Shares in Afferro Mining (LON:AFF) spiked almost 11 per cent after a generally positive update on the company’s potentially world-class iron ore project in Cameroon.
At midday the stock was changing hands at 114.72 pence, up 11.22 pence after the company revealed its reconnaissance drilling programme on the eastern portion of the Nkout prospect had identified high grade iron ore.
The plan is to assess the potential of this higher grade ore in the surface oxidised cap to see whether it is of sufficient quality to be shipped to clients directly.
The work at Nkout East has defined two overlapping 1.6 kilometre units that together give a strike length of 2.4 kilometres.
Each is between 100 and 120 metres in width, and the Nkout East anomaly in total is estimated to be in the order of 500 million tonnes.
An updated mineral resource statement for the project will be published later this month, to be followed in the fourth quarter with further revised estimate.
The maiden 43-101 resource estimate suggests Nkout project contains 1.04 billion tonnes of iron ore in the inferred category.
This is largely based on exploration of the Nkout Centre area, and management believes there may be headroom to increase the resource base to 4 billion tonnes by targeting the wider area, including Nkout East.
The current estimate covers just a three kilometre section of a 20 kilometre-long anomaly.
Affero chief executive Luis da Silva said this morning: "These results are highly encouraging and it is exciting to note that Nkout East exhibits similar geological and mineralisation characteristics to the adjacent Nkout Centre anomaly.
“The project continues at pace having more than doubled drilling since the maiden resource statement in February with an additional four rigs expected within three months."
Evolution’s highly rate mining analyst Charles Kernot believes the market has seriously underestimated Nkout’s potential.
In a note today he repeated his buy advice and 280 pence a share: “The project is shaping up to be a significant value generator for Afferro.”