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Real-Time news about African Aura (London Stock Exchange): 0 recent articles
|j1nxed: I've made some charts in excel that shows the current valuation based on EV/Total FE compared to peers. The bar represents the EV/Total FE and the little rectangle over it is the share price for AAAM if you applied the same multiples to it based on the corresponding peer
this is the CURRENT valuation i.e. 1951Mt total resources @ 34%, 93m Shares @ $4, 30M cash and applies zero value to the gold resource
this is a blue sky scenario with the above values except for total FE which is upped to 5500Mt (150Mt from putu and 4000Mt for nkout).the target have been upped to my Post DFS stage. it should be noted that this assumes NO RESOURCES from Ngoa or Akom and the gold assets are still valued at 0 so you could argue that it isn't really a blue sky, more like a sunny afternoon
This is the above Blue Sky scenario but at 150M shares for drilling and finishing PFS/DFS for their projects and the total cost for moving both putu and nkout through the PFS and DFS stage amounts to 212M. So the price you see is based on 47M new shares issued at the CURRENT share price so there is a possibility for less dilution with an increase in the share price
I've grabbed some data that is probably a bit old so the peer data might not be that accurate but it goes to illustrate just how cheap AAAM is compared to the others. It holds up against Sphere (not included here) who Xstrata bid on thus cementing the EV/Total FE at a probably mush lower ratio than it should have been if they were to bid on it now (see baffinland). I don't really care if people are saying to should fill this or that gap, the fundamentals based on their resources (and upside potential) screams buy me!|
|longsight: I apologise if I have made some crass comments today about political risk.
I went out for a long walk & thought about this. I think we miss the real risk here if we concentrate on Liberia & Cameroon. I do not minimise the potential for specific country risk - to my mind this includes some risk of civil war, war, anarchy & failure to honour mining licences. I've read a bit on this & of course I'm no wiser than the next punter. But I do not think that these risks have been materially affected by events in N Africa & the Middle East - just my take on things. I also tend to be fasirly optimistic about these supposed risks since Africa is embarked on a path of strongly increasing prosperity & opportunity & this must create the best chance of a continuing trend of improving stability. I have posted some stuff on this before & of course others, like Effortless Cool, have taken a more cautious line on this.
However, there is a real risk. This risk is that events in Libya & elsewhere will spread to other oil producing countries & disrupt oil production & send the price of oil up & that this disruption wd then keep oil prices high. I think that must be a real risk. In particular, as much as i quite admire Jim O'Neil I think he is out of his depth in likening current developments to the fall of the Berlin Wall. The difficulty with the Arab states is that most seem to have a complex tribal, ethnic & religious - & modern secular - mix. Dissent has typically been so ruthlessly crushed that there is an abscence of obvious National leaders to hold this volatile mix together post revolution. Iraq is a democracy - but due to the same unholy mixture it can not form a Government. So I think if revolutions spread then the outcomes are unknown & potential very unstable & will dislocate oil production.
Why do I think this is the risk here. Because of course sustained high oil prices will tip the world back into recession. But this time Governments will struggle to have any further fiscal or monetary means to restart the world's economy. Such a scenario wd be a threat not just to AAAM but to every junior & senior mining co.
To the extent that the Share price is being affected by increased risk - to my mind that is the risk to monitor. Data has suggested recently that the world's economy was growing again but oil shooting up can kill this stone dead.
Sorry to be a bit negative.
Having thought about this risk, my view remains that the world will probably muddle through this. After all, in 2008 when oil hit US$147 it killed demand so bad that the following year it fell to US$27 & they still cd not sell it & had to store it in tankers etc. The Saudis don't want that to happen again because this time the West might really get off its backside & finally invest in every form of alternative energy & permanantly reduce its reliance on oil.
I still think that if there is a growing world economy then AAAM looks like one of the very best investments out there. I repeat that I believe we will get through this risk & that recovery will remain on track. I have certainly not sold any AAAM shares & still think that in a recovering world economy £20 minimu will prove a conservative share price target. If you follow the Buffett principle you wd simply say that you are in the dark in attempting to assess the broader economic & political outlook & wd just focus on the merits of the Co & its management. By that metric, AAAM is a simply fantastic investment at this price, imo.
I sincerely apologise for presenting economic & geo political risk arguments on here. I emphasise that I am an amateur & this is just my opinion.|
Thank you for your excellent analysis - it is unbelievably time consuming trying to make sense of the information that is available and drawing together and cross-referencing the various sources!
For what its worth, and I haven't gone through the information in detail though I will have a more detailed look later, a few points struck me:
- the grade and length of the intersections in the Jan presentation are impressive. If anything, the grades and intersections look higher and longer than those for Nkout! But we have only been shown a selection and presumably the best!
- All the same, none of the grades reported from Nkout were as high as 63% Fe (the highest appeared to be 58% and then only over 1.7m). Most of the Nkout results over 50% Fe were short lengths, only two were significantly longer - 52m @ 52% Fe & 56m at 50.4m. But then, a lot more holes have been drilled at Putu.
- Even the magnetite looks impressive with long interestions of high grade material (high 30s/low 40s) while at Nkout most results were in the mid/low 30% and nothing like 367m at 39% MBIF. But, as noterd above, far fewer holes have been driled at Nkout. And I seem to recall reading somewhere, that a lot of the magnetite at Putu is friable and may not be that easy to extract/transport.
- the drill sequence is similar to Nkout; holes concentrated in a few areas and the results presumably extrapolated across a wider area. Looking at the chart on page 11 of the minesite presentation, I assume they will aim to declare an indicated resource for a large part of that area (Area A) and an inferred resource over a much larger area - possibly running from the southern end of block A to the northern end of Block C. That at least is what happened at Nkout, although the distances are somewhat greater here, but presumably that is the purpose of the scout holes at strategic intervals along the ridge between the three blocks to demonstrate [hopefully] continuity of strike.
- I will come back with some calculation later, but its worth noting that at both Nkout and at the previous Putu resource report, they used a cut-off depth of some 300m based on an reasonable cut off for practical open pit mining (and therefore potentially its economic extraction).
- More generally, I'm intrigued by Severstal's approach and will be interested to see what develops/is announced. I don't see how it is in Severstal's interest to declare a resource far in excess of 2bn tonnes (the point at which the project becomes economic) unless they plan to sell their stake to another company - looks unlikley.
- Assuming Seversat want to take Putu through to production, I would have thought they would want to get as much of Area A into the Indicated category to underpin a BFS, possibly undertake some scout drilling to reassure themselves that there is a high probability of continuity along the ridge, but not necessarily use those holes to declare an expanded inferred resource.
- A large indicated and even larger inferred resource would presumably boost the AAAM share price significantly, particularly post spilt, which is not in their interests if they plan to takeover AAAM idc. It is, of course, possible, given that AAAM management have proved pretty adept so far, that there is someting in the JV agreement which prevents or limits the scope for Severstal to behave in this way!
Overall, the results so far are encouraging and I've no doubt whatsovever there is plenty of scope to easily exceed 2bn tonnes at Putu.|
|longsight: I thought it might be helpful to update my comparison of yesterday between Sundance's Mbalam & AAAM's Nkout:
Before yesterday, crudely speaking, the share price reflected zero for Nkout in that the share price was actually down from before the initial announcements on Nkout & analysts had by & large not ascribed any value to it.
Today, 2 days after the RNS, the m cap has gone up by just over £32m. So the market has apparantly valued Nkout at £32m. The market has valued the apparantly inferior & smaller adjacent Mbalam at £812m. Either Sundance's share price shd collapse by 96% to be equivalant to Nkout's valuation - or arguably AAAM's m cap needs to go up by £780m or approx £9 a share.
I know this sounds ludicrous - but that is because AAAM's share price is ludicrous.
Sundance's Mbalam really is the best comparable out there being adjacent to the Nkout licence.
Obviously the above does not deal with the following further undervaluations:
2 New Liberty & the Bea Licence
3 Ngoa & Akon [which appears to be as extensive as Nkout]
5 the 22% stake in STEL
6 The Ridgeway licence for uranium & REE
7 The JV at Sonfon
AAAM are active currently on all the above except [as far as I know Ridgeway].
Just dealing with Ridgeway, posters might be interested to know that an adjacent licence right to it was sold recently for US$100m. I have read that the prices of uranium & REE are very bouyant.
In conclusion, ladies & gentlemen of the jury, I submit that the share price is guilty - of being far too low.
Perhaps some more informed posters on here might like to suggest reasonable share price targets. I think £10 over the next 18 months might prove a bit conservative.|
|longsight: soulsauce - another way to look at it is this:
Before today crudely speaking the share price reflected zero for Nkout in that the share price was actually down from before the initial announcements on Nkout & analysts had by & large not ascribed any value to it.
Today, after the RNS, the m cap went up by just over £18m. So the market has apparantly valued Nkout at £18m. The market has valued the apparantly inferior & smaller adjacent Mbalam at £812m. Either Sundance's share price shd collapse by 97.5% to be equivalant to Nkout's valuation - or arguably AAAM's m cap needs to go up by £794m or approx £9 a share.
I know this sounds ludicrous - but that is because AAAM's share price is ludicrous.
Sundance's Mbalam really is the best comparable out there being adjacent to the Nkout licence.|
Thank you for your calculations (and all the other information you readily share). I personally find it encouraging to follow, and occassionally contribute, to the excellent debate on this board - its a shame that a hike in the share price is invariably followed by a rapid fall in the quality of the debate!
On your estimates, I hope you're right, but I suspect as a couple of others have said it might take a bit longer than 12months, but not necessarily much longer. Like you, I agree the Bea license almost certainly contains 5moz plus of gold, but I doubt the company will prove up anything like that amount in the short term as I'd expect their focus to be on finalising the NL BFS, upgrading their existing resource and seeking rather than adding significantly more ozs at this stage. Interestingly, Ocean anticiapte they will have added a further 500,000ozs by the end of the year, presumably from extension drilling at NL and possibly a small maiden inferred resource from Ndablama.
Chip on his small caps gold thread uses the following for in-ground resources: Measured = 20.8%, Indicated = 11.4%, Inferred = 2.4% so with gold at $1360/oz, measured = $283, indicated = $155 & inferred = $33.
In the case of NL and assuming that a percentage (say 20% of the indicated is moved to the measured category and 50% of the exisitng inferred moves to Indicated), that would give if we get to a 2moz resource base: measured 150koz; indicated 1000koz; and inferred 850k oz inferred giving an in ground value of $42m+$155m+$28m or a total of $225m or £140m at a 1.6 exchange rate. This is, of course, a minimum as the company should by then have completed the BFS and be starting to construct the mine so valuation will increasingly be guided by its cash flow. There is also the value of the other licences and their potential.
On the iron ore, when we met Luis last year, he said that 'they would have done 25,000 30,000m by the year end. The objective was to drill a total of 62,000m, which wd be along the whole of the ridge, & once this was done they wd be able to give an indicated resource'. On this basis, there must be the potential for the company to come up with a 4bn tonnes resource later this year, though I do wonder whether it will turn out to be closer to 2bn tonnes (the figure they need to underpin the BFS) with an indication of the potential still to come. If so, that would give a value of some $180m at $61 tonnes in-ground resource.
Unlike junior miners who are looking to maximise their share price, Severstal has no great incentive to prove up resource beyond the 2bn tonnes threshold as the company has every intention to take the mine into production. Indeed, a sceptic might say it was in Severstal's interest not to prove up more than necessary as that would inflate AAAM's share price making an eventual buyout more costly for the company!
Like you, I think Nkout, Ngoa and Akon has the greatest potential for the company with an eventual resource potentially greater than the 5bn tonnes or so at Putu, at a higher grade, lower processing costs and closer to the coast. Given my comment above re severstal and Putu, it is arguably in AAAM's interests to prove up the maximum possible resource in Cameroon at sson as possible to boost the share price and ensure Severstal have to bid a realistic price for the company. Given the speed with which they've drilled Nkout, it is conceivable they might come out with close to 1bn tonnes by the end of the year over the licence area with an in-ground value in the region of $600m at $61/tonnes (taken from Ocean report). Though 500mt is probably more realistic.
There may well be some wishful thinking in here on my part, particularly around Nkout etc, but the fundamentals are very good. Overall, I get to a 'value' of c$1bn or c£630m in 12months time. Not quite as much as you, but pretty close and still a darn good return on our investment (>4x current mkt cap) and with more to come so long as we're not brought out too soon!
|hertsbirder: Like others, I was surprised by this morning's placing, but reassured by how quickly it was taken up, particularly given the small discount to the current share price and the lack of warrants. All suggests there is a lot of institutional confidence in the company going forward.
On the timing, I can see the logic for taking the opportunity of a relatively strong share price and growing investor awareness of the company's prospects to raise money with limited dilution while the opportunity exists. And it will let the company speed up the development of Nkout and undertake more gold exploration, both of which will in all probability drive further rises in the share price.
But I wonder what it means for the split into two companies, and even whether the company is having second thoughts. When we met Luis in September, he didn't expect to raise money before the placing. The logic was to raise money in Canada to create more liquidity there. As far as I can see this placing hasn't done that; does that mean another fundraising early next year? But the company should be well funded for its future work programme and it would make much more sense I would have thought to go for a further fundraising on the back of the NL BFS when the share price should be at a much higher level boosted [hopefully] by further exploration success. On the hand, the Ocean note the other day prepared following detailed discussion with the company was still predicated on a split, suggesting it is still going ahead. However, the directors have brought in at this time, particularly Guy Pas, and they wouldn't do that if they thought they could buy more cheaply and with warrants to boot in the New Year.
An optimist might think that a major price hike is round the corner on the back of some imminent and very encouraging news...|
|yumyum: The impressive part of this news is the significant improvement in grade. 1.51m oz at 3.78 g per ton is very nice when you look at many currently mined deposits in West Africa. The indicated resources of 751,000 oz at 4.17 g per ton is a big uplift from the previously measured resources of 746,409 oz at only 3.49 g per ton. This bodes well for the PEA, especially as those indicated resources can be lifted from an open pit of only 200m depth.
Having said that, I am a little disappointed that the total resources did not increase a bit more.
Resource definition drilling still ongoing at Nkout. I wonder if we are likely to get any sort of resource statement from Nkout this year. Might be pushing it?
It seems AAAM share price reacts to the falling gold price, which at the moment seems linked to the dollar more than the ongoing European and U.S. banking crises.
|longsight: Just received the report as corrected by Luis:
8 private investors attended the meeting at AAAM's Covent Garden offices. Luis da Silva, President & CEO of the Company kindly gave us 2 ½ hours of his time. Luis is also a director of Stellar Diamonds in which AAAM have a 30% holding. We were also joined for much of the time by Steven Poulton, the former boss of the old [pre merger] African Aura Resources & an independent director of AAAM. Steven started Altus Resources Capital Limited, which invests in mining companies, in February and this has done very well since launch and currently has £50m under management.
The London offices are fairly small as are the staff numbers employed in London.
The PIs who attended were all very favourably impressed by Luis and Steven. Luis comes over as very open, charming, young and energetic. He is very non-egotistical for example I ludicrously mispronounced his name as "Lewis" throughout the meeting but he did not correct me.
Luis was enthusiastic about meeting with PIs on a regular basis. We suggested annually but he was happy to have six monthly meetings and at a time when more could attend e.g. after working hours.
The Company Split
As things stood, AAAM intended to split the Co into 2 Cos. The 2 Companies wd be formed around the resources rather than by geographical area. The existing Co, AAAM, would retain all the IO resources & its listing on both the TSX & London markets. The gold interests wd be placed in a new Company which would be listed on the Toronto Exchange as well as on a second Exchange.
Luis said that AAAM were very aware of PI's anxieties that the current ISA qualifying status of the Co should be preserved in the new Co. Luis had had a lot of emails on this subject. AAAM had taken legal advice & had a 2 page advice from their lawyers assuring them that the new Company wd also qualify as ISAable.
The PIs stressed the importance of this to Luis at the meeting & reiterated the various arguments as to why this mattered so much to PIs [& which have been stated at length on this discussion board]. We told Luis that it appeared that PIs were relaxed, by & large, about any split so long as they did not finish up with shares which were no longer ISAable.
Luis said that the current timetable was for a press release to be issued soon & then for the split to take place in February next year. If the Exchange required full disclosure on the Putu JV Co as well then this might slightly delay the listing. The additional costs involved in having the 2 Companies listed wd be low.
AAAM had looked into this very carefully & listened to the views of investors in Canada & the UK. The strong conclusion they had come to was that the 2 individual companies wd attract far greater interest & achieve a far higher rating than AAAM was currently doing. Severstal had split out their gold division and the share price had gone up. MDL had spun off their gold interests and the share price had shot up. Luis ran through a series of comparisons with listed companies that had comparable but separate gold & IO resources. These Companies are shown in the September presentation on the AAAM website. These did appear to be rated far higher even where the specifics of the resources were inferior to that of AAAM's.
There wd also be no cross holdings between the 2 Companies & so, in Luis's view, they should not trade at a discount on that basis.
Despite the very low volume of AAAM shares currently traded in Toronto, Luis said that the interest in the Co was gathering momentum in Canada. There was considerable institutional investor interest in Canada but lack of liquidity had made it difficult for IIs to buy stakes. Luis knew of an II who had complained to the Co that his broker was unable to buy a decent amount of shares.
It was very likely that equity funding wd be raised at the same time as the new listing. There were no plans or need to raise any equity funding before then. Luis was asked about the possibility of raising equity by a rights issue rather than a placing, since this obviously favoured those who were included in it over other shareholders. Luis had sympathy for this point but said there were major difficulties with a rights issue. This would involve an information circular to shareholders which was both time consuming & expensive. A further difficulty was the dual listing in Canada and on AIM since both had their separate requirements and this further complicated the process, cost and time involved in a rights issue. Whilst AAAM was sympathetic to giving private investors the opportunity to participate in any placing, there were practical difficulties in involving too many private investors since this wd mean there wd be lots of insiders to the transaction.
Luis thought that in fact a placing did not necessarily have to involve equity being issued at a discount to the share price. The placing in April could have been issued at the full market price but was done at a discount since it gave AAAM an opportunity to bring some attractive institutional investors on board, like Blackrock. In response to concerns about the issue of deeply discounted warrants with placings of equity, Luis explained that any placing in Canada typically had to involve warrants and therefore they also had to offer this sweetener in London.
Luis informed us that the convertible loan notes for £2.3m were going to convert into shares and that the loan note holder had said that they would be keeping the shares.
The IO Co
The current initial inferred resource estimate of 1.08btn, at a grade of 37.6% total BIF mineralization, was based on just 4200m of drilling on 2.6km of the full 12km of the ridge. The 2.6km that was initially drilled was simply the most accessible rather than the most promising. If the rest of the ridge proved similar than the Co was looking at a 5btn resource. The geophysical survey had revealed a magnetic signature along the length of the 12km of the ridge.
They had done a total of 15,000 16,000m drilling by now. They would have done 25,000 30,000m by the year end. The objective was to drill a total of 62,000m, which wd be along the whole of the ridge, & once this was done they wd be able to give an indicated resource. Putu used the S Africans & Australians for sampling & this caused a 2 month delay for results. There wd be a bigger inferred & indicated resource by mid 2011 & possibly some of it wd be measured. Following this they wd start the pre feasibility. There wd be an update soon & again at the end of the year.
Luis emphasised that the award of the MDA was a major development.
Putu had several strong advantages over other IO resources in Liberia & West Africa. It was the nearest to the coast & the topography of the landscape sloped gently to the coast. This wd greatly reduce the capex on a railway to just US$300m. AAAM were working on the assumption that the total outlay for the capex on the project wd be US$2 - 2.5bn including contingency. This compared very favourably with other projects e.g. Sundance, which was 460km from the coast, & who were estimating capex at US$3.366bn. The production cost of the IO looked like it should be low and the margins should be very high. The mineralization compared favourably with other IO resources in Liberia. The IO was high quality and required less grinding than was typically needed. This wd reduce the energy requirement considerably in processing the IO in comparison with other IO projects in W Africa. They wd need to put in diesel generators but hydropower was a possibility in the future.
Capex was the major cost and determined the economics of the project. Putu needed to be a 2bnt resource to justify the capex. Luis was very confident that it was at least this much.
Putu employed 12 local geologists - more than any other Co. in Liberia. They had good relations with the local people.
Luis said AAAM had a great relationship with Severstal. They were well connected and pragmatic. He thought they were reliable partners. They were the fourth largest steelmaker in Russia. They operated in Italy. They had a GDR listing in London.
Luis said that Severstal had a first right of refusal on AAAM's 38.5% share in Putu if AAAM decided to sell. He thought it might be possible that Severstal wd want to buy AAAM out at some point. Severstal were quite acquisitive. They had bought Sacre-Coeur Minerals, nickel interests in the Philippines & had paid US$15m for 16.5% of Core Mining (Avima project). They clearly had a desire to grow in both IO & gold.
Nkout, Ngoa & Akom
The old African Aura Resources had moved into Cameroon 2 ½ years ago just when the political situation improved. Nkout & Akom were 100% owned. Ngoa was 70% owned & was part of the adjacent Essong licence.
Nkout, in fact, was originally a gold prospect & covered a large greenstone belt. Besides the IO there did seem to be gold as well & possibly other minerals there. The exploration licence covered any minerals found. My impression at the meeting, and also previously from speaking to Luis, was that AAAM are very excited by Nkout, Ngoa & Akom. Nkout, Ngoa & Akom together had a 20km strike length & was therefore more extensive than Putu.
AAAM wd have drilled 4200m by early November. This wd cover 2.4km of the 8km strike length of Nkout. wd enable them to infer 3.2km of the 8km i.e. 35 40% of the potential strike length. AAAM should be able to produce an initial inferred resource by January. Nkout used Ireland for sampling & this was far quicker for results than at Putu. They were using Howard Baker as their competent person & he was a very experienced & highly skilled geologist from SRK Consulting. Howard had made a drill site visit & had given a good idea of the quality of the samples just by visual examination. The impression we gained was that IO samples were looking favourable.
Luis' preference is to advance Nkout in 2011 on a wholly owned basis & wanted to retain 100% of Nkout for as long as possible.
There was lots of energy in Cameroon & they could use hydropower in the mining operation.
Before the plane crash which had tragically killed the Sundance Directors, it was clear that Sundance wanted to do an infrastructure deal with, amongst others, AAAM to share the cost & use of the infrastructure i.e. the railway & port. Since Sundance were 460km from the coast, the cost of their project was very large & they were keen to share this. There were several IO projects in the area that wd become cost effective if the railway was built. Severstal had, e.g., taken a 15% stake in Avima in the Congo which is likely to link up with the railway. The Cameroon Government were parties to the 2 MOUs between Sundance & the 2 Chinese Companies providing the railway system & the port & the Gov wd definitely want the infrastructure shared by the mining cos. Assuming the Sundance infrastructure goes ahead, this wd save AAAM US$1bn upfront on its capex & massively improve the prospective value of its resource.
Luis quoted the Minister as saying that "AAAM were the luckiest exploration Co in Cameroon to be where it is".
The Gold Co
AAAM were in the process now of recruiting a high calibre guy to be the boss of the new Gold Company & another to run the feasibility study.
AAAM had a 30% holding in Stellar. This wd be held in the new Gold Co in a "Precious Metal Co".
Luis was apologetic about the equity placement at 5p. He understood shareholders's anger but pointed out that the management had large holdings & had also suffered. Luis himself had shares that had cost £.87 each. .
There was a massive undersupply of diamonds looming something like a 5:1 disparity between demand & supply as many diamond mines come to the end of their productive life & new demand emerged in Asia. Everything depended on the price of carats
Stellar had bought the Kono kimberlite project from Petra. This just needed capex. The value in Stellar was in the kimberlite projects rather than in the alluvial diamond resources.
Stellar had been very unlucky with its big fancy yellow diamond which had shattered in the final stage of polishing. The polisher said it had never happened to him in 35 years! Fortunately, they had had it insured for US$150,000. Stellar were hopeful about discovering more fancy diamonds. Stellar had had a lot of bad luck but Luis believed in the Co & its prospects. Karl, the boss, had a good team & they were hardworking. Stellar wd take a while to come good. 2011 will see some investment in the business.
The current resource estimate of 1.4m oz was measured & indicated on the basis of 100m drilled and 300m inferred. The veins carry on into the ground deeply dipping. It was hopefully open along the strike. They had drilled as deep as 500m & still encountered gold. The Latiff zone was looking very good with high grade, near surface ore.
The scoping study and updated resource statement was due later this year. It could be measured or indicated. They were using a very conservative expert. There should be a NI 43-101 resource statement by the end of this year. The BFS should be completed by mid 2011.
AAAM were planning on a open pit mine with 100,000pa oz production for 8 to 10 years. NL should be in production by YE 2012.
The capex on setting up the open pit mine can be in the region of US$100m. In 2 months's time, AAAM should have a good idea of the production cost. When they had looked at this 3 years ago they had estimated it at just US$320 an oz. Allowing for inflation, this might turn out to be double this figure below US$500 an oz is possible. NL had great metallurgy with 93% recoveries. About 45% 50% of the gold could be recovered centrifugally.
Luis was reminded that AAAM had referred to NL as a multi million oz resource. Luis however wd not be drawn on just how big NL might turn out to be but there appears to be a lot of potential for increases in the resource size.
2 investors had suggested that AAAM might want to consider going for a deep mine operation. Luis has said that starting off with an open pit mine wd not preclude subsequently developing a deep mine operation.
Weaju & Ndablama
Weaju had a 230,000oz in-house resource of near surface gold. Conservatively it had a 500,000oz resource of truckable ore being just 30km from NL.
Ndablama looking very interesting as well. There had been 4000 artisanal miners panning for gold there during the rainy season. Usually when artisanal miners are attracted in such numbers the gold resource turns out to be significant. In fact, Luis knew of instances where the presence of large numbers of artisanal miners had been reported and the share price of the companies involved had subsequently seen a big jump.
AAAM wd begin drilling at either Weaju or Ndablama soon. The way it was looking, they wd probably drill Ndablama.
Luis explained that the presence of so many artisanal miners didn't present a problem since typically they were happy to take jobs mining with the Co.
This was a Cameroon gold resource. This had good grades of gold but had narrow veins which therefore involved the need to drill deeper. It was therefore very expensive to drill, typically US$40,000 60,000 per hole. They were not currently developing this.
AAAM had to focus on the best prospects to utilise cash & human resources most effectively.
AAAM had a 70% interest in the licence. The other 30% was owned by a very dynamic local businessman. There were a couple of Companies looking at the uranium. AAAM did not have the resources to develop this themselves at the moment.
Golden Star were in charge of this gold project and had put in US$1.4m into drilling 3200m. AAAM had a free carry until 31 January 2011. Luis did not have huge hopes for this.
Nimini & Pampana & East Kpo
These had been dropped several years ago.
Charles Kernot, the highly respected mining analyst, who has made a site visit to Putu, has previously produced a valuation on AAAM. This was based on Putu proving up to 2Btn, NL having 1.4m oz of gold. He assumed no value for Nkout, Ngoa & Akom. Kernot valued AAAM at above £3 a share.
In view of the very conservative assumptions used & the subsequent strength of the price of IO & gold, the shares must be worth considerably more than that.|
Which ever way you slice and dice it....the AAAM share price should be far higher....I have taken the opportunity to significantly up my holdings at these lowly levels and remain confident that next year we will be close to those broker target prices.
Keep up the goodwork chris....it has to come good one of these days.....and/or someone is going to take a crack at us if the share price does not get higher pronto....Severstal and a few others spring to mind....IMHO|
African Aura share price data is direct from the London Stock Exchange