African Aura Mining (LON:AAAM, TSX-V:AUR) today reported the results of metallurgical testwork on the Putu iron ore project in Liberia, indicating substantially improved recoveries and concentrates.
The testwork upped modelled iron recoveries by 19% to 95%, while concentrate grades improved 9% to 70%, which would lead to an increase in revenues of 8%.
Investors welcomed the update, driving African Aura shares up nearly 6% in early London deals.
In addition to that, the results pointed to significant reductions in processing, mining and capital expenditure costs.
The previous model put together by Amdel was based on early-stage and less representative samples taken in 2008.
As part of the prefeasibility study, further laboratory and pilot scale testwork will be undertaken on drill core and bulk samples to provide data for comminution and beneficiation plant design purposes.
More testwork is required to asses the extent to which the samples tested are representative of the entire resource at Putu, as well as determine the economics of ores from the transition zone banded iron formation (BIF), fresh haematite BIF and weathered BIF.
African Aura currently has four drilling rigs on site, conducting an initial 62,000 metre resource definition programme with 14,000 metres completed as of mid-September.
The current NI43-101 compliant resource stands at 1.08 billion tonnes, sitting within just 22% of the project’s estimated 13 kilometre (km) strike length.
The ongoing drilling campaign covers an increasingly higher percentage of the total ridge.
“...as we learn more about the structure of the ore body and types of ore, we anticipate an increase in confidence of the resource as we progress towards our minimum target of 2 billion tonnes," said president and chief executive Luis da Silva,
“Putu is shaping up to be a significant iron ore deposit and we look forward to keeping shareholders updated on progress.
Just yesterday, African Aura announced that it was now debt-free after holders of £2.3 million worth of convertible debt notes opted to convert the notes to shares at a price of 112 pence per share.
The company holds a 38.5% stake in the Putu project, whose pre-feasibility study is managed by JV partner Severstal Resources.
Severstal is investing US$30 million toward completion of the study, which is anticipated in 2012, for a 61.5% interest in the project.
In 2010 Putu was granted a 25 year renewable mineral development agreement by the government of Liberia.
African Aura’s iron ore division also holds a 100 percent interest in the Nkout iron ore project and surrounding iron targets in Cameroon which is subject to a resource definition drilling programme.
The gold division includes the multi million ounce potential New Liberty greenstone gold deposit, which is being advanced through a bankable feasibility study, and the proximal Ndablama, Weaju, Silver Hills and Gondoja gold projects all within the African Aura’s Bea Mountain 25 year renewable mineral development agreement.
In addition, the company presently has a 30 percent interest in AIM-listed diamond producer Stellar Diamonds (LON: STEL).