in both underground and surfical ore production, coupled with the rising total gold output “augurs well for achievement” of the 100,000oz production target.
The analyst emphasised the positive economic backdrop, with high gold providing a “hedge against the debasement of many Western currencies”.
“As an un-hedged, profitable producer with a large and high quality resource base VGM is well placed to capitalise,” Elder commented.
Elder sees Goldplat as a ‘Speculative Buy’, with a 19p target.
WH Ireland’s mining analyst highlighted that Is ‘one of the few’ well-funded African specialists.
In it results for FY2010 Goldplat said it continued its transition into a gold mining company, as the South African and Ghanaian processing plants fund the development of Kilimapesa in Kenya and Nyieme in Burkina Faso.
The two gold recovery businesses produced 21,461oz of gold during the year, consequently Goldplat reported strong growth in operating profits, up around 10% to just over £2m (FY09:£1.82m).
“The South African and Ghana plant performances underline the robust and cash generative nature of the gold recovery operations,” Elder commented.
In his analysis of the results, Elder emphasised that the assets “have a considerable history of operational and financial consistency” making them “both valuable and unusual in the gold mining business”.