African Aura Mining considers split.

African Aura Mining (LON:AAAM, TSX-V:AUR) has today released results for the quarter ended June 30, 2010 and also announced that it is considering splitting the firm into two separate companies.

It said that one company would focus "on developing its gold assets" while the "main surviving entity" would develop the iron ore assets.

A review is being undertaken.

"This process, being a Canadian incorporated company, would follow the most tax efficient means for the Company and its shareholders," the company said.

In a note, Evolution Securities analyst Charles Kernot said a split would “aid the share price” as investors concentrate more clearly on the development of the individual assets.

Referring to African Aura’s operational progress, Kernot also highlighted a number of upcoming news events which may boost the share, including drilling and metallurgical results for the Putu project.

Luis da Silva, President and CEO of African Aura said: "The company finds itself at a very exciting period of growth. 

"The first half capital raise means that the company can carry out its planned strategy and key projects are adequately funded."

Earlier today, the exploration and development company reported its Q2 results. For the three-months ended June 30th, African Aura made a loss of US$5.8m (Q209: US$2.92m loss).

Meanwhile, at project level, the company said that the Putu Iron ore project, in which African Aura has a 38.5% interest, is making excellent progress.

The drilling for the pre-feasibility study began in the second quarter and the study will be completed in 2012 at the latest. A definitive feasibility study is expected to be completed 18 months after that.

A project update with metallurgical and current drilling progress will follow in September.

At Nkout Iron Ore Project, a resource drilling programme was started in late July 2010.

The company's board believes that there is currently no value attributed to the Cameroon iron ore assets in African Aura's market capitalisation. 

It says it plans to deliver an inferred resource statement by year end or early next year, depending on drilling progress.

African Aura's gold strategy is based around progressing New Liberty towards a definitive feasibility study during the first half of 2011. Further definition drilling in the Latiff zone has been completed and assays are expected during September.  The resource statement to NI 43-101 level and results of the scoping study are expected towards the end of October.

The company is also stepping out along strike with extension drilling to further test the geology of the system. Additional targets within the same Bea Mountain licence area are being reviewed in order to provide further near surface mineable gold ounces. Of particular note are Silver Hills, Weaju, and Ndablama, all located within 15-30 kilometres of New Liberty. These near-surface target ounces will allow for truckable ore to be transported to New Liberty.

Looking to the future, the board said it was "delivering on its objectives" and said the outlook was "very promising".

The board believes that the current value of the Company does not recognise fully its key assets and is considering splitting African Aura into two separate companies.

The company summarised its key priorities for the remainder of 2010 and part of 2011 as follows:

- Substantially progress the 62,000m resource drilling programme at Putu;
- Finalise the 25 year MDA for Putu;
- Undertake a first phase 4,200m drilling programme at the Nkout Iron Ore prospect in the Cameroon to define a maiden resource;
- Update the resource at New Liberty and deliver a scoping study to evaluate the investment case for an open pit mining operation no later than quarter four
- Anticipe a successful scoping study, progress New Liberty towards a definitive feasibility study encompassing an environmental assessment, metallurgical test work, mine planning and design, plant and infrastructure and a full economic evaluation.
- Evaluate the business case for splitting the gold and iron ore divisions into two separately listed companies.