www.afferro-mining.com
Afferro Mining Inc. is an established TSX and AIM listed iron ore development company with projects in west Africa.
The Company is managed by a team with strong track records in the discovery and development of new commercial deposits.
Company split should help market recognise African Aura’s ‘substantial value’, says Evolution
The only area of African Aura Mining (LON:AAAM) operations that has not moved ahead is the share price, according to Evolution Securities mining analyst Charles Kernot.
In a note to investors, Kernot examined this 'anomaly of the market’, highlighting that the company’s proposal to split into two entities - to focus on its gold and iron assets separately - “should help the market to recognise the substantial value” inherent in both sides of the business.
However, Kernot said he was bemused by the recent share price response and emphasised that Evolution is strongly reiterating a ‘Buy’ recommendation for African Aura, targeting 210p per share.
“Clearly we see that there is additional upside potential beyond this level but await the results of the scoping study at New Liberty, which is expected in October”.
Kernot emphasised that African Aura has been busy over the past three months, as it pushes forward with exploration on its key projects. The analyst expects the subsequent drilling results to lead upcoming news-flow.
The analyst also looked at the company’s valuation compared to its immediate peers, specifically Mauritania-focused Sphere Minerals (ASX:SPH) - who are currently the subject of a A$428m (US$376m) takeover bid from Xstrata (LON:XTA).
Kernot suggests that the valuation of Xstrata’s bid for Sphere, which priced in a A$1.00 premium, would bode well for the value of African Aura’s resource.
Evolution estimates that the bid values Spheres’ 986Mt attributable resource at US$0.38 per tonne, and values the 710Mt adjusted resource, which takes into account geological confidence, at US$0.53/t.
“Allowing for an expected doubling of resources at Putu ... and assuming an inferred resource at Nkout, yields gross and adjusted resource valuations for African Aura of US$0.12/t and US$0.24/t, respectively”.
“This valuation confirms that African Aura’s current market capitalisation only reflects a part of the worth of its iron exposure ... An increase in geological confidence would enhance that valuation further”.



















