African Aura’s Nkout tops a billion tonnes of iron ore in Cameroon

A first resource estimate for African Aura Mining‘s (aur-v, aaam-l) Nkout iron project in southern Cameroon has more than a billion tonnes.

The inferred resource, covering a 3.5-km section of African Aura’s property, stands at 1.04 billion tonnes grading 34.2% iron in an east-west trending magnetite banded iron formation.

Within the resource, there lies a near-surface, high-grade 7-million-tonne oxide zone of 58% iron, then, also in oxide, 22.5 million tonnes of 51.2% iron and 131 million tonnes between 30 and 50% iron, and finally 878.6 million tonnes within the fresh magnetite at 32.7% iron.

The 3-km resource area falls within an 8-km-long strike length, with another 12 km of targets identified through geophysics. With room to expand, the company states that it is targeting a much larger resource at the project.

To grow the resource African Aura plans to drill 25,000 metres in 2011.

“Aggressive expansion of the resource base by drilling along strike both east and west of Nkout Centre is underway,” states Luis da Silva, chief executive officer of African Aura. “The project will undoubtedly form a major part in the development of the regional iron ore infrastructure which has yet to be built.”

Nkout sits 30 km away from a proposed rail line to link Sundance Resources‘ (sdl-a) 2.3-billion-tonne Mbalam iron ore project, 160 km to the east, with a proposed deepwater Atlantic port 310 km to the west.

African Aura is conducting metallurgical testwork on a composite sample of saprolite ore with a target head grade of 44% iron. Gravity testing showed lump production had little potential while sinter fines had promise. The company reports that for each size fraction below 3 mm, a high specific gravity fraction with an iron content of 65% or greater was produced.

Along with the Nkout project, African Aura has a 38.5% stake in a joint venture with Severstal (svst-l) on the 1.1-billion-tonne Putu iron ore project in Liberia, a 70% interest in the Ngoa iron project in Cameroon, and significant gold holdings.

The New Liberty project in Liberia is the company’s most advanced gold project, with a prefeasibility study released last December. The study outlined an open-pit operation mining 7.3 million tonnes at 3.6 grams gold to produce 787,000 oz. gold at a strip ratio of 18.9-to-1. Capex was US$92 million.

The pretax internal rate of return works out to 73% with capital payback in under two years and the pretax net present value, using US$1,100 per oz. gold and a 10% discount, comes in at US$234 million. The company expects a feasibility study on the project in the second or third quarter of this year.

African Aura also holds other targets on the New Liberty licence and a 1,000-sq.-km gold prospect in Cameroon.

With both its gold and iron holdings growing, African Aura plans to split the company along resource sectors, with the gold assets being shifted to newly established Aureus Mining.

African Aura’s share price was up 48¢ on the day the resource estimate was released to $3.13 on 167,000 shares traded. The company has a 52-week trading range between 80¢ and $3.13, with 86 million shares outstanding.