Yaounde, Cameroon Africa. February 2011. (Cameroon News) – African Aura shares rise again as it proves once again that its Nkout project in Cameroon is potentially world class.

Share prices of African Aura Mining (LON:AAAM, TSX:AUR) indicated a sharp rise this morning after it was proven that its Nkout project in southern Cameroon is going to be in future a “world class iron ore project”.

Independent consultants SRK have provided a 43-101 first level resource estimate on the project of 1.04 billion tonnes of iron ore at a grade of 34 per cent in the inferred category.

However the management is of the firm confidence that there will be the scope for enhancing the resource base to 4 billion tonnes by looking at the wider Nkout area.

The present target covers just a three kilometre section of a 20 kilometre-long anomaly.

Chief executive Luis da Silva said: “This is an excellent maiden resource achieved for the first 3 kilometres of the Nkout deposit and with the recently announced excellent metallurgical results, testifies to the world class potential of the project.

“Aggressive expansion of the resource base by drilling along strike both east and west of Nkout Centre is underway.

“The project will undoubtedly form a major part in the development of the regional iron ore infrastructure which has yet to be built.”

Early metallurgical test-work, carried out in the meantime, has indicated that the ore could be the basis for a high grade concentrate which has sinter fines potential.

Yet another operation that is being carried out is to determine the potential for direct ore shipment with samples being reviewed from a composite sample of saprolite material grading around 44 per cent Fe. The 2011 drilling campaign is now being carried out and is expected to run to 25,000 metres.

“This is an excellent result for African Aura, and we see the potential for Nkout to evolve into the company’s flagship asset,” said City research experts Fairfax clients.

At 10.30 am the shares were going up 8.1 pence at 175.35 pence in a frantic session. Charles Kernot, the reputed Evolution Securities mining analyst, expects that the share prices will move more higher and has hence increased his price target to 400 pence a share from 210p.

“African Aura has announced a maiden inferred resource at its Nkout banded iron formation deposit in Cameroon of 1.07 billion tonnes at an average grade of 34.2 per cent contained iron,” he said.

“This is more than we anticipated and we expect it to have a strong positive response to today’s share price.”

Fairfax, meanwhile, had brought to notice that Nkout is accessible being only 30 kilometres from a railway network that is expected to connect the 2.4 billion tonne Mbalam project that is 160 kilometres to the east, and will also be connected to a deep seaport that would be located 310 kilometres to the west.

This would improve the asset in terms of strategic value and would also offer the necessary competitive advantage in term so f transportation and connectivity should the proposed railway line be developed.

The brokerage also keys in on a potential valuation anomaly. It uses as its marker Sundance, with a market cap of A$1.3billion (£812 million), which has a relatively smaller asset than Nkout. AAAM, meanwhile, is estimated to be a little higher than £140 million.

“We recommend African Aura as a good switch from African Minerals and Bellzone for investors seeking earlier stage projects with greater upside potential (albeit with more risk),” Fairfax concludes.

African Aura also has good stakes in the Putu iron ore project in Liberia and the New Liberty Gold project with associated exploration targets in Liberia.

The company is planning to take stakes into one iron ore and one gold company that would set the pace for some major resetting of the asset base, and in November it raised £20.3 million, or US$32 million, to finance the two operations. It now has USS$39 million in cash and around US$28 million has already been set aside to fund work programmes targeting both businesses.

“With the new resource at Nkout, the preliminary economic assessment for New Liberty and an updated resource statement on Putu pending, the value opportunity in African Aura is increasingly visible and the rationale for the proposed split into separate gold and iron companies even more compelling,” chief executive da Silva said this morning.